Complete Federal Graduate Loans | National Review

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Columbia University campus in New York in 2009. (Mike Segar / Reuters)

Federal loans for high-cost, low-cost graduate schools have allowed the Ivy League master’s racketeer to flourish.

Columbia university ranks among the most elite schools in America. Many believe that a degree from Columbia or another Ivy League school will provide financial security for life. But recent investigation from Wall street journal Reporters Melissa Korn and Andrea Fuller show that this perception, so heavily cultivated by universities, is fiction.

Undergraduates in Colombia and many other elite schools are taking on hundreds of thousands of dollars in student loan debts. However, after graduation, too many find that the degree does not open the promised doors. The existence and scale of these substandard alumni programs stems from irresponsible federal lending practices that provide graduates with unlimited lines of credit regardless of their ability to pay.

Columbia’s Master of Fine Arts students in Cinematography typically accumulate $ 181,000 in federal debt, according to the report. But when they enter the labor market, their average salary is only $ 30,000, less than one-sixth of the debt they have taken on. Few of these students will fully repay what they borrowed from taxpayers.

“There were 55 students in my incoming class for the MFA Film program at Columbia University,” says former student of James Stoter… “Only four of us have made a career. … … … Columbia bought its reputation to sell them big dreams that it could never fulfill. “

Federally supported graduate programs have become profit centers for elite universities. Ivy League schools are ditching their selective undergraduate programs that bring schools to the top of the rankings. US News & World Report college rankings. They use this prestige to produce graduate degrees that would make many commercial colleges blush.

The strategy paid off. During the 2019-20 academic year Colombia raised $ 268 million in federal loans for graduate programs. The undergraduate schools on which Columbia has built its reputation have provided only $ 16 million in federal loans.

Colombian officials have even admitted to the scheme. The school’s deputy vice rector for academic programs says a master’s degree “can and should be a source of income,” according to Wall street journal report. The cost of this business model falls on the students, who are responsible for paying off the debt, and the taxpayers, who will inevitably have to pay part of the bill when the government forgives loans that students cannot pay off.

There is only one way to solve this problem: Defund Columbia and other elite institutions guilty of this practice. End the federal graduate student loans that have kept the Ivy League master’s racket alive for so long.

Congress originally created the federal student loan program to help low-income students afford college. But student loans have turned into a welfare program for wealthy universities. Graduation loans now amount to two out of five loan dollars issued by the federal government. This did not happen by accident; it is the result of deliberate policy changes.

The federal Grad PLUS program, created in 2006, allows graduate students to borrow a virtually unlimited amount from the federal government, provided they attend an accredited college or university. Once the debt has been taken, students are allowed to pay it off through income-based plans where, on average, payments are only $ 154 per month… Ten or 20 years after the borrower starts repaying, the remaining debt is canceled.

The Congressional Budget Office estimates that 60 percent of loans disbursed in 2021 and repaid in this way will be eventually be forgiven… Internal Education Department documentation suggest that more than $ 400 billion from the federal government loan portfolio will not be repaid. Of course, the students themselves will also have to pay a lot. But colleges and universities are fleeing profitably.

Congress can end this by making one simple policy change: end federal loan dollars to support graduate programs.

There is a reasonable business case for federal lending to undergraduate students as most of them do not have a credit history to talk about and may require government assistance to get a loan. But this argument usually doesn’t apply to graduate students who are in their 20s and 30s. There is no business case for a federal graduate loan program.

Indeed, there was thriving private market for graduation credits that could be used again before Grad PLUS appeared on the scene. Students who needed to borrow large sums of money to pursue a high degree, such as medical students, were almost always able to get private funding and usually at a lower interest rate than the federal government is offering.

But programs with outrageous tuition fees and meager wage payments will find it difficult to get funding from a private lender who cannot simply pass the loss onto taxpayers, as the federal government can. It is only the availability of federal graduate loans with their significant implicit grants that large-scale, high-cost, low-cost programs are possible.

Problems are best addressed by addressing their root causes. Avoiding funding for Columbia and other graduate schools is the most effective way to save graduate students from overwhelming debt and taxpayers from the burden of putting things in order.

Preston Cooper is a Research Fellow at the Equal Opportunity Research Foundation.



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