Minarchy and Education Finance

Whither Education

I’m not normally a fan of “quick fix” solutions.

When it comes to higher education in the United States, though, disaster as it is, I think there is one action we, as a country, could take that would fix most of the stupidity in our college/university systems very quickly, and that is to completely decouple the government from financing of education.  And by completely, I mean completely – no more Pell grants, no more subsidized student loans, no more “every kid deserves to go to college,” nothing, not one red cent.  Want justification for that?  Read the Tenth Amendment.  The Imperial government has no business being involved in education at any level, for any reason, and one could make a good argument for detaching the states from this process as well.

Let’s look at two scenarios: Two young people, applying for loans for their university educations.

Candidate One

It had been almost a year since the Supreme Court had ruled that Federal government grants and student loan guarantees were a violation of the Tenth Amendment in Onomatopoeia v. Fannie Mae (I know, that’s a pipe dream, but go with it) and thus effectively and completely privatized the financing of higher education.  This led to bank and credit union loan officers having some… interesting experiences.  The senior loan officer at the First National Bank of Tulsa was no exception.

Monday.  The First National Bank of Tulsa’s senior loan officer looked at the file the young man seated across from him had just handed over.  The fellow was eighteen and was impeccably turned out – his hair neatly cut, freshly shaved, wearing a navy-blue jacket, white shirt, red tie and khaki slacks.  His shoes were even shined.  He sat bolt upright, alert and engaged.

“James ‘Jimmy’ McNeal,” the bank loan officer read out loud.  “Class Valedictorian, Class of 2024, Tulsa Preparatory Tech School, three-time Westinghouse Junior Engineering Challenge winner.  GPA 4.25.  All-state track and field – I’m not sure how you found time for that and kept your grades up like this, but you obviously succeeded.  What are your plans for college?”

Jimmy passed over another sheet of paper.  “Sir,” he said, “I’ve been accepted to the Arizona Technical Institute, where I intend to enter their Software Engineering program and minor in Solid-State Physics.  If I can hold my GPA above 3.5, and I can, I’ll qualify to enter their master’s program in Software Development.  I’ve done some research; if you look at Page Ten in my application package, you’ll see that the nationwide average first-year salary for a candidate with the master’s in software development from Arizona Technical is $133,800 per year.  On Page Twelve, you’ll see the amount I’ll need to borrow to make up costs not covered by my savings, grants and scholarships – those are on Page Eleven – and an amortization table on how, if I get even the average first-year salary, I can pay those loans off in seven years.”

“It says here you have $52,000 already saved towards college expenses, aside from your scholarships.  How did you manage that?”

“All four years of high school, I was building custom gaming computers for my friends, first informally, then as a part-time business.  I’ve put together hundreds of custom computers and intend to continue that part-time work through college.”

“At the risk of using a cliché – son, you’ve done your homework.”

“My Dad was a janitor, sir.  His Dad was a farmer.  They pushed me to do better.  I intend to.”

“Nothing wrong with being a janitor or a farmer, those are honest trades.  But I believe you will get to where you want to go.  I’m going to conditionally approve your loan and get it on the desk of the underwriters this afternoon.”  He stood up and extended his hand.  “Mr. McNeal, on behalf of the First National Bank of Tulsa, I can tell you that we look forward to a long and solid relationship with you.”

Jimmy took the loan officer’s hand and shook, looking him in the eye as he did so.  “Thank you, sir.  I am sure it will be.”

Candidate Two

Tuesday.  The next morning, the First National Bank of Tulsa’s senior loan officer was back at his desk, looking at another education loan applicant.  Talk about night and day, he thought.

He looked at the loan application.  There was no accompanying documentation; just the one-page loan app, filled out with what looked like green ink.  The applicant, one “Kayden Gillibrand-Smith” slouched in the chair in front of the loan officer’s desk.  The…  kid?  Was the dictionary definition of androgyny, with bright blue hair, wearing a black hoodie with a red image of Che Guevara on the chest and stained white sweatpants.  On either side of…  Him?  Her?  On either side sat the parents, matching studies in thin, pale un-thriftiness.

