States are Slashing College Budgets…And That’s a Good Thing
There’s an article from Bloomberg Business decrying the drop in college spending by states across America. According to the article, 48 of the 50 states have cut spending in this area. Bloomberg Business would have you believe this is to the detriment of U.S. citizens-we would adamantly disagree. The fact is that government spending is the sole reason college costs have risen so drastically.
In 1944 the GI Bill of Rights was passed. This bill made it possible for 8 million veterans to obtain college degrees who otherwise would not have.
While this was a great step, offering our veterans a free college education for defending our country, it led to a rampant explosion in the development of college campuses by state governments in an attempt to meet the new demand, a demand paid for by the federal government. As states began investing in the development of public universities, the federal government further entrenched itself in the role of higher education provider and enacted The National Defense Student Loan program, later known as The Federal Perkins Loan program.
The new government programs in essence did for everyday citizens what the GI Bill had done for vets. However, a transition happened in the 70s that saw private loans, subsidized by the federal government, replace federal grants as the primary means of payment for college for the average family. Though family income and public investment fell, borrowing continued to take off, thus leading to the current $1.2 trillion student loan debt bubble.
Here’s where the basic law of supply and demand comes into play. If there is a greater demand the cost of the supply will rise. The government flooded the higher education market with consumers beginning in the 1940s, and it has continued to do so by subsidizing student loans ever since. Naturally, a surplus of demand has lead to universities raising the price of their product far above what the market itself could afford to pay without the assistance of subsidies.
The answer to this mess is not more government spending, that action only allows the problem to persist. Instead, the government should be removed entirely from higher education funding. Without the presence of student loan subsidies, colleges and universities would see a dramatic drop in the market of interested consumers. The lack of demand would cause these institutions to lower their costs to a point the market would support, that is the only thing that will bring down the costs of a higher education without saddling taxpayers with the burden of further educating all Americans.