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President Obama’s Education Department is facing some tough choices right now when it comes to federal student loan programs. The decisions they make will reveal their true level of dedication to all types of students, regardless of their age, socio-economic status or chosen career path.
So far, politically-appointed officials at the U.S. Department of Education appear to be leaning toward favoring students who attend traditional public and non-profit colleges and universities.
They are striving to make a case for limiting loans to students who attend private-sector schools — those schools that are run like a business, compete in the post-secondary education marketplace, and make a profit.
A college or university that primarily serves working-class adults is, apparently, somehow illegitimate to these liberals. Their criticism of these schools, and therefore of the students who attend them, is weak at best, leading me to believe that the foundation of the Obama appointee’s bias is elitism, not concern for federal student loan programs.
Masquerading as fiscally-responsible public servants, Obama Education Department officials are arguing that students at private-sector institutions have a higher level of debt and a higher rate of default on their student loans. In other words, they feel that these students are not good financial risks for the government.
Putting aside the fact that the Obama appointee’s faux-concern for the nation’s fiscal health doesn’t pass the laugh test, let’s take a look at whether their arguments are fair.
First, the higher level of student debt at private-sector institutions needs to be put in perspective. Private institutions are not subsidized by the taxpayers like their public and nonprofit counterparts, so the cost of tuition is “full price.”
Students pay this higher tuition cost themselves, so logically they will need more loans than students at subsidized schools. Since subsidies aren’t loans – they are gifts – can the Education Department really say that students at proprietary schools are somehow more of burden on taxpayers than their counterparts at subsidized schools? It’s not a fair argument when you look at the big picture.
Second, higher default rates by graduates of private-sector schools may be a reality, but they are certainly not a reason to cut off lending altogether. What an extreme decision that would be!
The government, when loaning money, is no different than a mortgage lender: it is their responsibility to determine the creditworthiness of any given student who is applying for a loan.
Again, some perspective is needed. Can you imagine the federal government implying that an Ivy League school was responsible for one of their graduates defaulting on a student loan?
And then denying all Ivy-League enrollees any student aid in the future? That’s exactly what they would be doing if they deny loans to students who want to enroll at career-oriented private-sector schools.
The higher loan default rates of private-sector institutions are actually linked directly to the demographics of the students that private-sector schools serve – mostly minority, many older, working full-time, etc.
Are Education Department officials ready to explain why they think that federal loans shouldn’t be given to these demographic groups? Are they ready to say that they don’t believe in a progressive approach to lending?
Education improves the global competitiveness of the U.S. and the social mobility of graduates. In short, it is a good investment. Limiting access to loans for certain types of students, therefore, smacks strongly of elitism.
The Obama administration needs to decide whether they will only support a certain type of student, or whether they will treat all students, and all accredited schools, as truly equal.
Ken Blackwell is the former Secretary of State of Ohio. He is a director of the Club for Growth and National Taxpayers Association
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