The Government Should Stop Throwing Money at My Problems

By Hannah Thoreson

The scene is Friday night in a college apartment.  I’m scrambling to finish one of those online multiple guess assignments, inconveniently due at 11:59 pm.  In stumble a couple of mildly inebriated students, who debate how to best spend the remainder of the night.  One of them suggests that they play a board game, and a box containing that rainy day staple, LIFE, is dusted off.

“I remember when I was a kid, you went to college in this game and it meant you got the $100,000 salary card, the best house, and a career as a rockstar.  Now it means you start off 50 or 60 thousand dollars in debt with no job,” somebody grumbles.

Unfortunately, it seems that most of my classmates begin their studies with the expectation of the first set of LIFE outcomes that will result from attending college, but end with the second set.  This year, for the first time, the value of the nation’s student loan debts exceeds the amount of outstanding credit card debt.  And as surely as the sun rises in the east and sets in the west, the little plastic bandwagon is filling up with pink and blue pegs and lurching ominously towards the “They Should Do Something (collect one LIFE tile!)” space.  However, if the Obama Administration has its way, as in many other instances, ‘they’ will do the wrong thing.

The government should stop blindly infusing money into the higher ed system.  It is causing unintended consequences of a severity that cannot be underestimated.

In the short term, every time the government raises the federal Pell grant allowance or the amount of federal loan money that a given student is eligible for, it has the obvious effect of pumping more money into the system.  Ladies and gentlemen, I didn’t even take Econ 101 and I can explain what’s coming next a lot more accurately than most people either can or care to admit:  when you increase the supply of money in any given economic system, prices also increase.  This is called “inflation”.

Conventional wisdom says that the cost of a university education has risen faster than the overall rate of inflation.  But has it really?  I suspect that if you look at the higher education market as a closed system, the cost of a degree has only risen to meet with the absurd amount of capital that has flooded into the system from the government and private lending institutions over the past 20 years.  So as much as I would like to submit to the traditional intramural sport of whining or maybe even taking to the streets in an effort to get the government to donate more of your tax dollars towards my quest for a college degree, instead I am going to say it once and for all:  the government should stop throwing money at my problems.

The government has created a vicious cycle in which more grant and loan money is pumped into the system and educational institutions raise prices in response.  This only increases the demand for posters featuring politicians with Hitler moustaches and calls for the government to add more funds to the system again.

What’s worse is that I suspect the rising costs and rising debts are also creating a long-term problem that no one has really considered yet.  If today’s college students graduate with student loan burdens that require them to shell out all of what should be their discretionary income to pay off their debts, we are squandering future gains in productivity and entrepreneurship.  Throwing money into an endless black hole of interest payments on intellectual capital a person has already obtained accomplishes nothing and does not put money back into the economy of the future.  People who are carrying around tens of thousands of dollars in student loan debt will be unwilling to take the risks involved in starting businesses.  The government’s effort to subsidize the production of college graduates is actually hurting our long term ability to create jobs for graduates!

The government must immediately stop feeding more money into the higher education system.  It is causing the problem people are demanding that they “solve”, as well as threatening to impair future economic growth.  The solution is obvious:  starve the beast.  Force the universities to live within their means instead of constantly asking the government for more money and raising tuition.  Since that probably won’t actually happen, I advise anybody reading this who is currently in college to take the maximum number of allowable credits per semester.  The more time we spend on the Lose-a-Turn side of the board, the more of both our individual and collective future prosperity is being squandered in the name of printing ourselves up degrees.

Hannah Thoreson is a physics student at Arizona State University.  She is also founder and president of ASU Students for Daniels.