“So, uh, Kayden – may I call you Kayden?”  The kid nodded.  “Tell me a little more about yourself and your plans.  What was your high school career like?”

“I dunno,” Kayden replied.  “I went to the Michelle Obama Academy for the Woke.”

“What was your grade point average?”  The applicant said nothing, instead appearing to examine their dirty sneakers.  “Do you know?”

Kayden looked at… His?  Her?  Mother, a cadaverous, pinched-looking woman, who said, “Two point Six.  But she scored very high on Social Equity and Compassion, which are rated very highly among Michelle Obama Academy students.”

Ah, it’s she, the loan officer thought.  “That’s nice,” he said.  It would have been nicer if the applicant could have answered for herself.  “So, Kayden, what are your college plans?”

“I’m applying for the Berkeley Social Issues Remediation Academy,” Kayden said.

“And?  You plan to study, what?”  Why the hell do I have to keep prompting this kid?

“Ethnic Gender Studies.”

“That’s still a thing?  Really?”

“Of course,” Kayden’s father snapped.  “Kayden’s Social Equity score alone qualifies her for advanced placement, probably a guaranteed spot in their master’s program.”

“What are the employment prospects for a graduate with a degree in this field?  What is the expected salary range?”

“Why would you ask that?”  The mother again; Kayden’s gaze appeared to be focused on her dirty white tennis shoes.

“Well, I should think that was obvious; for purposes of repayment, of course.”

“That’s the problem these days,” the father whined.  “Ever since the government stopped guaranteeing student loans, progressive people pursuing progressive educations are at the mercy of capitalist bankers.  Always ‘repayment, repayment,’ never a thought for how social progress and equity are to be achieved.  It’s all just numbers and cold calculations.”

“This is a business,” the loan officer said through gritted teeth.  “Not a charity.  Not a political mission.  A business.  We are a bank.  Numbers and cold calculations are what we do.”

“And that’s another thing,” the mother started, her eyes bulging.  “We are reduced to…”

The loan officer cut her off.  “I think we’re done here.  Good day.”  He waved a hand at the door of the bank, a few paces away.

“What do you mean?”

“I mean, your daughter proposes to pursue a degree – pursue it rather unenthusiastically, from the looks of her – which has zero prospects of employment, much less employment that will enable her to repay the substantial loan she is requesting.  Her academic record to this point has been unimpressive.  Her appearance likewise does not inspire confidence.  As far as poor risks are concerned, frankly, they don’t come any poorer.  And so, as I said, we are done here.  Good day.”  He motioned to the door again.

“You can’t just dismiss us like that,” the father said.

“Sir, either you and your family walk out now, or I will call Security and have you removed.  Good day, I said.

Kayden got up, a sullen look on her face.  She headed for the door, her parents trailing along behind her.  A not-so-glowing future as a barista surely loomed up ahead of her.

How Things Ought to Be

Were education finance decoupled for government, you might see some scenarios like the two above.  But after a very few years, I’m certain, you would be seeing a lot more like Candidate One and a lot fewer like Candidate Two.  Why?  Because if education financing were private, from private institutions focused on risk of default, you’d see interest in the various Underwater Dog Polishing majors disappear very quickly, as nobody could get financing for them.  The university system would be facing a literal “Get Woke, Go Broke.”

Incentives matter.

Our higher education system has exploded into a bloated, wasteful mess, and much of the reason is government’s pouring money into the system.  This favors bloated bureaucracies and B.S. degree programs.

And I remind you, as noted above, the Tenth Amendment, properly applied, precludes government involvement in education.  At all.

Privatizing education and the finance of education would starve the beast in short order, and would go a long, long way to returning higher education to what it’s purpose rightfully should be – to produce educated young adults with marketable skills.

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