https://www.wsj.com/articles/warrens-free-college-time-machine-11556144467?mod=mhp
“Ms. Warren proposed this week to erase a substantial portion of more than $1.5 trillion in student debt held by Americans.
The irony is that when Democrats nationalized the student loan market in 2010, they swore it’d be a profit center for government and devoted “savings” to finance the Affordable Care Act. Part of the pitch was that the government could save on administrative costs. This was always a trick. The Obama Administration would claim profits from interest-rate arbitrage—borrowing at lower rates and charging more to students—even though a sizable portion of loans aren’t in repayment.
The Congressional Budget Office said the student-loan takeover would save $87 billion over 10 years, later revised to $61 billion. We questioned this bogus accounting at the time, and during the debate in 2009 wrote that “parents will soon have no choice beyond a Washington bureaucracy to borrow money for their college-bound children, and taxpayers will pay a fortune for the privilege.” File that one as: Vindication is overrated.
The Obama crowd also expanded income-based repayment options that capped payments and forgave the balance after 20 years (10 if you work in vaguely defined “public service”). The number of borrowers enrolled in these plans swelled by more than 600% between 2011 and 2016, to more than five million, according to an Education Department Inspector General report from last year.
Now less than a decade after the takeover, Ms. Warren is telling taxpayers this was a con all along. The total cost once Ms. Warren throws in free college tuition for all: $1.25 trillion over 10 years, which is surely a conservative estimate.
Her accomplices are the colleges that have captured these subsidies, often for dubious purposes like hiring administrators, who have multiplied faster than instructional staff. Ms. Warren laments that in her day college was much cheaper, yet the prime reason it’s more expensive is federal subsidies and student loans. For every new dollar a college receives in subsidized loans, colleges raise tuition 60 cents, according to an analysis from the Federal Reserve Bank of New York.”
