Today’s Boston Globe features an editorial that points out the increasing costs of college education and suggests, as an antidote, that we get private lenders out of the business of offering student loans — and have the government do so directly, instead of simply guaranteeing them.

This article raises some interesting questions — albeit ones the Globe is not asking.

“As tuitions skyrocket, more students are being priced out of a college education.” For years, the cost of college education has, indeed, skyrocketed — well beyond the rate of inflation. Has anyone asked the colleges why their costs keep going up so rapidly? Where is all that money (much of it either taxpayer-guaranteed or coming directly from taxpayers) going?

The Globe also repeats the cliche that spending on education should be seen as an “investment.” The loose definition of an investment is “money spent in hopes of a profitable return.” To cut out the middlemen (the banks that administer the loans, assume the risk, and handle all the paperwork) would be to cut out the “investors.” It is they who are garnering the profits — the tangible ones, that is. The intangible profits, such as the positive externality stemming from a better-educated populace, are captured by the government. If education is supposed to be an investment, why shouldn’t we allow private entities to profit from investing?

The Globe concludes with a truly insipid declaration: “Educational investments should go straight to students.”

That would do no good whatsoever. The “investments” need to go to the people and institutions that provide the services in question — the colleges, trade schools, and so on. The students here are the consumers.

Whether or not the system is “broken” is certainly debatable, but what is certain is that the most fundamental questions are not being asked in this debate — and simply throwing more money at the problem is only going to allow the important questions raised above to fester even longer.

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This entry was posted on Monday, July 20th, 2009 at 4:42 PM and is filed under Contentions. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.