In what can be described as another “Oh, that Joe Biden!” moment, the Vice President admitted before a crowd of students at Florida State University Monday morning that government intervention in the free market and providing subsidies for students to attend college has led to an increase in college tuition.
“Good morning Mr. Vice President,” one Florida State student began during a Q&A session, “I was wondering how do you feel about the idea that government subsidies and interference with the free market, for example, by artificially increasing availability of student loans is at least partially responsible for rising tuition costs."
"And now we're facing a possible student loan bubble and subsequent collapse just as we're coming out of the housing crisis,” the student said.
“Well, say the first part of your question again about how we're artificially creating what?” Vice President Joe Biden asked.
“By manipulating variables in the free market and giving out government subsidies that maybe is partially responsible for rising tuition costs,” the student clarified.
Listen to the Vice President explain how government intervention affects the markets via BreitbartNews:
“By the way, government subsidies have impacted upon rising tuition costs. It's a conundrum here. But if we went the way of your view of the free market route, what we would have done is we would not have done that,” the Vice President said. “We would not have increased Pell grants, for example. And there would be 9 million fewer students in college today.”
“And there would be hundreds of thousands and millions of students who would not be in college who don't get Pell grants because there was no ability for them to borrow money through Perkins loans and/or have the tax deduction,” Vice President Biden added.
“So you are right,” the Vice President added, “In a pure free-market, the college tuition would have to be lower because there would be fewer people going to school, they wouldn't have as much coming in. But the end result is we would probably have -- we go for the better part, half a generation, of going 16th in the world maybe down to 20th in the world.”
The Vice President went on to argue that if Bank of America, despite all of its mistakes, can be rescued by government intervention, then, naturally, America's youth should receive similar financial assistance.
But outside of openly admitting that government intervention has led to price hikes, what else does the Obama administration’s proposal to expand student-aid through increases ($1 billion to $8 billion) in the Perkins student-loan program mean?
“To anyone who hasn’t graduated from college recently, this might sound great. To those of us who have, it’s terrifying,” writes Ron Meyer, a program officer for Young America’s Foundation, in a recent New York Post op-ed.
“Making it easier to get a student loan now is as devious as making it easier to get a mortgage a decade ago — the government is encouraging people to take on more debt than they can handle,” Meyer adds.
Indeed, many critics believe that it was this type of action that caused the housing market to collapse.
“Many recent graduates face the same situation as the people who took out subprime loans from 1998 to 2007; the government encouraged them to take out massive loans that they now can’t afford. Student-loan defaults hit a record-breaking 8.8 percent last year,” Meyer writes.
“Growing the student-loan program means dooming more graduates to this same fate. Tuition costs continue to rise at twice the rate of inflation, and average graduating-student loan debt has grown 12.5 percent since 2008 (in real terms) to $26,300.”
Although the president has promised to fight increases in tuition by reducing funding to colleges that raise it, he has failed to mention that the “vast majority of federal funding comes to colleges through student loans,” which he intends to expand.
“So, even if Obama makes good on his threat to cut other funds to the schools, colleges that hike tuition will still receive more overall funding — giving these institutions little reason to reform,” Meyer writes.
Therefore, as opposed to doing them a favor, it seems the Obama administration is encouraging students to take out loans that will tie them massive amounts of debt, all so that they can go to a college that has increased its tuition rates as a result of government intervention.
But, this is still preferable to having "hundreds of thousands and millions" of students who can't afford to go to college -- at least it is if you're the Vice President.