Obama has the wrong answer to student loan crisis
Have you seen Obama’s latest response to the student debt crisis (hat tip Ernest Davis)? He’s going to rank colleges based on some criteria to be named later to decide whether a school deserves federal loans and grants. It’s a great example of a mathematical model solving the wrong problem.
Now, I’m not saying there aren’t nasty leeches who are currently gaming the federal loan system. For example, take the University of Phoenix. It’s not a college system, it’s a business which extracts federal and private loan money from unsuspecting people who want desperately to get a good job some day. And I get why Obama might want to put an end to that gaming, and declare the University of Phoenix and its scummy competitors unfit for federal loans. I get it.
But unfortunately it won’t fix the problem. Because the real problem is the federal loan system in the first place, which has grown a shitton since I was in school:
and in the meantime, our state and private schools are getting more and more expensive relative to the available grants:
And state funding for public schools has decreased while tuition has increased especially since the financial crisis:
The bottomline is that we – and especially our children – need more state school funding much more than we need a ranking algorithm. The best way to bring down tuition rates at private schools is to give them competition at good state schools.