On Aug. 10, Hillary Clinton, the front running Democratic candidate for the office of the President in 2016, laid out a new plan to aid college students who have been swamped with over $1 trillion in student loan debt since 2003. Her plan suggests funding another $350 billion in taxpayer monies for higher education, and providing incentives to states that spend more of their own money in the same arena.
However, like Bernie Sanders, Hillary Clinton’s adversary for the Democratic ticket in 2016, neither progressive shows any true understanding of economics, and their plans for addressing the student loan bubble are exactly the same programs that created higher costs and massive debt obligations in the first place.
When the value of money is diminished by excessive supply, then the natural market reaction is to increase both the cost and the size of every facet of an industry where that new money is directed towards. And this has been proven out around the country through overall increases in teachers, administrators, and building programs over the past 30 years. And when you increase the size of an entity, the costs to maintain it increase as well, and thus the cost of education to the consumer has exploded well beyond their ability to keep up with increased prices for a service they could once afford without going into debt.
Hillary Clinton plans on Monday to begin rolling out one of the biggest-ticket policy proposals of her presidential campaign, a $350 billion plan aimed at reining in the ever-growing cost of college and help millions of borrowers struggling to repay student loans manage their debt.
Drawing on many of the same ideas and advisers on which President Barack Obama built his college affordability agenda, Clinton’s proposals—to be formally unveiled at campaign stops in New Hampshire on Monday and throughout the rest of the week—include federal incentives for states to boost their spending on public higher education, options for students to graduate from state colleges and universities without taking out loans, and pushing for a program to help borrowers refinance existing debt first pitched by Obama. – Bloomberg
Since 1979 when former President Jimmy Carter created the Department of Education, costs for higher learning, and in particular a college degree, have skyrocketed by more than 1120%, with increases to the cost of education being much greater than nearly all other sectors in the economy, including healthcare, energy, and housing. And the primary reason for this is that when the Federal government wrested control over education from the states, their massive infusions of tax dollars created the basic economic principal of price inflation.
And since 1979, that same government has increased what it spends on education every year.
More money for schools meant administrators and legislators were more than happy to increase their own spending and growth. And when President Obama co-opted all student loans from the Sallie Mae Student Loan Servicing corporation, colleges and universities quickly raised their prices since they knew that money for education would be backstopped by government and taxpayer guarantees.
The primary reason that educational costs are so high, and why the current millennial generation is in such debt, is directly attributed to the government getting involved in education, and throwing hundreds of billions of dollars in new money each year at the industry. And as with any enterprise that has limited competition, and does not have to worry about fiduciary responsibility (government), the solution to every problem that arises is to simply throw more money at it, instead of recognizing that the solution is to do exactly the opposite.