Student-loan debt in the United States is now $1.48 trillion. That incredible sum is a heavy drag on the economy and a burden on young people. And federal intervention in education is the cause.
It wasn’t always this way.
In June 1965, I began working as a salesman at the Sears store in Knoxville, receiving a ten-cents-per-hour raise over my job as a bag boy at the A&P. At Sears, my wage was $1.25; I was required to wear a suit and tie. I was very proud of that job.
I worked full-time that summer and usually around 20 hours a week after I began my freshman year at the University of Tennessee in late September.
After I had worked at Sears for a full six months, I was called to the office for the first time. I was very concerned. I met David Weaver, who was my age (18), at the escalator. I told him I bet I had “been hit by one of those Hallmark shoppers”—one of the mystery shoppers Sears had at the time. He told me he had just been called by a very angry woman to whom he had sold the wrong color of paint. David said he was scared, and that he had diabetes, and when he got too nervous he passed out. (I can remember that conversation as if it happened yesterday.) Much to our relief, we had been called to the office so management could give us good news: Because we had been working at Sears for six months, they were giving us a nickel-an-hour raise.
It shocks students at the University of Tennessee today when I tell them that tuition my freshman year was $90 per quarter, $270 for the academic year. By my senior year, it was $405. Almost no one left college with debt, unless he had bought a car or made some other major purchase. Students certainly did not go into debt for tuition, because they could work part-time and pay all their school expenses.
Now, over 44 million Americans carry student-loan debt—some even into six figures. Readers Digest recently published an article entitled “The Student Debt Racket” (December/January). The authors quote one student who owes $90,000 as saying, “my loans are a black cloud hanging over me. I’m a student-debt slave.”
Colleges and universities were heavily promoting student loans in the late 60’s and early 70’s. They were able to tamp down opposition to tuition and fee increases by telling students, Don’t worry; we’ll just get you a loan. Then, because loans were available, many schools began raising tuition at two or three times the rate of inflation each year, and have continued to do so.
Now, the cost of higher education has soared to such great heights that universities are bragging if they hold the annual increases to two or three percent. They never consider reductions, not even miniscule ones. Thus, we have another example of how big-government liberalism helps the few at the top while harming the many down below.
The federal student-loan program has made the owners of some loan-servicing companies very wealthy, and has been a boon to most college administrators and tenured professors. And all of this, at the expense of students and their families. When the Knoxville News Sentinel lists the highest-paid people in East Tennessee each year, they are almost all at TVA or UT.
Yet the pattern continues to repeat: Liberals find a very small group of people who are having trouble paying for something, then insist that the only solution is to let the federal government “help.” But whenever the federal government subsidizes something, the costs simply explode, because most of the incentives or pressures to hold costs down vanish. That is why Mark Cuban, the Shark Tank star, has said, “If you want to make college really expensive, make it free.”
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