How about this: instead of forgiving everybody’s college debt, we force all the colleges who scammed millions of Americans into degrees in Useless Theory Masquerading As Valuable Life Skills to grant refunds. That would end the grift right quick.
This is a November 16 tweet by Ben Shapiro. I’ve heard this idea repeated a number of times, with slight variations. Tucker Carlson argued for it last week on his show.
Last week I posted about a bad way to handle existing student debt. I noted that University of Michigan economist Justin Wolfers agreed with my bottom line and also that we agreed on some of the reasons for that bottom line.
Ben Shapiro’s proposal above is also bad and is arguably worse. It’s much more of a violation of property rights than the Joe Biden-type proposal is.
Here are the problems.
1. How would he identify those colleges that actually engaged in scams? Presumably he would need evidence that the college promised X and didn’t deliver X. That’s possible but my guess is that most colleges were far more circumspect and didn’t promise X. If they did, then the former students would have a justification for suing the college, but this justification would be independent of the amount of student debt. Student A who went into no debt or who paid off all his debt, but who got scammed, would have just as strong a case as Student B who owes $30,000.
2. If Shapiro is saying that we don’t need to find actual evidence of a scam, then he is advocating a taking: the fact that a student has debt but has a fairly useless degree would be enough in this case for Shapiro’s remedy. That’s a problem. It would amount to the government taking forcibly from college D to give to student B.
3. It could even be worse. When Tucker Carlson discussed this kind of remedy on his show last week, he almost licked his lips as he discussed Harvard’s $40 billion endowment. He seemed to be saying that this amount should be distributed to students who had debt. Was it all students or just students who went to Harvard? And if the latter, how many of them are struggling with massive debt and low-paying jobs? I bet it’s under 10%. If it’s the former, then what distinguishes this proposal in principle from Stalin’s grab of land and food from the kulaks? I understand that the Stalin move was way more extreme: Stalin murdered millions of innocent people. I’m talking about the principle here, not the consequences.
4. Establishing the precedent that a student who doesn’t get what he wants from a college can sue to get a refund would, I admit, have some salutary effects. Colleges would substantially raise their standards and might even, gasp, quit discriminating against Asians. (If you follow the link, you’ll see that Harvard dodged a bullet and a federal court found that it did not discriminate. The data I saw caused me to think otherwise.) But it would be better to establish that principle going forward than to penalize colleges that, along with students, thought they were operating under different rules.
READER COMMENTS
john hare
Nov 25 2020 at 4:19am
I am against retroactive penalties in general. I see much of the education system as corrupted, not in the sense of criminal, but in the computer sense of a corrupted code. I would like to see code revisions going forward.
Investigate and address the reasons many employers are requiring extensive credentials for jobs that clearly do not need them. BA for a janitors job is the common reference. Backing off on credentialism could have a very strong positive effect on those getting a degree just to get the job. Especially those that can’t really afford to lose several years of productivity in addition to the direct costs of schooling.
Move the various learning institutions towards market discipline and away from the federal distortions on student loans.
But going back and changing the rules later, absolutely not. I could get hammered for not having company signs on all my work trucks in the past for one. Just because it is required in other places doesn’t mean retroactive penalties make sense.
Bill
Nov 25 2020 at 10:59am
If a student sues a state college, where does this college get the money to settle? From the same taxpayers who bore the cost of guaranteeing the loan?
Thomas Hutcheson
Nov 25 2020 at 1:18pm
“Excessive” credentialism is presumably just a effect of inadequate demand for labor at the current price level possibly the result of inadequate inflation given the stickiness of prices.
Going forward, instead of student loans, we could have loans to universities who could provide aid in the form of an equity interest in future income with IRS helping the universities recover their investments.
J
Nov 26 2020 at 11:43am
I suspect that that tweet was only half serious, and that Ben is just pointing out the foolishness of going to an expensive school, taking out loans to do it, learning information that has little connection to the job market, and then complaining 4 years later that you don’t make enough money. On this point he is correct. The average starting salaries for jobs associated with your major is widely available online, and students should do their research and plan accordingly.
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