Can Free College Solve the Student Loan Crisis? (2)

Cruel psychology

Whether it’s Trump or Biden or Congress, any form of loan forgiveness won’t look as good in the real world as it does on paper. Why? Not because of the math, but because of the psychology.

Not only will college administrators take even greater advantage of the system, but young college graduates will learn the wrong lessons.

First, what about those diligent grads who have spent many years and many dollars paying off their education? What do they get, besides angry?

Second, what message do we send to young people? When you get too deep into debt, someone will bail you out? If we start down this path, here’s a prediction: These new college grads will one day buy too much house, get saddled with too burdensome a mortgage, and then demand mortgage forgiveness just like they did with their student loans.

The unsexy solution

So what is the solution? Because if there’s another bipartisan consensus, it’s that the status quo can’t continue.

I’ll propose something that may not happen, simply because it’s not sexy enough for most politicians to campaign on: Slash the interest rates on federal student loans.

Right now, the average interest rate is 5.8 percent among all households with student debt, according to New America, a nonprofit and nonpartisan think tank. I propose cutting those to 1 or 2 percent.

It’s unlikely that will cover the default rate and other expenses for administering those loans, but it will still be cheaper than forgiving loans. It will split the difference between wiping out debts and sharply subsidizing them.

It will send a message that education isn’t free, but that we’re investing in Americans. Even if you’re skeptical this will work, then I say this: Let’s start there. Because once you forgive loans, or start talking about free college, there’s no going back. You can’t put that genie back in the bottle.

If you need proof of that, look across the pond. It was a decade ago that riots erupted in London. “An estimated 50,000 turning out to vent their anger at government plans to raise tuition fees,” The Guardian reported on Nov. 10, 2010. “Protesters smashed windows and waved anarchist flags from the roof of the building housing the Conservative party headquarters as the fringe of a vast rally against university funding cuts turned violent.”

Sadly, once you offer something for nothing, people will never agree to paying anything ever again. If the United States experiments with free college, don’t expect to go back without similar protests. Even worse, expect Americans to take free college for granted in other ways – treating it like many do high school.

Here’s the simplest truth: People who pay something for their education will also pay more attention to it.