There’s a service vital to our economy and social mobility. Nearly everyone has some contact with it. Not everyone has the same access. Some Americans go into serious debt to obtain it. But don’t worry. President Obama has a plan for the federal government to take care of it. He’s going to take from the wealthy to rescue the poor and middle class.
In 2009, it was healthcare. Now, it’s higher education. Same song. Second verse.
Earlier this month, President Obama unveiled plans to provide two years of free community college for any American who attends school at least half-time and maintains a C+ grade average. Strings would attach for community colleges. The federal government would set academic standards and police graduation rates. It would only apply to programs that lead to a four year degree or provide job training skills.
Estimated cost? Sixty billion dollars over ten years, which President Obama proposes would be split similarly to the way Medicaid costs are shared with states. For this plan, the federal government would pay 75 percent of the costs, states would pay 25 percent.
To announce the proposal, Obama joined Tennessee’s Republican Gov. Bill Haslem. Like a handful of other states, Tennessee already has a program to provide free tuition for residents attending community college. So does Missouri. President Obama points to these programs as models that can and should be replicated by the federal government. If Republican governors are doing it, the thinking goes, how could Republicans in Congress object?
But the difference between state created programs — driven by knowledge of local needs and fiscal restraint — and federal leviathans is stark. Obama’s community college program may seem fair at first glance. After all, who’s against education? The devil is in the details.
Like Medicaid, Obama’s single-payer community college proposal shifts regulation and spending for a vital service away from individuals, local governments, and states — replacing it with a disconnected federal government. This is where the strings attach. Who knows better how to run community colleges? People in those actual communities or Washington, D.C. bureaucrats?
Like Medicaid, it has an inverse match rate — where the federal government funds a much bigger portion of the cost than the state. While the stated purpose of Obama’s plan is to make education more affordable, the Medicaid-style match rate ensures that states have incentives to spend more.
Worse, by removing the ultimate consumer from any cost decisions, it will effectively create a single-payer system for community colleges. When government picks up the entire tab, the students have no reason to shop around for the best bargain. Community colleges have no incentive to attract students by keeping costs low.
Furthering the march toward single-payer higher education, President Obama paired his free community college proposal with a widely-criticized and recently abandoned plan to scuttle 529 savings accounts used by middle class families to pay for college. In his State of the Union, Obama argued 529 plans were tax avoidance vehicles for the wealthy. Facts, however, are stubborn things.
According to the College Savings Foundation, 10 percent of 529 plans are held by families with less than $50,000 in annual income, 70 percent are held by those with less than $150,000 in income, and a whopping 95 percent of 529 plans are held by families with less than $250,000 in annual income.
Think about that the next time President Obama claims he has a plan that only impacts the wealthy. Unlike Obama’s single-payer plan, these 529 plans allow families to choose any higher education institution — not just community colleges. And they keep market forces in a vital sector of our economy.
Congress will not move on Obama’s single-payer proposal, but this issue will likely remain a top-tier one for the 2016 presidential campaign. Obama’s proposal is just a start. It represents the liberal world-view which compounds problems with bigger government — and fewer choices. It contrasts sharply with conservative proposals, such as Sen. Mike Lee's Higher Education Reform and College Opportunity, which would create more choices for students by allowing states to accredit colleges for which students may receive federal loans. Even better, Sen. Marco Rubio, R-Fla., has proposed an income-based repayment system for student loans.
Single-payer systems do not reduce costs or improve quality. Instead, they remove market forces necessary for progress. That’s just as true in education as in health care. President Obama is right to diagnose a problem in economic mobility.
A December poll revealed a record low 64 percent of Americans still believe that “it is possible to start out poor in this country, work hard and become rich.” But his single-payer community college solution won’t cure the problem.
Jay Barnes is an attorney and state legislator from Jefferson City, Mo. A conservative Republican, Jay previously worked as a speechwriter for former Missouri Gov. Matt Blunt and as a reporter for Newsmax magazine. His opinion pieces have been published in the St. Louis Post-Dispatch. For more of his reports, Go Here Now.
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