A “no-brainer.”
That’s what President Obama calls a bill by Sen. Elizabeth Warren (D-Mass.) that would hike taxes so the government can forgive some college debt. It’s an excellent choice of words — but not for the reason the president thinks.
Behind both the Warren bill and the executive order the president signed earlier this week is the same philosophy that created a mountain of student debt that is $1 trillion and climbing.
This is a federal aid regime that encourages ever-more student borrowing, which in turn fuels university spending that then drives up tuition faster than general inflation.
If President Obama and Sen. Warren were right, the explosion in federal aid over the past decades would have made college more affordable. The reality is otherwise.
That’s also why the president’s executive order is a bad idea. It caps loan repayments at 10 percent of a student’s monthly salary. After 20 years of regular payments, the unpaid balance can be wiped off the books. Meaning, the taxpayers will be on the hook.
Until we give colleges incentives to be stop pushing loans (e.g., hold them responsible for a portion of a student’s unpaid college debt) and provide students with hard information (e.g., job and salary prospects) about what they are getting for their tuition dollars, we’re never going to stop this vicious circle.