As my son, then age 10, said to me one day: “Papa, if food (food stamps), housing (rent subsidy), medical care (Medicaid, Obamacare), cell phones (Obama-phone) and college education cost nothing, then the value of everything is zero.”

The best thing I have read on the evils of “free stuff” and “government money”.

https://www.lewrockwell.com/2019/10/bill-sardi/why-a-free-college-education-will-lead-to-ruination-of-america/

By Bill Sardi

Free college education is now being handed out to high school graduates and will lead to the ruination of many unwary young Americans.

Here is what happens when higher education becomes commoditized:

1. More people compete for jobs that require college degrees. Greater supply and no increased demand means those graduates who do obtain jobs in their field will be paid less. With more graduates than job openings, these students who momentarily wore a cap and gown in a proud graduation ceremony may end up doing menial labor, like the women who clean my home or the waiters at a restaurant I frequent.  Labor is still subject to supply and demand.  It may be tough to graduate in engineering, but too many engineers and their earning power erodes.  There are 117,553 graduates with an engineering degree entering the job market each year.  Colleges do no counseling to inform students that the career field they have chosen may have a limited number of job openings.  This borders on fraud.

2. If everybody has a college degree, what is it worth? About 4% of American adults have a 4-year college degree.  The governor of New Mexico just granted free college education to high school graduates in her state, regardless of family income.  She just diminished the value of a college diploma.  The over-abundance of anything leads to its devaluation.   Gold is scarce.  It is treasured.  The oil industry attempted to create false scarcity by misleading the world there were only so many dinosaurs and plant material that got compressed in the earth layers to produce oil.  And of course, oil producers weren’t refining at capacity.  These kinds of lessons are not being taught in American schools.  College degrees were once valuable because they were difficult to earn and graduates were scarce.

As my son, then age 10, said to me one day: “Papa, if food (food stamps), housing (rent subsidy), medical care (Medicaid, Obamacare), cell phones (Obama-phone) and college education cost nothing, then the value of everything is zero.”

3. This effort to get every high school graduate to enter college is a likely effort to reduce unemployment rolls. Students are a pawn to a political objective. This keeps them off the unemployment rolls.  Close to 20 million Americans are in U.S. private and public colleges.  When the cost of a college education became so expensive, many young men and women opted to go into the military, so no military draft is needed.  There are an additional 3 million Americans in active military duty.  The U.S. unemployment rate is reported to the 3.5%, a 50-year low.  Just think if all these young Americans were out looking for jobs.

4. College loans just bury students into debt and they don’t enough have money to get their own life started. They still live with their parents.  They can’t buy a car or put money down on a home mortgage.  (To add injury to this problem, if students get a job, they have to pay into Obamacare even though they are not likely to need much medical care given their age.) Auto and home sales suffer at the expense of being a loan serf.

Most students with higher academic achievement are already in college.  Offering a college education for free will tempt young Americans with C to C- grades in high school to enter college in an attempt to earn more money in their chosen profession.  But studies show most of these low-grade students withdraw from college and never earn a degree, leaving them with a college loan to pay and no increased earning power.
According to the Census Bureau and National Center for Education Statistics via Postsecondary Education Opportunity, about 45% of low-income students participate in baccalaureate degree attainment but only about 10% graduate.

Half of the borrowers in default leave school without earning a degree!  Unpaid student debt occurs more often to single parent families, in other words, to those who are striving to get out of their cycle of poverty but probably don’t have the where-with-all to be in college in the first place.

Once the federal government began to guarantee payment to lenders for student loans, colleges raised their fees beyond affordability.  Tuition prices grew by 63% from 2008 to today (2019).  The average cost of tuition for the 2019-2020 school year is over $40,000/year at private colleges and over $20,000/year for state residents at public schools.

A report by author Daniel Freidman is telling.  Says Friedman:

The percentage of U.S. students who go to college substantially exceeds the percentage of U.S. students whose academic records suggest that they are capable of doing college-level work.  46 percent of 25 to 34-year-old Americans have at least a 2-year degree, and 36.5 percent earned a four-year degree. However, about 19 percent of Americans enrolled in college but never earned a credential of any type—that’s nearly a third of all students.

At schools that accept fewer than 25 percent of applicants, 88 percent of students graduate, and at schools that accept fewer than half of applicants, 70 percent graduate. However, at schools that take 90 percent of applicants, fewer than half graduate, and at open enrollment schools, only a third of freshmen complete their degrees. Students who drop out, and who are currently at very high risk to default on student loans, will be better off under a program that lets them leave college for free. But they’ll still be worse off than they would have been if they never went to college in the first place, because they will still waste their time struggling in courses that they cannot pass, and will still have poor employment prospects after they drop out. Instead of further subsidizing the programs that are currently failing these students, it would make more sense to try to develop some sort of new postsecondary job-training program that might have better results for students who are unlikely to complete a college degree.  But in a country where two-thirds of the population is already going to college, there aren’t many promising students left to find.  Few students in the bottom third of academic performers are capable of passing even introductory college classes.

5. It may be wiser for students of lower academic achievement to be trained in a tech school. For example, the auto industry needs an estimated 76,000 auto mechanics each year.  The National Auto Dealers Association graduates 37,000 service technicians annually.  Starting salary for an auto mechanic out of tech school is $61,000, higher than that of a college graduate majoring in business.  Auto technicians can go on to earn over $100,000 a year with continuing education paid for by auto manufacturers.

There are many opportunities to earn more money without a college degree.  The Wall Street Journal published a report showing plumbers often achieve a higher income than college grads. Read the rest of this entry »