By now most Americans are quite familiar with the concept "too big to fail." Yet most people assume that it is related to some large bank or corporation whose failure would lead to a cascade of economic consequences most politicians believe would be more than Americans are willing to bear.
Yet there is one kind of entity currently flying under the radar where the government — meaning the taxpayer — is potentially on the hook for hundreds of billions of dollars, and I'm betting most Americans aren't even aware of it. As of right now, student loan debt is close to one trillion dollars, all of it government-guaranteed. This raises a logical question: are America's universities too big to fail?
One of the oldest adages in politics is "if you want more of something subsidize it." The "more" in this case is the cost of college tuition. Yesterday, the NY Post released a list of the ten most expensive universities in the country, and the numbers are staggering. In the number one slot was Sarah Lawrence College in Bronxville, NY. The cost of tuition, room and board, and other estimated expenses? $58,334 per year, meaning the cost of a four-year degree runs to $233,336.
A little perspective? Tuition costs have doubled since 2000, a pace which is not only far greater than the rate of inflation, but one which exceeds the rate of real estate over the same period. In other words, the housing bubble which crushed the economy and left millions of Americans underwater on their mortgages, was only the second worst bubble out there.
Perhaps the only thing more aggravating than that reality is the reality that the American university system is the home base of progressivism, in all its social justice, spread-the-wealth-around glory. Yet railing against income inequity, among other things, doesn't come cheap. In 2010, according to the New York Times, the average salary for a full professor was $109,843. Other average salaries? $76,566 for an associate professor, $64,433 for an assistant professor, $47,592 for an instructor and $53,112 for a lecturer.
College presidents? The median salary for public university presidents was $427,400 — and nearly one hundred thousand dollars higher for presidents at private universities. And that was three years ago, according to latest data made available by the Chronicle of Higher Education.
The work load? From the Bureau of Labor Statistics Occupational Outlook Handbook 2010-2011: "Most postsecondary (college) teachers have flexible schedules. They must be present for classes, usually 12 to 16 hours per week, and for faculty and committee meetings. Most establish regular office hours for student consultations, usually 3 to 6 hours per week. Otherwise, teachers are free to decide when and where they will work and how much time to devote to course preparation, grading, study, research, graduate student supervision, and other activities."
Flexible schedules certainly give one time to rail about, among other things, the cruelty of capitalism, the great divide between rich and poor, and the shortcomings of America in general, don't they? Especially when such high-mindedness pays more than a couple of grand per week for a full professor — with summers off, in many cases.
How is all this possible? If you said government, go to the head of the class, as it were. The federal government guarantees to pay off all student loans, even if the students themselves default, which, unsurprisingly, they are doing in ever-greater numbers. In 2008 (the last year statistics are available) the default rate was 7 percent, compared with 4.6 percent in 2005.
Furthermore, when Democrats still controlled both chambers of Congress in March 2010, they voted to nationalize the student loan program. As a result of that change, the feds will allow student borrowers to cap their loan repayments at 10 percent of their income above basic living requirements, instead of 15 percent, beginning in July 2014. Government will also allow those students, if they keep up their payments, to have any remaining debt forgiven after 20 years instead of 25 years — or 10 years if they are in public service, such as teaching, nursing or serving in the military.
And who gets left holding the (debt) bag for such forgiveness? The American taxpayer. Even the "clingy" G0d-fearing gun-toting types who never got the chance to sniff a college education.
But it's even worse. A lot of Americans don't know it, but one of the demands being made by many of the Occupy protesters across the country is — wait for it — "forgiveness" of their college loans. Why? Because college graduates are shocked that a sheepskin they borrowed a couple of hundred grand to acquire doesn't guarantee them a cushy, high-paying, self-actualizing job. In other words, despite four years of "higher" education, these anarchistic nit-wits remain insulated from the one over-arching lesson that any decent university should have hammered into their self-aggrandizing, self-entitled heads on the first day of classes:
The. World. Does. Not. Owe. You. A. Living.
Aside from the glaringly obvious however, Americans need to consider something else quite seriously. They need to consider whether a college education per se makes sense anymore. No doubt there are some fields where amassing more than two hundred thousand dollars of personal debt in order to get a job makes sense. But I'm betting courses like Comparative Literature; Film Studies; Ethnicity, Race and Migration; History of Art; or Women's Gender and Sexuality Studies — every one of which comes from Yale University's "Subjects of Instruction" web page — aren't any of them.
A two hundred thousand dollar loan amortized over twenty years comes to five thousands dollars a year — plus interest. And for what? Maybe the smartest thing the protesters, and perhaps of lot of other Americans, could do would be to pressure businesses to stop making a college degree the ultimate criterion for getting a job. If one considers where the so-called "best and brightest" among us have taken this country in the last few years, one could make a compelling argument that a college degree is the most over-rated product on the planet.
In fact I just did.
