College is overpriced. Debt relief won't fix that fact

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Joe Biden's summer jubilee of student debt forgiveness will be autumn's campaign fodder. Biden offered targeted assistance, proposing to cancel up to $20,000 in federal loan debt for recipients of federal Pell Grants and $10,000 for other borrowers. Defaults run high among students who drop out, often for life circumstances beyond their control. And income-based repayment plans, often administered by bungling private servicers, don't necessarily help these former-students, who deserve help.

But Biden's $10,000 break also indefensibly helps individuals earning up to $125,000 and households up to $250,000. That's a trickle-up giveaway, when the median family income is just $80,000 and fewer than 40% of Americans have bachelor's degrees. (Concerns that the plan will turbocharge inflation may be overblown, however.)

Pros and cons aside, as the father of a high school senior, I know the salience of this issue will endure beyond the midterms and the expected legal challenges to Biden's plan. It's clear that forgiveness does not address the continuing, out-of-control cost of college.

My family is looking at my university employer's exchange network, in which member schools give scholarships to children of other member schools’ staff. We watch every sneeze in the stock market, hoping our 529 plan doesn't catch a full-blown cold. My son is working part-time to save something for his studies. We’re also mindful about keeping any borrowing restrained.

Democrats have become the party of the college-educated. Will they dither on meaningfully helping their future base, beyond Biden's $20,000 forgiveness Band-Aid?

Along those lines, Biden's plan caps future borrowers’ payments at 5% of monthly income and promises to wipe out loan balances up to $12,000 after 10 years of payments. But he didn't hose the underlying flames heating up higher ed inflation, which is a more complicated problem to address. Still, without such relief, future taxpayers will be stuck holding the bag for canceled loans.

Honest higher education representatives have conceded for years that, for all its benefits — from lifetime earnings to elevating the mind and soul — college is overpriced. I once heard the Reagan-era chairman of Dartmouth College's trustees say his institution's quality of education had not soared by the same percentage as its price tag. The Biden-era cost of higher ed would have sent him into shock.

Four years’ tuition at the average public university runs $37,640 for in-state students. As daunting as that is for poor families, it's a bargain compared to the average $95,560 out-of-state families pay. The tab at the average private university? Just south of $130,000.

Axios put those numbers in perspective: A family with two college kids and making that median $80,000 will fork over nearly one-quarter of their pre-tax income for in-state public tuition, "minus financial aid and/or federal loans"— and 81% of pre-tax income if the kids attend a private college. Those calculations are before factoring in room and board. Even with institutions’ financial aid, too many Americans carry too much debt; that's why we’re having this conversation. "I worked nonstop and still needed loans to fund my education," as one writer recently put it.

The reasons for this sticker shock are hardly a mystery, but they are numerous. States have slashed support for their public universities, forcing tuition hikes. Many colleges must recoup lavish outlays for Taj Mahal dorms, dining halls and athletic facilities that lure students and their families. Observers right and left blame the cost of schools’ bloated bureaucracies, too.

Meanwhile, perverse incentives are at play. Colleges charge what the market will bear. And the market's load-bearing swells prodigiously when student loans grease the conveyor belt of paying customers through ivied gates. Ron Lieber, a personal finance columnist for the New York Times, got it right when he wrote: "If we want higher education to cost less, we should make it cheaper when people enroll, rather than subsidize its indefensibly high cost."

Fixes would require Uncle Joe to get more stern with higher education leaders. He might disqualify from federal loan eligibility those schools whose graduates stagger under the highest debt, especially in comparison to their post-graduate earnings. (For-profit schools are the most egregious offenders in this regard.) He might also curb federal research grants to schools with runaway tuition.

Also, free public-college tuition, paid for with tax dollars now vacuumed up by "scattershot," federal financial aid programs, would fortify Abraham Lincoln's vision of land grant schools educating "the sons of toil." Any such free tuition plan should include community colleges, unsung heroes in spreading economic opportunity that deserve the extra funding Biden unsuccessfully sought in Build Back Better.

Over my lifetime, Democrats have become the party of the college-educated. Will they dither on meaningfully helping their future base, beyond Biden's $20,000 forgiveness Band-Aid? My son's generation will be watching.

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