When I started state college back in the 80s, and private
law school back in the 90s, tuition was about $1,200 and $13,000 per year,
respectively. Today, however, prices for
those same degrees can easily surpass $8,000 and $45,000 per year,
respectively. And there are similarities
to the housing market: tuition is raised each year, and each year the federal
government lends or guarantees as much money as the schools ask for, and to as
many students as are willing to sign on the dotted line. (Again, the details aren’t my
concern here, so excuse the imprecision.)
There is typically no consideration given to the student’s
creditworthiness, chances of success at college, chosen major, or the likelihood
of earning a living and paying back the loan.
Obviously, this was a recipe for disaster. Today, outstanding student loan debt exceeds
$1 trillion dollars, and the default rate is now higher than that for credit card debt. The good news, though, is
that the solution going forward is simple.
Yes, the lender could investigate each student’s creditworthiness, their
chosen major, and the likelihood that they’ll be able to get a job and repay
the loan. But that would be a lot of
work, and there is an easier solution.
Granted, this solution would have been far more effective ten years ago,
but it would still work today.
Let’s suppose that private law schools charge $45,000 per
year, and anyone who wants to attend such a school can get a student loan. Now let’s assume that law schools announce a
tuition increase to $50,000. Instead of increasing available funds for tuition to $50,000,
the government could say: “No dice. We’re
capping the amount of the federally guaranteed loan at $45,000, and you law
schools will just have to deal with it.
Or, you can charge whatever you want, but the student will have to come
up with the amount of tuition over-and-above the $45,000.”
So what would happen?
Law schools would go back to charging $45,000 faster than a chain smoker
can light up a cigarette. And they could
easily do it. It would just mean no new buildings, no $867,000 salaries for deans, no army of under-deans, dean-lets and dean-lings, no grossly insane bonuses (excuse me, “forgivable loans”) for
faculty, higher teaching loads (say, five classes per year), no visiting prof program, and no money for professors to travel
around the county to hear themselves talk about their articles at academic conferences (see the author's note on page 478 of this article, for an example). In
short, if the extra $5,000 per year per student is not available to the law school, then the administration won't take on all of
these frivolous things to “soak up all available resources.” And let’s face it, as a colleague of mine
says, “We all know that learning the law involves a case book or statute book, a
note pad, and a pen.” In fact, little has
changed since the time Lincoln
studied.
Further, and most importantly, law students wouldn’t be any worse
off. In fact, they’d be far better off
for having “paid” the lower tuition. And
with lower student debt, there is a greater likelihood that they’ll be able to
pay it back. And with more students paying
back their student debt, we taxpayers would be on the hook for fewer defaults.
In short, the government shouldn’t let schools (colleges or
law schools) dictate how much money they are going to suck from the taxpayers
each year. You, government, hold the
purse strings. Cap—or, better yet,
reduce—the amount you will loan or guarantee for tuition each year. You are the dog. Stop letting the tail wag you.
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