College Tuition: Demand versus Supply

It is always interesting to see what is in the mind of certain members of Government Panels when the propose Policy. One person is Elizabeth Warren who recently chaired the Congressional Panel and published the report Special Report on Regulatory Reform in January 2009.

That Panel recommended:

1. Identify and regulate financial institutions that pose systemic risk.
2. Limit excessive leverage in American financial institutions.
3. Increase supervision of the shadow financial system.
4. Create a new system for federal and state regulation of mortgages and other consumer credit products.
5. Create executive pay structures that discourage excessive risk taking.
6. Reform the credit rating system.
7. Make establishing a global financial regulatory floor a U.S. diplomatic priority.
8. Plan for the next crisis.

The minority members were Congressman Jeb Hensarling and former Senator John E. Sununu. They prepared a minority report voicing free market views. Warren as a strong Democrat seemed to stresses the role of Government in solving the problem with more regulation whereas Hensarling and Sununu voiced the other opinion. The question is, what is truth, if it exists at all.

One need look at Warren's suggestions regarding the problem of escalating College Tuitions. It is "Government Service". Namely you get your tuition forgiven if you spend time working at low wages in Government jobs. Specifically in her Harvard Law Review paper, Service Pays: Creating Opportunities by Linking College with Public Service by Elizabeth Warren et al the authors state in their conclusions:

"It is time for a new vision, time to focus on expanding opportunities for America’s young people. Fully supporting college educations and promoting loan repayment through public service would reset national priorities. Even if only a modest number of young people moved to public service, value lies in the commitment itself. Making the commitment that any student who is willing to work can get a college diploma without incurring burdensome levels of debt would transform the idea of helping young people complete their educations from an empty promise into a real national priority."

The problem here as in her Regulatory Reform issue is that the true problem in education is not finding a way for Government to pay for the students tuition but to get Government out of education and reducing the costs. It is not professors salaries which have exploded but it is the added load of Deans for this and Deans for that. The Federally mandated overhead and protectionary tactics needed to avoid Federal law violations have added collosal costs to education. Thus we should not start a Federally subsidized indentured servitude program.

The problems with such a program are as follows:

1. It takes young creative people who would have normally created new businesses and value in the economy and places them in a Government job. It creates a dependence mentality which is totally counterproductive to the entreprenurial spirit which has made this country. Has Warren ever created a job and met a payroll. doubtful.

2. It does not solve the problem, in gact it will exacerbate it. It will create a new and massive Government and academic beuracracy to manage, monitor, and operate this program. The costs to society will be massive! Even France does not have such a program.

3. It almost violates the 13th Amendment! Young people may see no other choice but to sell themselves to the Governmant. That could esaily destroy a generation.

The solution is simple. Reduce the costs by reducing the mandated overhead. Faculty salaries are not the issue. It is everything else!