Federal Student Loans and Rising Tuition Costs: An Insider Speaks Up

David Boaz

We’ve been debating for three decades the question of whether federal student aid leads to higher college tuition. Now a new and well‐​placed voice has weighed in.

In 1987 then‐​Secretary of Education William J. Bennett argued that “increases in financial aid in recent years have enabled colleges and universities blithely to raise their tuitions, confident that Federal loan subsidies would help cushion the increase.” The higher education establishment indignantly denied the claim.

But there was no doubt that tuitions were rising faster than the inflation level. And while some people insisted that federal and state aid to higher education was being cut back, that was hard to credit. Bennett pointed out in 1987 that federal student aid had risen 57 percent since 1980, while inflation had been 26 percent. A 2020 study by the Congressional Budget Office brought the numbers up to date: “Between 1995 and 2017, the balance of outstanding federal student loan debt increased more than sevenfold, from $187 billion to $1.4 trillion (in 2017 dollars).”

A 2017 study from the Federal Reserve Bank of New York found that the average tuition increase associated with expansion of student loans is as much as 60 cents per dollar. That is, more federal aid to students enables colleges to raise tuition more. Salaries rise; bureaucracies expand; more courses — from “History and Analysis of Rock Music” to “Ultimate Frisbee” — are offered; dorms, dining halls, and recreational centers become more lavish. Even with all this spending, employers don’t find that new grads are well prepared for the workplace.

But now, in addition to academic studies, we have an insider’s testimony. For a new book and a lengthy Wall Street Journal article, reporter Josh Mitchell talked to Al Lord, former CEO of Sallie Mae, then the quasi‐​government enabler of federal student loans. At the time Lord viewed student debt as a good investment for families, and he made Sallie Mae the biggest student lender. But now, in retirement, he has a confession to make.

He joined the board of Penn State, and, Mitchell writes,

he had an epiphany: Colleges were incredibly inefficient businesses, and the student‐​loan program enabled them.

He was stunned to learn how big Penn State’s budget was, about $5 billion [in 2014], and how quickly it grew. (Penn State’s budget is currently $7.7 billion.)

He was also stunned to discover how much his grandchildren’s college educations were costing, as much as $75,000 a year per child. He had known that colleges were raising their prices faster than inflation, but he figured it would have to stop. But it hasn’t. “They raise them because they can, and the government facilitates it,” he told Mitchell.

“Schools were able to hike tuition since students now had expanded access to loans,” Mitchell summarizes.

Federal student loans went up. So did tuition, college budgets, and the debt that students carry for years. This system isn’t working.

Posted on July 28, 2021  Posted to Cato@Liberty

Our Deep Roots in Defending Free Speech

David Boaz

Freedom of speech is a fundamental principle of a free society—and of the United States in particular. It’s also deeply embedded in the founding of the Cato Institute.

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When it was founded in 1977, Cato was named for Cato’s Letters, a series of newspaper essays written in the 1720s. Why that name? Because John Trenchard and Thomas Gordon, who wrote under the pen name Cato after the defender of the Roman republic who refused to submit to Julius Caesar, took the ideas of great thinkers such as John Locke and Algernon Sidney and applied them to the controversies of the day. And that has always been the approach of the Cato Institute: to apply the great principles of liberty to policy and current affairs.

In any epoch, freedom of thought and expression is one of our essential liberties. Earlier this year, Cato held a virtual Young Leaders Seminar for college students, focusing on the importance of freedom of speech as a pillar of a free society and the unique threats facing free speech in the 21st century. The seminar paid special tribute to the legacy of former Cato senior fellow Nat Hentoff, one of the great First Amendment defenders of the past half‐​century.

In opening that seminar, I drew on our connection to Trenchard and Gordon. I noted that the great American political historian Clinton Rossiter described Cato’s Letters as “the most popular, quotable, esteemed source of political ideas in the colonial period.” Bernard Bailyn, perhaps the most important historian of early America, wrote, “To the colonists the most important of these publicists and intellectual middlemen were those spokesmen for extreme libertarianism, John Trenchard and Thomas Gordon.”

Another historian of the American Founding, Forrest McDonald, points out that “free speech” was never a central political claim prior to the 1720s: “It was John Trenchard and Thomas Gordon … who first gave unreserved endorsement to free speech as being indispensable … and who were willing to extend the privilege to all, including those who disagreed with them.”

As Trenchard and Gordon wrote in Letter 15, “Without freedom of thought, there can be no such thing as wisdom; and no such thing as publick liberty, without freedom of speech.… This sacred privilege is so essential to free government, that the security of property; and the freedom of speech, always go together; and in those wretched countries where a man cannot call his tongue his own, he can scarce call any thing else his own. Whoever would overthrow the liberty of the nation, must begin by subduing the freedom of speech.”

