A compromise has been reached on the student loan interest rate, according to the Associated Press. We'll see how it goes, but we're happy to be able to report that compromise is still possible in this Congress.
This debate touches on a bigger problem, however: Four-year university tuition is too high, especially at private colleges. Maybe the federal government, which is helping to pay for it, can use its leverage to lower the price tag.
It's like health care. The cost has increased so rapidly that the government's share of aid is becoming a budget buster. With health care, though, the federal government is trying to reduce runaway costs at both private and public health facilities. It's messy, but it's an attempt.
Like health care, there's no getting around that fact that university education is going to be expensive. It's very valuable, and it has substantial costs.
Nevertheless, the cost of a university education has more than doubled over the last 20 years, far outpacing inflation. It doesn't seem like that extra money has been used to improve the quality of the academics. What are the chances, for instance, that a class is taught by a graduate student or adjunct rather than a professor? It's more likely now than 20 years ago, judging by what we've seen, heard and read.
We're focusing here on private colleges. The biggest problem with federal student loans is that they relieve private schools of the need to compete price-wise. To a certain degree, these schools can charge what they want, and the federal loan programs can make sure they get it.
This is, essentially, a huge public subsidy of private education - while the public also pays for a parallel set of public universities.
State colleges are the ones the people as a whole have designated as affordable and have chosen to subsidize with our tax dollars. There are a wide range of them for students to choose from, in state and out of state. They're still expensive, but the public can weigh in on that somewhat through elected officials.
Many private colleges have plenty of money from endowments, alumni and television sports contracts, but they don't use much of that to lower tuition and offer scholarships. Instead, they rely on public loan programs.
What if the federal government said, "We won't loan students money to go to any college with tuition higher than X"?
What if it also required each school to offer a certain proportion of academic scholarships - serious ones, not just a couple thousand dollars - before issuing student loans there? Such scholarships were once widely known as a ladder to success; they also were an incentive for high schoolers to work harder, a brass ring to reach for. Now they're mostly gone. It seems like almost all merit-based scholarships today are for athletics. Scholars must rely instead on need-based aid, mostly loans they'll have to pay back for most of their adult lives.
If the government did these things, our own Paul Smith's College might come out better than most. Its tuition for 2013-14 is $21,930 - high, but much less than many private schools. Columbia in New York City, the most expensive undergraduate college in 2012-13, charged $47,246, according to U.S. News & World Report. The top nine charged more than $45,000.
There's a lot of fat for such schools to trim, if it comes to that.
Start with presidents. Dozens of U.S. college presidents make seven-figure salaries. In 2011, the Chronicle of Higher Education reported that Mountain State University in West Virginia paid its president a whopping 3.5 percent of the entire college budget - $1,843,746. Even public universities pay their presidents a median salary of more than $400,000, according to the Chronicle.
This is outrageous, given that student debt is such a national problem.
Many schools also spend way too much on sports and buildings, which lure more students and more money, taking advantage of recruits and alumni donors being awed by beautiful architecture and winning teams. Unfortunately, it's often hard for prospective students to see much of how well a school actually educates until after they've taken out a loan.
It might be a good thing for certain kinds of private colleges to find themselves ineligible for federal student loans. We suspect they'd solve the problem quickly enough on their own.