The Education Racket
In this populist age, why are both parties giving education windfalls to the wealthy?
It’s not hard to understand why politicians promise to sock it to the rich and powerful. It’s basic math. If you can villainize the top 10 percent, or better yet the top 1 percent, that leaves lots of voters potentially on your side.
What’s harder to understand is why both parties are currently pushing to send taxpayer dollars to the very same wealthy elites at a time when populism and concerns for working-class Americans supposedly reign. Yet when it comes to education, that’s precisely what both Democrats and Republicans are doing.
In the case of the Democrats, I refer to President Biden‘s universal student loan forgiveness gambits, including his latest major proposal, announced in April, which continues to go forward as legal challenges to parts of it work their way through the courts. With Republicans, it comes in the form of “universal school choice.”
There are versions of these ideas that make sound policy as well as good politics: targeting benefits narrowly on those who need extra help.
In the case of student loans, that means Americans who were defrauded by predatory for-profit colleges, usually when quite young, or who are saddled with sky-high interest rates or have been paying for long periods of time with lower incomes. Biden is indeed aiding such folks with targeted help—which is worthy and worthwhile.
What’s much harder to defend, though, is universal loan forgiveness. What’s the argument for wiping out the debts of the wealthiest Americans, including those who attended elite universities and now make buckets? Doctors, lawyers, MBA grads—these folks don’t need our assistance. Yet Biden would give it to them anyway. According to the Wall Street Journal, with his April proposal, “an estimated 750,000 borrowers with an average of $312,977 household income will save on average of $25,541 from a provision that eliminates debt after 20 years.”
Such a windfall wastes money and rewards irresponsible behavior. Why not forgive their mortgages, too? And how to explain this to working-class Americans with debts of their own, such as loans to start their small businesses, or monthly payments for the truck that gets them to the factory? Nobody is offering to transfer those debts to Uncle Sam’s credit card.
Republicans are no better. They’ve historically pitched school choice as a way to level the playing field by providing opportunity to the most disadvantaged kids in America. Giving poor black and Hispanic children a chance to escape their flailing neighborhood public schools and attend their local Catholic schools instead is a praiseworthy idea that appeals across the ideological spectrum.
Now, though, many in the school choice movement want to ditch its focus on equalizing opportunity, and instead make government subsidies available to all families. As with the Democrats’ student loan schemes, the key word is “universal.” So we see Arizona handing out upwards of $8,000 per child per year to even the wealthiest parents, many of whom already send their children to fancy private schools at their own expense. A family with two or three children is looking at hundreds of thousands of dollars in taxpayer subsidies over the course of their kids’ K-12 experience. Some of these plans, structured as “education savings accounts” also allow families to spend public money on practically anything that might be “educational,” from trampolines to visits to amusement parks. North Carolina, meanwhile, is in the midst of a debate about whether to extend school vouchers to families making more than $260,000 a year.
For both student loan forgiveness and universal school choice, it’s obvious what the beneficiaries get out of the deal: free government cash. No one is going to turn that down. But these are relatively small groups of Americans. Meanwhile, the rest of us foot the bill. It’s said that the beneficiaries will notice and be grateful while those who pay the bills will barely be aware.
But true populists—and most economists—understand that “windfalls for the rich” are ultimate losers at the polls as well as in the nation’s account books. We should get back to targeting finite public resources towards the Americans who need the most help.
Michael J. Petrilli is president of the Thomas B. Fordham Institute and a visiting fellow at the Hoover Institution.
I have major problems with handouts to irresponsible people and people who are making over 250,000 per year no matter what excuse is given. Why? I have and will always stay at home with my disabled son. He is 28. Anyone think I've been paid to do that? Nope. And, that's okay because I'd do it either way, but it hardly seems "fair." Here's another, my husband and I, on 1 single income raised both our boys at home. We scripted and saved and did without for YEARS and we paid for our youngest son's first Bachelor's in what wasn't covered by scholarships (it was around 60,000) and we paid it off the year he graduated in 2020. Why? Because we wanted him to have a better start than we were given. All those years of overtime and sacrifice were worth it and I'd do it again. However, there's nothing fair involved.
Education has managed to become synonymous with success, and those without considerable higher education are shamed in our society. It is embarrassing to work in a factory or in a trade. I recently moved to a new city and was thrilled to find a very smart plumber who can solve the complex problems of renovating an older home, but these folks are few and far between. Meanwhile we keep the doors closed to construction workers from other countries while not producing new workers or respecting those who choose those careers. Same with factory work: we need smart people (not necessarily educated, but SMART) to run the machines that make the goods we need right here in the US. It is all about branding and messaging! The Democratic Party's emphasis on higher education and punditry has alienated those who work at something other than a computer. It's a tragedy.