In the realm of economic stimulus proposals, none is as audacious, as Machiavellian, and as transparently designed to buy the votes of a critical electoral demographic than the proposal to forgive all student loans. Even if it fails, as it likely will, the seamless coordination between members of Congress, leftist advocacy groups, and the media to try to sell this idea is a perfect example of how brilliantly certain factions play their hand in the high-stakes game of crafting the dominant political narrative.
Launched into the teeth of the Occupy Wall Street movement, where unemployable art history majors share tents with urine soaked street bums, Rep. Hansen Clark's (D-Mich) bill to forgive outstanding student loans is finding strong resonance among young people who want their voices heard. Those protesting bailouts are now shouting, "I Want Mine."
MoveOn.Org recently came on board, hanging a "Free Money" sign on its website. This allowed the group to collect the email addresses of over 630,000 twenty-somethings. Attracted to add their names to a petition to Congress for free tuition, they first had to sign up to receive the never ending flow of emails emanating from the MoveOn meme machine. You couldn't buy a better mailing list of receptive minds eager to propagate their catchy slogans.
For those not paying close attention, outstanding student loan debt will soon pass the trillion dollar mark, exceeding the nation's total credit card debt. Following the arc of the now-nationalized home mortgage market, the student loan market has evolved from being privately managed to government subsidized, to government guaranteed, and finally to government owned and operated.
And, like subprime mortgages, loans to aspiring college students are driven by government social policies that take no consideration of any relevant indicators of the ability to repay. Thus, gender studies majors get the same deal as aspiring petroleum engineers.
As the surplus of college graduates with no marketable skills grows, all colleges, from the for-profit education mills to the Ivy League, benefit from the inflation-outpacing price increases which government subsidies fuel. And, like any business run by Uncle Sam that is allowed to accumulate off- balance sheet debt, the now centralized program has become yet another powder keg waiting to explode in taxpayers' faces.
Bill Frezza is a fellow at the Competitive Enterprise Institute, and a Boston-based venture capitalist. He can be reached at bill@vereverus.com. If you would like to subscribe to his weekly column, drop a note to publisher@vereverus.com or follow him on Twitter @BillFrezza.
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