One of the best ways to bring down the exorbitant costs of higher education is to allow the market to work. If colleges and universities find that young people have done the math and many are no longer willing to go into debt to patronize them, they will be forced to act accordingly–or else.
Not a friend of market forces, the Obama administration has a better idea: find circumstances to forgive the loans and help the debtor learn early that one can undertake serious obligations without a serious intention to meet them. Only the debts aren't really forgiven–they are just passed onto the taxpayer.
The Wall Street Journal explains how it works:
As a parting gift to young voters, the Obama Administration last week issued a rule allowing borrowers to discharge billions of dollars in student debt. Tucked in are knick knacks for the plaintiffs bar and another whack at for-profit colleges.
The “borrower defense” rule purports to clarify a provision in the Higher Education Act of 1965 that allows the secretary of education to forgive student loans based on “acts or omissions of an institution of higher education.” Progressive groups have been helping for-profit graduates file claims for debt relief, so the Education Department has been inundated by applications. Last year the department set up a committee to streamline and standardize the administrative process. After the committee couldn’t agree, the department unilaterally rewrote the law.
The rule creates a process in which loans can be discharged if a department official concludes that a college engaged in a substantial misrepresentation based on a preponderance of evidence. This is a lower burden of proof than the clear and convincing standard required in most states to demonstrate fraud. The definition of misrepresentation would be amended to include “omissions of information and statements with a likelihood or tendency to mislead under the circumstances,” so students wouldn’t have to demonstrate fraudulent intent by the college.
The education secretary could approve a class of claimants (e.g., borrowers who attended a for-profit) who would be represented by a department advocate. Another department bureaucrat would resolve claims and assess a college’s liability; the secretary would adjudicate appeals. No taxpayer advocate is anywhere in sight.
If I am going to contribute to a young person's education, at least can't she be somebody I judge worthy of my help? Why should I be forced to buy votes for progressive candidates? And, most of all, why tempt young people to enter into debts that they expect to wiggle out of paying?
And it is not going to be cheap:
While the department pegs the taxpayer cost of the rule at between $9.5 billion and $21.2 billion over the next decade, it has repeatedly lowballed the costs of its loan-forgiveness programs. Here is the Administration’s regulatory model: Destroy businesses while doling out favors to political constituents. Later, bill taxpayers.