So, the importance of freedom of speech was in our bones even before the Cato Institute was founded. And obviously freedom of expression is essential for the work we do and, as Trenchard and Gordon wrote, for the public liberty.

We exercise our rights of free speech in books, studies, journals, and newspapers, on the radio, television, and internet, and in seminars and public speeches. We defend the right of free speech through our advocacy, as well as in the courts, on college campuses, and in our advice to legislators and policymakers.

People often complain that free speech is being violated when a newspaper refuses to run an article, a social media company bans a controversial account, a publisher cancels a book, an NFL team won’t hire a politically outspoken quarterback, or an owner shuts down a magazine after its criticisms of an elected official. We want to encourage a culture of free speech, but all these private actors are making decisions about which ideas and controversies they want to be associated with. That’s very different from government restrictions on expression. The First Amendment forbids any “law … abridging the freedom of speech, or of the press,” not editorial decisions by private companies.

Our defense of free speech must be aimed at those on both sides of the political spectrum who seek to have local, state, or federal governments ban—or compel—the expression of certain ideas. Government remains the true threat to be guarded against, and state censorship is crucially different from the decisions of private actors, however open the latter are to fair criticism. Conflating the two opens the door to the very thing free speech guards against: control of the marketplace of ideas by the government rather than free individuals and private, voluntary society.

Posted on July 19, 2021  Posted to Cato@Liberty

Who Started the Culture War?

David Boaz

Kevin Drum is a progressive blogger who was at Mother Jones until early this year. He caused a stir two weeks ago with a blog post titled “If you hate the culture wars, blame liberals.” Taking issue with most of his ideological compatriots and with much of the mainstream media, he wrote, “over the past two decades Democrats have moved left far more than Republicans have moved right.…Almost by definition, liberals are the ones pushing for change while conservatives are merely responding to whatever liberals do.” He cited such “hot button social issues” as same‐​sex marriage, immigration, abortion, crime, “defund the police,” cancel culture, and wokeness. Drum stressed in a followup post that he was generally “all on board with most progressive change”; he just thought moving too far too fast would hurt Democrats electorally. Nevertheless, left‐​liberals were not happy with the column, but conservatives loved it. Peggy Noonan got a whole Wall Street Journal column out of it.

Tim Miller, a former Republican operative turned anti‐​Trump strategist, wasn’t having it. Sure, he said, the data showed that Democratic voters had shifted more than Republican voters. But culture wars start at the top:

But when it comes to the actions of politicians, the aggressive, top down Culture War is being driven overwhelmingly from the right. And the shift rightward among Republican politicians on culture war issues is as dramatic—if not more so—than the leftward shift among Democratic voters on policy.

So who’s right? As in so many issues, they both have a point. The cultural trends of the last generation and more have been leftward — in many cases we might say they have been classically liberal — and in the Trump and post‐​Trump eras the leftward pressure has picked up steam. Republican politicians have shifted their focus from fiscal conservatism and national security to angry tweeting about football players’ knees and the threat to Mr. Potato Head. Rather than creating a good climate for economic growth, Republican legislatures are banning “vaccine passports” and Critical Race Theory.

But some of this right‐​wing culture war is in response to real social and political changes that have upset many voters. Civil rights, feminism, and gay rights all created a backlash, and right‐​wing politicians in earlier eras capitalized on that backlash. Now strong majorities support most of the outcomes of those battles, so politicians have moved on. But progressives are now pushing new measures: chasing down every baker and florist in the country who declines to use their talents for a gay wedding and forcing them to comply; pushing K-12 school curriculum based on thinkers such as Ibram X. Kendi who are well to the left of the mainstream on matters of race; imposing a national policy, never passed by Congress, on local school districts to guarantee transgender access to school locker rooms and sports; and more.

Miller is right: it’s Republican politicians, not Democrats, who raise hell about these issues. But that’s because they represent the voters who see themselves losing these battles. And most Democratic politicians don’t want to be vocal advocates of these policies. Think back to gay marriage: most Democrats, including Barack Obama, Joe Biden, and Hillary Clinton opposed it or avoided the subject until the polls turned positive. Right now Democrats prefer to focus their messaging on populist economic issues, not controversial social issues, especially when the social policies are being effectively advanced through bureaucratic impositions and court decisions. (Speaking of courts, I noted a few years ago that the federal courts prevent conservative states from being as conservative they’d like to be.)

As a libertarian, I wish Republicans and Fox News would spend less time on critical race theory and more time on Biden’s latest plan to spend $4 trillion the Treasury doesn’t have or the troubling use of executive orders and the administrative state. And like Drum, I often sympathize with liberals more than social conservatives on the expansion of equal rights and personal freedoms. But I’m not surprised that conservative voters and politicians push back when they feel — rightly or wrongly — that their traditions and values are under assault. Conservatism at its core is the opposition to change, for better and for worse, and especially relatively rapid change. Republicans, unlike Democrats, have little success in getting the policies they want on social issues from the courts and the bureaucracy, which leads to a greater focus on doing it through popular agitation and elected politicians.

