Creighton University economist Ernie Goss says taxpayers in Iowa and nationwide will be the losers under President Obama’s newly-announced student loan plan. More than 200,000 Iowans have student loans.
With what the president’s proposing, Goss says colleges, universities and borrowers will benefit. “A lot of it is at the taxpayer expense,” Goss says. “A lot of these men and women that are out there working don’t have kids in college, won’t have kids in college, and it’s a big transfer of income to those of us who have university educations, or particularly those of us who are in university education.”
Goss says students owe about $1.1 trillion to the federal government in loans. He says the government will pay the loans back to the universities regardless of how much the students pay back. While the president’s executive order has some good aspects, Goss cautions that capping student loan payments at 10-percent of income will benefit borrowers, but will eventually fall on the backs of taxpayers. “I just don’t know if we can afford it, all in the guise or all in the belief that we’re increasing human capital, the value of human knowledge out there,” Goss says. “I think it’s a poor expenditure.”
Nearly 72-percent of Iowa’s college graduates have student loan debt, the fourth highest percentage in the nation. Goss says the president’s proposal on counseling new college students makes sense. “Letting students know what they’re getting themselves into, and their parents as well,” Goss says. “We need to more properly indicate what universities are bringing to the table, what we’re doing for these young men and women, or in many cases, older men and women.”
Iowa college grads have an average of $29,000 in debt. Goss estimates the President’s proposal will cost the federal government $5 billion per year. He says misplaced priorities from university leadership have led to higher education costs. He says the executive order amounts to another subsidy from the federal government to colleges and universities at taxpayer expense.