The Biden administration’s decision to “forgive” $5.8 billion in debt to 560,000 former Corinthian College students is a terrible policy that could backfire politically. And of course, the loans aren’t really “forgiven” because they will be borne by taxpayers, including poor and middle-class Americans who never had the privilege of going to college.
The move, announced by Vice President Kamala Harris on Wednesday, is the latest salvo in a destructive Democratic war against private, for-profit education. Liberals say for-profit schools exploit low-income and minority students, burdening them with heavy debt, poor job prospects and low graduation rates.
Yet these liberals apply more lax standards and greater mercy to public and private nonprofit schools, which are complicit with the government in fueling the student loan bubble. For-profit colleges account for a much lower percentage of outstanding student loan debt (just 17%) than other types of colleges — but you wouldn’t guess that by the glaring headlines against them.
The federal government is also complicit in the scandal at Corinthian, a school that was Harris’ personal pinata while she was California’s attorney general. Harris enjoyed whipping Corinthian for political gain and took the opportunity to grab his seat in the US Senate. As The Wall Street Journal reports, Harris “began investigating the for-profit company in 2013 for allegedly misrepresenting investment rates, but she struggled to substantiate her claims. [Obama] The Department of Education came to his rescue with extensive document requests.
And when the school failed to produce the documents quickly enough, the federal government cut off all student aid, which quickly drove Corinthian into bankruptcy.
Harris and his party have done nothing to stop the federal government from disbursing student loans unaccountably to colleges of all stripes. Over the past two decades, college tuition has quickly outpaced inflation, but colleges have continued to raise tuition because they knew government-backed student loans would keep them afloat. It’s a textbook case of moral hazard—profligate college administrators behaving badly because someone else pays the bill.
Reckless government lending encourages risky student loan companies from both students and school administrators. A 2017 study by the Federal Reserve Bank of New York found that one dollar of government student loan expansion was linked to a 60-cent tuition hike.
Despite the Democrats’ holy war against them, for-profit colleges play an important role, especially in market-based jobs programs. But there should be much stricter limits on public loans. It would help keep tuition fees lower, and if you take out a loan, it should be a private bank that has to pay – not Uncle Sam.
“For-profit colleges are more nimble than most traditional colleges, including community colleges, in developing and implementing programs,” according to a GOP report from the Senate Health Committee, the United States. education, work and pensions. “When these programs meet workforce needs and lead to jobs in high-demand fields that pay good wages, student outcomes can be great. »
Plus, for-profit associate and professional programs don’t block the prospect of moving into four-year college programs. On the contrary, they can be used as a base and are “stackable”, notes Nicholas Wyman in his book “Job U: How to find wealth and success by developing the skills that companies really need”.
For-profit schools have provided many low-income and racial minority students, including non-traditional students, with real-world skills that better prepare them for the job market compared to many traditional academic pathways. Judah Bellin, an associate fellow at the Manhattan Institute, detailed in the City Journal how New York State’s for-profit, two-year degree-granting colleges got more students than any other industry. higher education, including private, not-for-profit colleges.
As so-called STEM (science, technology, engineering, and math) careers dominate growing economies, critics of for-profit colleges are taking note: for-profit colleges produced 51% of associate degrees in computer science and technology information, according to a Harvard University study.
Politically, the Biden administration’s decision to favor one class of people — the educated — over the less educated could backfire. After all, only 38% of Americans have earned a bachelor’s degree or higher and only 13% have student debt. As many families struggle to survive record inflation, baby formula shortages and sky-high gas prices, millions will be upset that the federal government is selecting a few for magical relief.
Student debt holders have already received unprecedented student loan forbearance relief that President Donald Trump began during COVID. President Joe Biden continues to push this loan forbearance further and further away from the actual pandemic period. What is becoming clear is that the Biden team wants reckless education policy to remain rampant.
Carrie Sheffield is a Senior Policy Analyst at Voice of Independent Women.