Posted on July 16, 2021  Posted to Cato@Liberty

Gay Rights and the Illiberal World

David Boaz

On Monday, LGBT activists in Tbilisi, Georgia, called off a planned Pride March after hundreds of violent counter‐​protesters attacked activists and journalists.

On Tuesday, WeChat, China’s most popular social media service, shut down dozens of accounts on LGBT topics run by college students and nonprofit groups as part of a tightening of political control by the Communist Party.

Three weeks ago, Hungary’s parliament passed legislation that would ban the dissemination of content in schools deemed to promote homosexuality and gender change.

And all these assaults on human rights reminded me of a column written in 2013 by the British journalist Michael Hanlon. Hanlon wrote about a “morality gap” in the world that could be seen most clearly in attitudes toward gay rights. His column is worth quoting at length:

It is now clear, though not much talked about, that humanity, all 7.1 billion of us, tends to fall into one of two distinct camps. On the one side are those who buy into the whole post‐​Enlightenment human rights revolution. For them the moral trajectory of the last 300 years is clear: once we were brutal savages; in a few decades, the whole planet will basically be Denmark, ruled by the shades of Mandela and Shami Chakrabarti.

And there’s some truth in this trajectory — except for the fact that it only applies to half the planet. The other half resolutely follows a different moral code: might is right, all men were not created equal and there is a right and a wrong form of sexual orientation.

You can identify those countries in the dark half of the divide by their attitudes to homosexuality and women; to honour killings, race, disability, mental illness, religious minorities and to crime, torture and punishment, even animal rights and the environment.…

Let’s start with attitudes to gays, not because gay rights are the most important issue, but because attitudes to homosexuality show the morality gap in sharpest relief.…

A look at the timeline of gay rights shows a seemingly unstoppable barrage of permissiveness, with state after state passing laws first legalising homosexuality, then going further: permitting gay marriage and gay adoption and formalising gay relationships in terms of pensions and property rights. It’s tempting for those of us in this enlightened half of the world to think of this as a great wave of progress that rose up in the mid‐​20th century and will sweep across the world.

Tempting, but wrong. In fact, in much of the world, received wisdom on homosexuality appears to be going into reverse.

Of course, this divide in the world is well known. It’s been discussed and analyzed in Pew Research studies, examined at Human​Progress​.org, and included in the rankings of the Human Freedom Index.

Martin Luther King, Jr., often said, “The arc of the moral universe is long, but it bends toward justice.” There’s certainly evidence that’s true, but it’s cold comfort for the gay, lesbian, bisexual, and transgender individuals living stunted lives in so much of the world today.

Posted on July 7, 2021  Posted to Cato@Liberty

Happy Second of July

David Boaz

As Americans enjoy the Fourth of July holiday, I hope we take a few minutes to remember what the Fourth of July is: America’s Independence Day, celebrating our Declaration of Independence, in which we declared ourselves, in Lincoln’s words, “a new nation, conceived in Liberty, and dedicated to the proposition that all men are created equal.”

The fireworks would be today if John Adams had his way. It was on July 2, 1776, that the Continental Congress voted to declare independence from Great Britain. On July 4 Congress approved the final text of the Declaration. As Adams predicted in a letter to his wife Abigail:

The second day of July, 1776, will be the most memorable epoch in the history of America. I am apt to believe that it will be celebrated by succeeding generations as the great anniversary festival. It ought to be commemorated as the day of deliverance, by solemn acts of devotion to God Almighty. It ought to be solemnized with pomp and parade, with shows, games, sports, guns, bells, bonfires, and illuminations, from one end of this continent to the other, from this time forward forever more.

The Declaration of Independence, written by Thomas Jefferson, is the most eloquent libertarian essay in history, especially its philosophical core:

We hold these truths to be self‐​evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, — That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.

Jefferson moved smoothly from our natural rights to the right of revolution:

Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.

The ideas of the Declaration, given legal form in the Constitution, took the United States of America from a small frontier outpost on the edge of the developed world to the richest country in the world in scarcely a century. The country failed in many ways to live up to the vision of the Declaration, notably in the institution of chattel slavery. But over the next two centuries that vision inspired Americans to extend the promises of the Declaration — life, liberty, and the pursuit of happiness — to more and more people. That process continues to the present day, as with the Supreme Court’s ruling for equal marriage freedom last year.

At the very least this weekend, if you’ve never seen the wonderful film 1776, watch it at 10 pm on July 4 on TCM.

Posted on July 2, 2021  Posted to Cato@Liberty

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