This weekend students across the country will attend commencement ceremonies to celebrate an important milestone in their lives: graduating college. But after three and a half years of slump and uncertainty, the Class of 2012 faces a competitive job market and a still-recovering economy.
With this in mind, Congressman Paul Ryan (R-WI) penned an op-ed in the Wisconsin State Journal Saturday arguing that the Republican House budget, which passed by an 228-191 margin, offers both a “sensible path forward” and “principled policy solutions” to our higher education woes. Here are some notable excerpts:
First, the House-passed budget offers young Americans a plan to boost the economy and provide them with opportunities to succeed. Over half of recent college graduates are either jobless or underemployed. That's unacceptable. We need to foster sustained job creation with reforms that avert higher taxes and remove the shadow of debt that is hanging over would-be employers.
One step we should immediately take is to make the U.S. tax code fair, simple and competitive. Right now, the code fails on all three counts. High tax rates put us at a disadvantage against other nations, businesses with the best lobbyists triumph over those with the best ideas, and economic growth suffers. We can level the playing field and create jobs by lowering tax rates and closing tax loopholes.
Indeed, Paul Ryan’s Fiscal Year 2013 Budget dramatically simplifies the tax code by creating two income brackets: 10 and 25 percent. As mentioned above, broadening the tax base and closing loopholes is perhaps the best way to incentivize business owners to invest and create jobs in the United States.
Second, the House-passed budget takes steps to tackle tuition inflation. In the last four years, college tuition has risen by nearly 17 percent, or an average of $1,200 per student. The goal of federal financial aid is to make college more affordable, but there is growing evidence that wholesale increases in aid have had the opposite effect. Instead of helping more students achieve their dreams, these increases are simply being absorbed by (and potentially enabling) large tuition increases.
Consequently, student loan debt is on pace to eclipse $1 trillion. This unprecedented level of borrowing, which has surpassed the national level of credit-card debt, is causing young people to graduate with mortgage-sized debt payments, a debilitating hurdle to clear as they seek to start a family, a career, or a business.
The House-passed budget addresses this problem by limiting the growth of open-ended financial-aid subsidies. Instead, we focus aid on low-income students who need help most. Furthermore, we propose to remove regulatory barriers that restrict competition, flexibility and innovation in higher education.
Individuals who take out student loans graduate college on average $25,000 in debt. But as Rep. Ryan points out, the reason undergraduates need to borrow tens of thousands of dollars every year is because government subsidies are driving up college costs. To address this problem, we need to dramatically reduce the percentage of students who receive government-backed loans. This is precisely what the House Budget plan does. President Obama’s proposal, however, calls for increased spending and more subsidies.
By contrast, the president's approach has proven woefully short-sighted. Instead of addressing the structural causes of tuition inflation, his policies have simply chased ever-higher college costs with ever-higher subsidies, encouraging students to go deeper into personal debt while adding billions more to the national debt. That's an unsustainable plan, for our country and for our students.
Incidentally, my colleague Kevin Glass and I co-wrote a feature for the July issue of Townhall Magazine on this exact subject. In the piece, we argue that extending the lower interest rate on federal Stafford loans is not only bad public policy (even though it’s politically popular on both sides of the aisle during an election year), but will do very little to drive down college costs in the long run. Click here to purchase a subscription.