The President’s College Bailout Tour

The powers that be must be getting nervous about the collapse of the education bubble. They’ve decided to send out Obama, amid all the overseas problems he ought to be dealing with, to play national cheerleader for the “higher” education industry.

That’s not the way Obama or the media a portraying his tour of the countryside, but that is exactly what is going on. Thus:

“On Friday, the president surprised the girl’s soccer team at Tully Central High School in Tully, N.Y. Obama talked with the soccer players about sports and summer jobs, and then he turned to the main message of this bus tour: college affordability. ‘I’m assuming everybody here is going to want to go to college,’ he said, to resounding affirmation from the players. Obama says higher education is the best investment young people can make in their future, but with tuition costs outstripping paychecks, many families face an unpleasant choice between a heavy debt load or skipping college altogether.”

What happens when millions of families all over the nation look at the cost of college and compare it to the likely payoff after college? How do families act when a child graduates with five to six digits worth of student loan debt but can’t find a job with an income that will support the debt in a way that will allow him to actually start living like an adult?

They decide that their children won’t go to college this year.

What happens to the rising cost of college when the suddenly find a dwindling student base?

A crash. Some colleges will go out of business. But many will survive by lowering prices and lowering costs. The textbook racket will die. Suddenly universities will be looking at open source alternatives to proprietary software solutions. And tuition costs will sink.

All Obama’s talk about keeping college affordable is just smoke and mirrors. He (or those he represents) are desperate to keep costs up. They have done so thus far through state manipulation, propaganda, and the perceived value of a diploma to getting a job. The bottom line is that keeping up the supply of students is precisely what enables colleges to keep jacking up costs.

The colleges and university decision makers don’t perceive it this way. They find that all their suppliers keep raising costs, that their preferred administrators demand higher packages, and that “needed” expansions keep costing money. That mentality will not change by Obama’s political band-aid proposals. As soon as students start deciding to get educated on their own in the work force, then suddenly the suppliers will find that colleges are not going to use them anymore. Professors will find their own textbooks or write longer syllabi so that $200 textbooks rot in publisher storage rooms.

The government might delay it, but there is no way to avoid this outcome. And it is the only way to solve the problem. The government blew an education bubble both by a host of policies. Now, in the anemic recovery Great Recession, those policies no longer work. Obama is the narcotic supplier trying to find a new dose that will get his addicts high again.

But withdrawal is both inevitable, and the only way to ever get healthy again.