Obama’s College Scorecard is a Giant Student Welfare Scheme

University presidents are deeply disturbed that not only is
President Obama not backing off from his proposal to create a federal scorecard to rate colleges, but
one of his deputies actually said that this was no more difficult
than “rating a blender.” Educating young minds is a such a lofty
thing, you know, that comparing it to selling kitchen appliances
not just vulgar — it’s blasphemous.

But, I note, in my Washington Examiner column this
morning, the tears of university presidents are the only good thing
that’ll come out of the proposed scorecard.  So enjoy them
while you can. Because once they’ve dried their eyes, they’ll start
seeing all kinds of opportunities for shaking down taxpayers.

For starters, the scorecard, wants to tie federal aid — all $150
billion of it — to the ratings colleges get on “affordability and
accessibility” for underserved populations. “This sounds great, but

in reality it means that existing federal aid will beget more
federal aid,” I note.

But this is not the only way that this scorecard will become a
giant welfare scheme for universities and students. One of the
little reported provisions in it is that it wants to do expand a
student loan repayment program called “Pay As You Earn.”  This
program caps the loan repayment of students at 10 percent of their
income for 20 years after which the remainder is written off. (For
professions such as nursing it takes only 10 years to get the write
off.)  Currently, only the 2 million or so avail of this
program. The
president wants to extend it to all 37 million federal loan
borrowers, including many new borrowers. I note:

Setting aside the fiscal insanity of expanding an entitlement
at a time when the country is already groaning under debts and
deficits, what incentive would students have to be careful shoppers
if they know that Uncle Sam will eventually write off all their
debts?

One reason college costs have grown
27 percent beyond inflation
over the last five years is that parents are picking up an ever
smaller share of their kids’ college costs and the government (and
other) grants ever more,
according to a report last year by Sallie Mae, a government-sponsored
enterprise that manages student debt. Loan forgiveness will
shift this equation even more toward the government, giving
students even less reason to seek — and colleges less reason to
become — more cost-effective institutions.

But colleges can go really creative in legally scamming
taxpayers on behalf of their students through this program.
Consider this story about what Georgetown University’s law school
has been doing that didn’t make it into the final column for space
reasons.

The New America Foundation, no right-wing nut-bag critic of
generous welfare policies, exposed that Georgetown was using this
program to pick up the entire law school tab for its students — not
just some portion that they couldn’t payback. This is how it works:
The program forgives loans after 10 years for law graduates making
less than $75,000 in government or non-profit jobs. Until then,
however, they have to pay 10 percent of their income toward the
loan.

So Georgetown calculates what 10 percent of $75,000 or so would
add up to over 10 years. It hikes students’ tuition by that amount
because that’s what they’d ultimately have to repay. The students
finance their entire tuition — hike and all — from Uncle Sam.
Georgetown uses the hike to pay off the feds and the students get
to pocket the rest.

The Foundation estimated that Georgetown is able to extract
close to $160,000 from Uncle Sam for students, basically their
entire cost of law school.

Pretty neat, eh, to see how the nation’s brainiacs are keeping
themselves busy? Does Georgetown teach them how to spell crony
socialism?

For a great explainer of the scam, check out Washington
Post’s Dylan Matthews’
piece.

Bobby Jindal on Georgetown’s scam
here.

My Washington Examiner column
here.