If China Jumped Off A Bridge, Would We Do It Too?
Everyone has heard that China is leaving us in its dust when it comes to producing college graduates, and if we don’t do something drastic to catch up they’ll crush us economically as well. Indeed, it’s a driving force behind efforts to ramp up federal higher education intervention.
As President Obama proclaimed when introducing his American Graduation Initiative, which is now part of the ironically titled Student Aid and Fiscal Responsibility Act:
By 2020, this nation will once again have the highest proportion of college graduates in the world….Already we’ve increased Pell grants by $500. We’ve created a $2,500 tax credit for four years of college tuition. We’ve simplified student aid applications….A new GI Bill of Rights…is beginning to help soldiers coming home from Iraq and Afghanistan to begin a new life — in a new economy. And the recovery plan has helped close state budget shortfalls…at the same time making historic investments in school libraries and classrooms and facilities all across America. So we’ve already taken some steps that are building the foundation for a 21st century education system…one that will allow us to compete with China and India and everybody else all around the world.
Now, while a college education could furnish important learning that helps drive innovation and economic development, it could also be as worthless as conferring a bachelor’s degree on a dog. What’s important is that people actually learn things of value, not simply that they get degrees. But a funny thing happened in China…
Yesterday, news broke that China’s top education official has been sacked. Reports the New York Times:
Facing rising criticism over the quality of schools and a crush of jobless college graduates, China’s legislature announced Monday that it had removed the minister of education after six years on the job and replaced him with a deputy.
China has been cranking out college graduates at a breakneak pace, but the quality of the education has become highly suspect and, perhaps more importantly, there haven’t been nearly enough jobs to employ all the newly credentialed. In other words, simply producing more graduates — no matter how much it has frightened some people in America – has largely been a waste.
The obvious lesson from this should be that it’s foolish to simply make massively expanding the ranks of degree holders a national goal. But that doesn’t compute for many U.S. politicians, despite abundant evidence that we don’t need heaps more graduates anymore than China does. It’s getting elected that matters most to politicians, and as long as voters keep believing that government is opening the door to the middle class simply by pushing more and more people to college, politicians will keep wasting taxpayer dollars on unnecessary degrees.
So let’s hope that both voters and politicians will learn China’s clear college lesson: Fixating on degrees is not very smart. Failing that, let’s hope that we at least don’t have any rioting…
Filed under: Education and Child Policy; International Economics and Development
Full House to Vote on Lie of a Bill
The Student Aid and Fiscal Responsibility Act (SAFRA) is expected to head to the full House of Representatives for a vote tomorrow, and as it does there is yet another Congressional Budget Office estimate upping its expected cost. The bill that sponsor George Miller (D-CA) shamelessly says will be a taxpayer-money saver continues to be exposed as very much the opposite.
As you might recall, Miller has been touting SAFRA as legislation that would fund all kinds of new or expanded federal programs while allocating $10 billion to deficit reduction. But the CBO has never agreed with that. First, the CBO identified a likely net cost to taxpayers of about $6 billion over ten years, and that was without including any deficit reduction. Then it estimated that SAFRA would cost an additional $33 billion after accounting for lending risk. And now, CBO estimates that the cost of expanding Pell grants could be almost $11 billion greater than originally estimated. If you add all of those things together, the cost of SAFRA has flipped from a promised $10 billion savings to a $50 billion loss.
In fairness, the last estimate comes from a change in the baseline used for Pell outlays, going from March to August 2009. The increased cost estimate could very well reflect a higher-than-usual Pell expense because of the economic downturn, and the additional cost would not materialize if and when things improve. Nonetheless, this just adds to a very clear message about SAFRA: Far from relieving taxpayers, it’s going to deliver yet one more punishing blow.
How’d That Get in Here?
Understandably, the public is a little preoccupied right now with efforts in Washington to “reform” health care by making it much, much worse. Fortunately, people are starting to notice that a congressional bum rush is heading right toward them — maybe they’ll be able stop it in time. Unfortunately, that is giving Washington a chance to sneak some other stuff by us.
In particular, I’m thinking of the just-introduced Student Aid and Fiscal Responsibility Act. It’s been largely ignored so far, save a little chatter about the community college stuff it incorporates. In a simpler time, it would have generated a lot more copy. After all, it will:
- end federally backed student loans that come through private companies, and instead make Uncle Sam the universal lender;
- greatly increase Pell Grants and peg their growth to the rate of inflation plus 1 point;
- balloon the federal Perkins loan program;
- authorize $5 billion over two years for elementary and secondary school facility projects, with a focus on “green” efforts;
- authorize $10 billion over ten years for Early Learning Challenge Grants; and
- furnish $12 billion for community colleges.
Not all of this, I should say, is terrible. Getting rid of the Federal Family Education Loan Program — which backs loans coming from ostensibly private companies and guarantees lenders a profit — is a good thing. But replacing it all with loans directly from D.C.? That’s a bad thing.
To be fair, transitioning from guaranteed to direct lending could save some money, especially in the short run, eliminating various fees and guarantees Washington pays to lenders under FFEL. But those savings almost certainly won’t be the $87 billion over ten years supporters claim, a number that is no doubt overstated as a result of budget chicanery and how quickly government grows. And don’t expect taxpayers to benefit from whatever savings are ultimately generated. According to the proud declaration of SAFRA sponsor George Miller (D-CA), only $10 billion of the projected $87 billion savings is slated for deficit reduction. The rest — breathtaking deficit be damned! — is going to standard, feel-good government spending, including school “modernization” projects and “early learning” grants
Which brings me to the community college components, which have, unlike the rest of the bill, been getting some media play. I wrote about them earlier this week, noting especially that they make little sense in light of Bureau of Labor Statistics numbers showing that positions requiring on-the-job training will grow in much greater numbers than jobs requiring at least an associate’s degree. What I didn’t mention was the dismal performance of community college students, who take remedial courses in droves and complete their programs at very low rates.
Ah, but we’re told that this new legislation, backed wholeheartedly by the Obama administration, is going to reform community colleges. As David Brooks celebrates in his column today:
The Biggest Leeches Always Live
By proposing to eliminate the Federal Family Education Loan Program, President Obama has raised a pretty big ruckus in the relatively staid world of higher education policy. For the uninitiated, FFELP uses taxpayer dollars to essentially guarantee profits to participating financial institutions, and to keep student loans cheap and abundant.
Since neither corporate welfare nor rampant tuition inflation are really good things, getting rid of this beast would be a welcome move. Unfortunately, the president wants to replace FFELP with direct-from-Washington lending and to plow the savings into Pell Grants, so there’ll be no savings for taxpayers and probably very little beneficial effect on college prices.
As I wrote on NewMajority.com in May, no one should expect big lenders to get kicked off the federal gravy train:
[T]he Obama administration is saying they’d keep private companies as servicers of loans to maintain quality customer service. Of course, this could very well be worse than the status quo: It will likely keep at least the biggest current lenders (read: Sallie Mae) at the political trough, but Washington will be THE lender for all students.
Right I was! Or, at least, signs of my prescience keep getting brighter: Despite Obama promising to go to war against an ”army” of lenders’ lobbyists, the U.S. Department of Education just awarded Sallie Mae and three other big lenders lucrative contracts to service federal loans. So while smaller leeches could very well be removed from their supply of taxpayer blood, the biggest will keep on sucking!
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