Investing in Public Education
One way to do that is to bring price competition back to the higher education marketplace by investing more in public universities. States are slashing funding for higher education, forcing schools to plug the holes by boosting tuition. Re-funding public universities will make them less dependent on tuition for operating and capital costs -- and with that more able to hold the line on tuition hikes; creating a more competitive environment.
The most effective way to tame student debt is a simple supply and demand approach. We need to slow the flow of money. Low interest rates fueled the mortgage boom. Cheap student loans are "funding" the indentured scholarship of lifelong student loan debt. Let schools use other sources of money, including endowments and alumni donations, to compete for market share by building lavish swimming pools or expanding into new disciplines.
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Rep. Petri should be commended for advancing an idea that has already proven to be effective in the UK and elsewhere. The Commonwealth has another practice that would help our public universities reset the floor on college prices: national benchmarks that qualify students for a publicly-funded college education. In the absence of that sort of paradigm shift, we should at least consider going to the root of the problem. It's not about debt collectors and new creative ways to keep debt-saddled graduates from committing suicide. It's about addressing the conditions that made debt collectors and all the rest a reality.
Pretending the laws of supply and demand don't apply to college education is a recipe for disaster. The marketplace is wiser than the boardroom (and makes Washington look positively brain dead). It's time to return student loans to the discipline of the free market. Only then can tomorrow's graduates enjoy the futures they've been promised.
Adam Levin is chairman and cofounder of Credit.com and Identity Theft 911. His experience as former director of the New Jersey Division of Consumer Affairs gives him unique insight into consumer privacy, legislation and financial advocacy. He is a nationally recognized expert on identity theft and credit.