A Libertarian Take on School Loans & International Students

This is part of a series I’m testing out called: The Propaganda Report, Your MSM Companion. Here’s what it’s about: I read the WSJ to keep up with the official narrative–if we know what they’re trying to feed us, we might be able to figure out why. I have concluded that nothing in The Wall Street Journal, which I consider to be the “conservative” newspaper of record, is put there simply to inform. It is to misinform in order to serve an agenda or to spin real information that cannot be ignored. With that said, I thought I would take an article or related articles from The Journal (and occasionally elsewhere) every day and try to start a conversation. The format: article title in bold linked to the online version of the article, subtitle in italics followed by excerpts from the article as block quotes, then my take.

student-loans1

Heavy Recruitment of Chinese Students Sows Discord on U.S. Campuses
Colleges need international students in part for the tuition revenue, but language and cultural barriers make assimilation a struggle

…A decade ago, facing falling state financial support, Oregon State decided it needed to attract more students from outside the U.S. State appropriations per full-time college student have fallen 45% in the past five years.

In an effort to jump start international enrollment, Oregon State launched an English-immersion program in partnership with a private British-based firm called INTO, which accepts students with limited English skills and aims to prepare them for regular course work.

The program is housed in a $52 million state-of-the-art facility, paid for by Oregon State, which boasts a store stocked with organic and Asian food products, eco-friendly plumbing and solar panels on the roof.

“Our primary goal was to double the number of international students in five years,” says Chris A. Bell, an engineering professor who was on the team that launched the INTO partnership. “We had blown through that in four.”

Oregon State’s international population surpassed 3,300 last fall, up from 988 in 2008, the year before INTO began operating. The revenue has enabled the university to add 300 tenure-track professors and expand overall enrollment to nearly 29,000 from about 19,000 during the same period.

One concentration, the school’s accountancy masters of business, now has more Chinese than American students, says senior professor Roger Graham Jr. That raises questions, he says, such as, “Do I stick with the original learning objectives or modify them” to suit the needs of Chinese students?…

Whenever I discuss immigration issues, I have to reiterate that I am a libertarian in favor of a free society. In a free society, market forces work to regulate employment, migrant flows, skills, etc., and the right of individuals to engage in arms’ length transactions include recognition of their rights to work and travel. (For my views on immigration in an unfree society such as ours, click here.) All that said, in discussing this article, I’m not offering a judgment call on what is right or wrong, I merely aim to point out the government policies that are resulting in this phenomenon and how a free market would result in a very different outcome….

Universities are engaging in active recruitment of international students and investing hundreds of millions of dollars in that effort in order to increase tuition income by charging international students higher rates. This article describes this practice and some of the difficulties that have arisen as a result. My libertarian alternative to these problems is simple: Eliminate government subsidies for higher education.

If state and federal governments stopped providing grants and subsidizing school loans, college students would only be able to get loans from private institutions if their chosen major is calculated to generate enough income to allow the student to repay the debt. This would eliminate the moral hazard of encouraging students to take on school debt (debt that cannot be forgiven even in bankruptcy), without any feedback mechanism as to whether or not their commitment makes financial sense and would begin to reverse our looming student debt crisis. Eliminating college subsidies would also allow college tuition to become much more affordable, eliminating the artificial demand that has resulted in exorbitant tuition-inflation.

The pressure on colleges to generate out-sized tuition is no doubt a result of bloated budgets which have resulted from subsidized demand for college and from government decision-makers who know that cutting their budgets cuts their power. Ending government subsidies for higher education would result in a shake-out as colleges downsized or shuttered in response to reduced demand, but after the market adjusted there would be less if any pressure on colleges to recruit international students and less if any demand by industry for H1B1 visas for higher-skilled jobs as American students choose smarter majors in order to qualify for private loans.

As marginal students for whom college debt does not make sense stopped falling for the moral hazard of subsidized school loans, there would be more Americans available to take the jobs that currently draw in lower-skilled immigrants. As it stands, over-educated under-performers are better off taking government jobs or non-profit work to get government rescue packages (see article below), but without the burden of ill-conceived loans, they could have followed market signals to their highest and best occupations, and be debt-free already.

As an added free market boon, if we used the savings of ending the college subsidy program to eliminate corporate taxes (the source of much government-bestowed privilege and cronyism anyway), new firms would flock to the US and many would pay to educate employees for higher-skilled jobs, a practice that was common here a few decades ago. This would help reduce American unemployment as would allowing market forces to reassert themselves in students’ decisions on whether or not to go on to college and if so, what majors to choose.

Finally, this report on the challenges presented by a government-fostered international student body reveals the fallacy that a wall between the US and Mexico is a solution to citizens’ fears about immigration. As Germans and Swedes, for example, are seeing, conflicts over immigration do not concern primarily those who enter illegally despite governments’ best efforts, it’s government immigration policy overall. The same is true here. As this Journal article foreshadows, middle class American parents will find out more and more, that their children will not so much face competition from illegal immigrants taking low-skilled jobs (for more on the surprising policy sources of that phenomenon, click here), but from legal immigrants benefiting from an ever-weakening dollar who will compete for enrollment at good schools and higher-skilled jobs upon graduation. As a libertarian, I welcome free market competition anytime, anywhere; likewise as a libertarian, I object to government policy that distorts markets and incentives, as is the case with college subsidies.

Student-Loan Delinquencies Decline
Number of Americans at least a month behind on payments falls, but many don’t see debt load diminishing

The number of Americans at least a month behind on their student-loan payments is declining, reversing a trend the Obama administration has called a threat to the nation’s economic health.

About one in five Americans, 19.7%, who were out of school and required to be making payments on federal student loans, were at least 31 days behind as of Dec. 31, the Education Department said Thursday.

That figure, which covered only loans made directly by the government, the most common type of student loan, was down from a delinquency rate of 22.2% a year earlier.

But don’t let the headline fool you. The numbers are looking up primarily because the government is spending yet more money to fix the problem it had caused when it lured millions of people into college debt who would be better off without it and drove college costs sky high with indiscriminate subsidies.

Delinquencies remain exceptionally high compared with any other form of household credit, after surging during the recession and through much of the recovery. But the Obama administration touted the latest drop as a sign its multiyear campaign to help troubled borrowers with debt-relief programs was working, even though the programs cost taxpayers….

The plans cost taxpayers because they include a provision to forgive student debt after a period of payments. For example, borrowers who make payments under the plans while working in government or nonprofit jobs can have any remaining balance forgiven after 10 years of payments. Those in the private sector can have balances forgiven in 20 to 25 years. Any forgiven balances are covered by taxpayers.

Update (March 23, 2016): Just making it worse…
Colleges Brace for Overtime Overhaul
Many schools say rule is at odds with Obama goal of making higher education affordable

This entry was posted in education, immigration, The Propaganda Report, Uncategorized. Bookmark the permalink.

3 Responses to A Libertarian Take on School Loans & International Students

  1. Norman says:

    Monica Perez has one problem …. She is smarter then the people who make their living in politics. Humans biggest problem – freedom. B

  2. bradrad says:

    How many products does the government make that could survive competition in the open marketplace? Certainly not education. Imagine today’s public schoolteacher, putting an ad in the paper for what she does. She must compete now with millions of other more competent teachers, and if her product is useless or flawed, she will not have any income. Those that do well will be those that are useful and productive. All the teachers that remain in the field will be responsive to the customers they serve, or they will have to go clean toilets or something. A happier outcome could not be imagined. And all you need to do to make that happen is to stop paying for a useless product.

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