Care About The Poor? Consider Consequences

On the day of the second presidential debate, I had the pleasure of participating in a panel discussion at debate-host Hofstra University. The topic was "defusing the student loan debt bomb," and I was the lone voice calling for an end to inflation-fueling federal student aid. My co-panelists were Tamara Draut of the think tank Demos, Above the Law blog co-editor Elie Mystal, and US PIRG’s Ed Mierzwinski.

I had perhaps the best interaction with Mystal, with whom I had interesting chats throughout the day. Mystal's response to my proposal was basically that poor and minority students need help, and phasing out federal aid would disproportionately hurt them. It was an argument with which I could sympathize, and it made more sense than just proclaiming "college education is a public good and should basically be free." Unfortunately, writing on his blog post-debate, Mystal said that my "view makes a certain kind of sense" but nonetheless smacks of "the classic, Republican 'f**k 'em' approach that disproportionately screws the poor and minorities."

Um, ouch. Ascribing callousness or cruelty to either me or Republicans because we don't like the negative effects of aid is, frankly, precisely why we can't have a reasoned debate about these things. Maybe I'm an exceptionally gifted multi-tasker, or maybe I’ve just contemplated some important logic and facts, but I can be against mega-inflation without being indifferent to the poor. Indeed, quite the opposite.

First, much aid goes to people with little regard to their income. Pell Grants might be pretty well targeted – though they’re getting less so by the minute – but "unsubsidized" federal loans, which are backed by taxpayers, are available irrespective of need. Tax-based aid also skews high-income. The American Opportunity Tax Credit, for instance, can be claimed by joint filers making up to $180,000. And the well-to-do are best positioned to maximize their aid because they can afford financial planners to tell them how to hide wealth, or temporarily reduce income to optimize their eligibility. The cumulative effect of all this is to push up college prices.

Then there’s the psychological effect of hugely inflated sticker prices. If the message "college is astonishingly expensive" is repeated often enough, who do you think will more often be deterred from attending college, the rich or the poor? Probably the latter.

Next, the poor and minorities are no doubt disproportionately burdened by debt. Data indicate that’s definitely the case for African-Americans, and is likely the case for the poor considering that even debt loads that are small compared to some totals might be huge relative to a poor student’s wealth.

Finally, while people of all income levels and races spend too much time and treasure on higher education, the poor and minorities are probably the most snookered by "college for all." The unfortunate reality is that those groups tend to be the least prepared to do college-level work or pay mammoth, inflated bills, and as a result tend to most readily pursue degrees without completing them. Among first-time, full-time students entering college in 2004, a weak 58.3 percent that didn’t transfer schools completed a four-year program within six years. Much worse, only 39.5 percent of African-Americans completed their degrees, and 50.1 percent of Hispanics. In large part this is the fault of factors preceding higher education – including our moribund K-12 system – but the dismal college completion reality remains.

In light of all this, is it really fair to proclaim that those who want to phase out inflationary, consumption-driving aid don’t care about the poor and minorities? Or is it long past time to give them a full and fair hearing?

Comments

Eh, it's not that "those who want to phase out inflationary, consumption-driving aid don’t care about the poor and minorities," it's just that the policy alternative proposed doesn't help them. It's fine to say that the system doesn't work (and it doesn't really) but merely cutting off the funds wouldn't improve anything.
Mystal's comment exemplifies something I've found that's as constant as gravity: logic and facts have no place in what should be substantive public policy discussions. You can have unspun facts and Vulcan-like logic perfectly in line with actual reality, but you're a stone-cold, crazy, fascist, racist (insert pejorative) libertarian if you use them to challenge the status quo. I've always found it odd when people who have learned in our liberal education system to challenge everything attack those who challenge things that are blatantly wrong but accepted without much if any consideration. The really strange thing about this, though, is that even in our government-run education system, economics classes I attended explained the basics to an adequate degree. Any person capable of incorporated the meaning of supply and demand curves into their thought processes OUGHT to be able to form a hypothesis that a bottomless bucket of "free" loan money dumped into an education market where supply is relatively stable can only have one possible outcome: mega inflation. When, in reality, mega inflation is precisely what happens, instead of acknowledging the proof and ending policies that harm everyone with the ability to benefit from higher education, the tendency is to attack those who point out the unintended consequence...as predictable as an apple falling from a tree. I believe that the greatest measure of success for pretty much anything is how well it works out in the real world. Degree conveyance rates from colleges become less impressive if out in the real world graduates display a dedicated ignorance of microeconomics and other compulsory topics. The fact that an overwhelming majority of Americans, represented by those who unfailingly vote for republicans and democrats, seem incapable of incorporating relatively simple supply and demand curves into discussions about the negative effects of taxpayer funded education assistance programs raises what I think is an interesting point: does that real world failure reflect poorly on "the system," or is it that most people attending college simply don't have what it takes to truly understand even the most basic, compulsory content? My hunch is that the latter is the better fit to reality, which begs a second question: how can intelligent public discourse happen if the majority doesn't have a firm grasp on the fundamentals upon which the entire discussion is based?

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Posted by: Neal McCluskey

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