If there’s a more comprehensively corrupt industry than the education industry, it has not yet revealed itself. That’s wise. The education industry does not like competition.
At least la cosa nostra makes no pretensions about its nefarious operations. But the education industry shrouds itself with a saintly aura of beneficence and public good, which obscures in plain view all sorts of perfidy: clearly collusive practices, including kickbacks and bribery (teachers unions openly buy politicians on a scale that would make the Godfather blush); labor union strong-arming; and turning school districts into territorial rackets, where all competition is muscled out, and children are treated as chattel.
But of all the treachery, of all the sins of our pedagogic caporegimes, none is as pernicious, and lucrative, as student loans, which is basically loan sharking with impunity (“I need, Don Corleone, all of those politicians that you carry around in your pocket, like so many nickels and dimes”), and on a level to which even the most ambitious gangsters, and venal white-collar criminals, could not aspire. The largest financial crime in history was not Bernie Madoff’s $17 billion Ponzi scheme. It’s the nearly $2 trillion in predatory loans that American kids have been saddled with for the privilege of attaining that which should not require privilege.
How the heck Wall Street was accused of predatory lending, but somehow the education industry has gotten away with pushing mortgage-sized loans on borrowers with no credit, income, job history, or collateral, while at the same time receiving taxpayer money as they jacked up tuitions year after year, is absolutely scandalous. At least, it should be. The entire purpose of higher education is to get ahead. Instead, generations of American kids are starting out with crushing debt that they won’t be able to pay off for decades, if ever. But what choice do they have? A college degree is a condition antecedent to any employment beyond trades and menial labor. It’s basically a work visa, and exploiting this need is nothing short of extortion.
And let us be clear: the scandal isn’t just the debt. That’s the crime. The scandal is the corruption, and the corruption is both that the schools are allowed to get away with this, and worse, that now taxpayers have to pay the restitution for the crimes the education industry committed.
That corruption is the source of the frustration for those of us who bemoaned President Biden’s announcement that he was unilaterally forgiving billions of dollars in student loan debt that was not his to forgive. Our jeremiad was not about kids getting some relief from their golden chains. We are not a cruel people. Indenturing generations of young people was not something anyone celebrated. But neither can we celebrate taxpayers footing the bill instead of the schools, who caused the problem, and profited from it, and still have the money.
President Biden’s “plan” (or whatever other euphemism you want to apply to this half-baked election season vote buying), will cost around $600 billion, with an average cost to taxpayers of around $2500 each. Yet it involves no regulation on how much schools which accept federally subsidized loans, and other federal grant money, can charge their students. And there is no requirement that the schools contribute so much as a nickel to the problem they exclusively caused so that they could live large, and pay themselves handsome salaries (often over $1 million), and give themselves plenty of perks, and hire armies of administrators (there are more college administrators than faculty in the United States), and build football stadiums that rival those of the NFL, and corporate campuses that exceed those of Silicon Valley tech giants, and, of course, hoard money.
That’s what happens when laws are made by one man’s edict, rather than Congressional consensus and compromise: the problem doesn’t get addressed and an inequitable result follows, because the people excluded from the process aren’t able to advance and protect their own interests, so they’re the ones who get stuck with the bill.
In short, the problem of egregious college costs is one that should be prioritized. Instead, it’s being subsidized. And by the wrong people.
There are 139 American colleges and universities with endowments over $1 billion, which together total $731 billion. That’s up from $219 billion in 2005, which itself is massively excessive. And that does not even include the endowments of hundreds of other schools with less than $1 billion each. These are the people who should be footing the bill. And it’s not just because they have money, it’s because they have the very money that was taken from the students. Asking the schools to contribute at least something to this problem is no different than asking a burglar to return some of the furniture they stole.
The schools tend to argue that the endowments generate income that provides operating money. That’s nice! I’m sure we’d all like to accumulate immense stockpiles of wealth and then just sit on it like Smaug, while we live off the interest and dividends. But we have to pay taxes on our income along the way as we accumulate that money, and then as it generates income for us, and the schools should too. If Washington really wants a wealth tax, start with these people.
Instead, the only tax these schools are subject to is a paltry 1.4% excise tax on their endowment income (not the total value, just the wealth generated from it), which only applies to fifty or so of the wealthiest schools, which they don’t even notice. Who else gets to pay only 1.4% tax on their income? Stanford, for example, paid about $43 million in excise taxes in 2019, which sounds like a lot, but it’s roughly just one-tenth of one percent of its $40 billion endowment, and none of it goes to student loan repayments.
This is nonsense. Nobody should be talking about wealth taxes and billionaires paying their fair share, until these schools are compelled to do so first.
Don’t expect that to happen anytime soon. Democrats don’t want to solve the problem because the universities are the best thing Democrats have going for them. More than the media, more than Hollywood, it’s the education system which carries the water for the cultural left. There is near left-leaning uniformity among American faculty, administration, and curricula, and through this gauntlet almost all American students must pass.
But it’s not just about indoctrination. Democrats receive an extreme amount of political and financial support from the universities. Since 2002, Democrats haven’t received under 70 percent of education industry donations in any year. In 2018, the education industry gave more than $64.5 million to Democrats and just $7.8 million to Republicans (i.e., roughly 90% for Democrats). In 2020, it was $281 million to Democrats, and about $31 million to Republicans.
Of the top 20 politicians to receive political donations from the education industry this year, all 20 are Democrats, ranging from Congressman Tom Malinowski ($263,000), to Senator Raphael Warnock ($2,614,515). Of the top 20 senators to receive education lobby money, all but three are Democrats. In 2020 alone, Bernie Sanders received close to $20 million, and Elizabeth Warren nearly $12 million. Eleven senators received at least $1.4 million, all of whom were Democrats. Joe Biden received $65 million. Don’t expect much leadership from that group.
Republicans are not without sin in this, but theirs is more the sin of omission: being generally and characteristically devoid of thoughtful solutions, not caring, and standing idly by while their own voters suffer. What else is new?
So forgive us if those of us not benefiting from this magnanimous giveaway of our money don’t exult at this latest costly non-solution to a problem that we did not create, which this windfall will do nothing to address, and which nobody in office seems to care about fixing. Now please, let’s return our focus to some other diversion, such as the national inflation problem which we are also trying to fix (not really) by spending more money, and which, at 8.5%, is a drop in the bucket compared to the 750% inflation in college tuitions which has occurred since 1963, and which will continue to occur until the schools are held accountable.