On the campaign trail last week in New Hampshire, Hillary Clinton rolled out her plan to make college more affordable. She said: “College is supposed to help people achieve their dreams. But more and more, paying for college actually pushes those dreams further and further out of reach. That is a betrayal of everything college is supposed to represent.”
Clinton Doesn’t Realize How Colleges Spend Money
Like many liberal policies, it sounds nice. Who wouldn’t want college to be more affordable? But a closer look proves it’s anything but sound. On Friday, via his CyberDust app, billionaire investor and Shark Tank superstar Mark Cuban tore her plan apart calling it “backwards” and offering his own solutions which are, unsurprisingly, free-market based.
[Hillary’s plan] stands a better chance of increasing the amount of money students owe than decreasing it. How? Just as easy money led to the real estate bubble a few years ago, the easier it is to borrow money for college the easier it is for colleges to raise tuition. Tuition keeps going up because no matter how high they raise it, students can still borrow more to pay for it.
In fact, Clinton’s plan is so inept in its ability to understand how college funding even operates, and so atrociously far from providing any adequate solutions to a complex problem, that it sounds like she was channeling the Simpson’s: “If something’s hard to do, it’s just not worth doing.”
Cuban continued with Clinton’s imprudent plan:
It doesn’t require any change in how a school receiving funds operates. They can still waste money. A lot of it. Competition for new students is fierce. So schools spend billions on perks they think will attract students and donors. They build new buildings, gyms, food courts, dorms, anything that they think provides drive up curb appeal to prospective students. To manage all of the above they hire more and more expensive administrative positions. All of which do nothing to improve education. Instead they just provide justification to increase tuition.If you meet a rich person who gave money to build a new building at your Alma mater, don’t thank them. Explain that the maintenance of that structure and the people who manage it are going to increase tuition for future generations.
He makes an excellent point. The average liberal arts professor’s salary is $83,623. A 2011 Washington Monthly piece reported: “A comprehensive study published by the Delta Cost Project in 2010 reported that between 1998 and 2008, America’s private colleges increased spending on instruction by 22 percent while increasing spending on administration and staff support by 36 percent.”
But the average cost of a liberal arts education is about $26,000 annually, with elite colleges demanding something closer to $50,000 annually. So Clinton wants to make college affordable without looking at how poorly colleges are spending their money, and thereby hiking up costs for the student? That’s ludicrous.
A College Degree Isn’t For Everyone
Part of Clinton’s plan is to hold colleges accountable for students not paying back their loans. But Cuban points out a college degree simply isn’t for everyone. “Not everyone should be a STEM student or business major. Not every company wants to hire only STEM and business graduates. There is a market for smart people with different perspectives. College has gotten so expensive and the amount of debt on students so crushing that schools are already seeing a dramatic decline in liberal arts students and in the number of liberal arts majors offered.”
Instead of motivating kids to payback their loans, Clinton’s plan might actually lead to the decline in liberal arts enrollment, since, as Cuban writes: “the risk of the university being on the hook to repay those students loans as required by the Clinton plan would be much higher.” In essence, “The Clinton plan could push liberal arts colleges and programs to the point of extinction.”
Clinton Can’t Do Math
Finally, Clinton, in a show of ignorance about of the free market that seemed previously impossible, says students will never have to pay more than 10 percent of what they make and all the loans will be forgiven after 20 years.
Cuban rips this logic to shreds and applies the same principle to the real estate market. “You can buy any house you want and you will never have to pay more than 10 percent of your income and after 20 years the mortgage will be forgiven. If it’s under water before then, the person who sold you the house will pick up part of the cost.” Would you spend more on your next house?
Mrs. Clinton: Your plan is an epic failure.
Free Market Solutions Will Make Colleges More Affordable
What will make college affordable? Cuban has a few ideas. It will be interesting to see if any GOP candidates mirror these free market-based suggestions:
The problems with college is how colleges are run. It’s not like things can’t change. I work with Paul Quinn in Dallas, between work study and Pell Grants the net cost to students is close to zero. How did they change the game? They started using open source textbooks so kids didn’t pay outrageous prices for books. They run their school like a business. They innovate. They see their cost model as a competitive advantage and it is. They are the model for the future.
Cuban’s most valuable piece of advice to a candidate trying to figure out how to make college more affordable:
“I would like to see a limit on the amount of private loans a parent or relative can take out or co-sign per year per student. I’m open to anything that reduces the amount of cash available to students to pay for school. That won’t reduce the number of students who will go to college. It will reduce the amount of money they have to pay to go as colleges reduce tuitions to be more competitive.”
The Clinton plan won’t work because it’s a progressive, liberal, quasi-socialist plan applied to something that should operate like a business within a free market. When the market is allowed to operate freely and competitively, it always works fluidly. When a business operating within that structure competes and innovates, everyone utilizing that business–whether it’s a college or a coffee shop–wins.