{"id":601677,"date":"2023-12-19T19:00:00","date_gmt":"2023-12-19T16:00:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/its-time-for-universities-to-share-the-burden-of-student-loan-defaults\/"},"modified":"2023-12-19T19:00:00","modified_gmt":"2023-12-19T16:00:00","slug":"its-time-for-universities-to-share-the-burden-of-student-loan-defaults","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/its-time-for-universities-to-share-the-burden-of-student-loan-defaults\/","title":{"rendered":"#It\u2019s time for universities to share the burden of student loan defaults"},"content":{"rendered":"<p><img decoding=\"async\" src=\"https:\/\/thehill.com\/wp-content\/uploads\/sites\/2\/2023\/10\/GettyImages-888240130-e1697733882732.jpg?w=800\" \/><\/p>\n<div>\n<p>            <iframe title=\"Audio Article\" id=\"instaread_iframe\" name=\"instaread_playlist\" scrolling=\"no\" allow=\"autoplay\" style=\"display:block\" width=\"100%\" height=\"100%\" frameborder=\"no\"><\/iframe><\/p>\n<p>While the nation is rightly worried about the proliferation of antisemitism on its college campuses, another higher education abuse also needs prompt attention.<\/p>\n<p>On Dec. 6 \u2013 St. Nicholas Day \u2013 President Biden handed student loan defaulters another $5 billion gift in debt forgiveness. The administration\u2019s eagerness to win the votes of student loan borrowers by shifting the cost of student debt from borrowers to taxpayers now <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.whitehouse.gov\/briefing-room\/statements-releases\/2023\/12\/06\/statement-from-president-joe-biden-on-another-nearly-5-billion-in-debt-relief-for-over-80000-student-loan-borrowers\/\">adds up to $132 billion<\/a> of student loans those borrowers will not have to pay \u2014 even though the Supreme Court <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.ncsl.org\/state-legislatures-news\/details\/supreme-court-strikes-down-student-loan-forgiveness-program\">ruled<\/a> a related scheme unconstitutional last June.<\/p>\n<aside class=\"ad-unit ad-unit--mr1_ab\"><\/aside>\n<p>But if borrowers don\u2019t pay the debts they incurred and default on their debts, someone else has to pay. Right now, that someone else is American taxpayers. Now it\u2019s time that the cost of nonpayment of student loans be shared by those who have benefitted the most directly from federal student loans: namely, the colleges and universities themselves.<\/p>\n<p>By inducing their students to borrow from the government, higher education institutions collect vastly inflated tuition and fees, which they then spend without worrying about whether the loans will ever be repaid. This in turn incentivizes them to push the tuition and fees, and room and board, ever higher \u2014 by an average of 169 percent since 1980, <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.forbes.com\/advisor\/student-loans\/college-tuition-inflation\/#:~:text=Between%201980%20and%202020%2C%20the,on%20Education%20and%20the%20Workfo\">according to a Georgetown University study<\/a>.<\/p>\n<p>In short, in the current system the colleges get and spend billions in borrowed money and put all the loan risk on somebody else \u2014 including those student borrowers who responsibly pay off their own debt and those who never borrowed in the first place, not to mention taxpayers, whether they attended a college or not.<\/p>\n<p>This perverse pattern of incentives and rewards must stop. A more equitable model would insist that colleges have serious \u201cskin in the <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/game\/\" data-internallinksmanager029f6b8e52c=\"7\" title=\"Game\" target=\"_blank\" rel=\"noopener\">game<\/a>.\u201d It would insist that they participate to some degree in the losses from defaulted and forgiven loans to their own students.<\/p>\n<p>This idea has been thoughtfully discussed and proposed in Congress before, but now is the time to implement a model that realigns incentives and rewards in our national student loan system and distributes the burden of risk more equitably.<\/p>\n<p>The first principle should be that the more affluent the college is, the higher its participation in the losses should be. The wealthiest colleges with massive endowments should be covering 100 percent of any losses on federal loans to their students, which they can easily afford. Others can cover a lower, but still significant, percentage, but every college that finances itself with federal student loans should assume some real cost when its students default on their loans. Four million student loans <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/educationdata.org\/student-loan-default-rate\">enter default each year<\/a>, not counting the Biden scheme for student loan \u201cforgiveness,\u201d which creates even more losses.