Education Secretary Betsy DeVos caved on Thursday, agreeing to cancel $150 million in student loan debt in line with an Obama-era policy she previously tried to fight off. The specific debtors to whom DeVos finally succumbed qualified for “closed school” loan discharges, or those who attended failed, fraudulent private, for-profit colleges. While these debts were attributed to a specific, dying breed of colleges, the greater effect of student loans across colleges, public and private, nonprofit and for-profit, remains.
Federal financial aid and student loans in particular will continue to act as a piggy bank for bloated campus bureaucracies, and their tuition pricing can continue to spiral out of control.
The Bennett hypothesis (the theory that the less conditional and controlled access to funding directly causes colleges to further hike tuition and fees) has proven itself in abundance in the decades since the term was first coined by former Education Secretary William Bennett. The theory goes that as long as colleges know the taxpayer piggy bank will foot the bill, they'll continue to increase prices — not for student benefit but to essentially widen their profit margins, even at nominally "nonprofit" institutions.
With DeVos in office, fiscal conservatives have been hopeful that she'd crack down on the college cartel and try to halt the student loan bubble's economically terrifying growth.
Perhaps she still will......As economist Andrew Gillen puts the effect of student loans matching the demands of price-makers, rendering student demand for college more inelastic as they think they can get unlimited funds to foot the bill............the federal government doesn't require colleges to have any real skin in the game. .............To Read More....
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