<\/p>\n<aside class=\"ad-unit ad-unit--mr2_ab\"><\/aside>\n<p>Specifically, we propose the following \u201cskin in the game\u201d requirements for colleges on losses from federal student loans to their students, based on their <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.nacubo.org\/-\/media\/Nacubo\/Documents\/research\/2022-NTSE-Public-Tables--Number-of-NTSE-Participants--FINAL.ashx\">endowment size<\/a>:<\/p>\n<p><strong>Endowment Size\u00a0\u00a0\u00a0\u00a0   Cumulative Rank\u00a0in Endowments\u00a0\u00a0       Coverage of Losses  <\/strong><\/p>\n<p>Over $10 billion\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Top 0.6%\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0  100%<\/p>\n<aside class=\"ad-unit ad-unit--mr3_ab\"><\/aside>\n<p>$5 billion to $10 billion\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0Top 1.1%\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 80%<\/p>\n<p>$3 billion to $5 billion\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Top 1.7%\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 60%\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n<p>$2 billion to $3 billion\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Top 2.6%\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a040%<\/p>\n<aside class=\"ad-unit ad-unit--mr4_ab\"><\/aside>\n<p>All others\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 100%\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 20%<\/p>\n<p>Any fair observer would have to conclude that this represents a rational and efficient matching of benefits and costs.<\/p>\n<p>Moreover, we propose that the most affluent colleges that participate in federal student loans, such as Harvard, Yale and Stanford, should contribute to a \u201cTrust to Offset Losses from Federal Student Loans\u201d through an excise tax on their endowments \u2014 some of which are larger than the GDP of sovereign countries.\u00a0<\/p>\n<aside class=\"ad-unit ad-unit--mr5_ab\"><\/aside>\n<p>This tax would <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>ly to only about the top 1 percent or 2 percent of college endowments. The trust would then be used to offset some of the remaining losses the less affluent colleges cannot pay, thus sharing the wealth of the top 1 percent or 2 percent to help others in need.<\/p>\n<p>For the excise tax to fund the Trust to Offset Losses, we propose:<\/p>\n<p><strong>Endowment Size\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Cumulative Rank In Endowments\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Tax Rate\u00a0<\/strong>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n<aside class=\"ad-unit ad-unit--mr6_ab\"><\/aside>\n<p>Over $5 billion\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Top 1.1%\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0          1% per annum<\/p>\n<p>$2.5 to $5 billion\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Top 2%\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0        0.5% per annum<\/p>\n<p>It seems only fair that the wealthiest colleges be asked to contribute to cover the student loan losses the Biden administration is sticking taxpayers with. After all, they benefited the most from the Great Tuition Bubble since the 1980s, just as subprime mortgage brokers benefited in the Great Housing Bubble in the early 2000s.<\/p>\n<aside class=\"ad-unit ad-unit--mr7_ab\"><\/aside>\n<p>Since Biden\u2019s St Nicholas Day gift to student borrowers simultaneously gave a large lump of coal to the taxpaying public, not to mention to those borrowers who made every sacrifice to meet their loan obligations, it\u2019s high time to give the rest of us a Christmas present of a new model for government student loans. The proper model should be one that will keep on giving as colleges and universities take on the responsibility and accountability they have shirked until now.<\/p>\n<p><em>Arthur Herman is a senior fellow of the Hudson Institute and author of \u201cThe Viking Heart: How Scandinavians Conquered the World.\u201d Alex J. Pollock is a senior fellow at the Mises Institute and former principal deputy director of the U.S. Office of Financial Research.<\/em><\/p>\n<\/div>\n<p>Copyright 2023 Nexstar <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">Media<\/a> Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.<\/p>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/news\/\" target=\"_blank\" rel=\"noopener\">News category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/thehill.com\/opinion\/education\/4364894-its-time-for-universities-to-share-the-burden-of-student-loan-defaults\/\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>While the nation is rightly worried about the proliferation of antisemitism on its college campuses, another higher education abuse also needs prompt attention. On Dec. 6 \u2013 St. Nicholas Day \u2013 President Biden handed student loan defaulters another $5 billion gift in debt forgiveness. The administration\u2019s eagerness to win the votes of student loan borrowers&#8230;<\/p>\n","protected":false},"author":1,"featured_media":601678,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/thehill.com\/wp-content\/uploads\/sites\/2\/2023\/10\/GettyImages-888240130-e1697733882732.jpg?w=1280","fifu_image_alt":"","footnotes":""},"categories":[70897],"tags":[10574,134420,991,40445,115,134354,134489,12178,4965,147805,147806],"class_list":["post-601677","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-education","tag-equilibrium-sustainability","tag-joe-biden","tag-media","tag-news","tag-nexstar-media-wire-news","tag-student-loan-debt","tag-student-loan-forgiveness","tag-technology","tag-university-endowments","tag-us-supreme-court"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/601677","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=601677"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/601677\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/601678"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=601677"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=601677"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=601677"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}