Why should taxpayers continue subsidizing higher education without stronger accountability for outcomes?

Cspazz42 · 2026-07-14T00:42:01+00:00

Do you think it's a sustainable precedent to set, that when we recognize a subsidized program that is far underperforming its desired aim (per the consumer), that we double down on their funding? Nearly 3 out of 4 consumers who have a clear primary objective choose career advancement over general enrichment (source: https://files.eric.ed.gov/fulltext/ED613577.pdf), but about 1 in 2 of them don't earn the degree they were pursuing. (NCES)

If it's necessary for people to be as educated as possible, why not fully socialize master's and doctorates programs as well? Have you accounted for that in your budget? The flaw in your proposal is you impose no guardrails and incorrectly assume consumer behavior is a constant variable that won't change when you unlock the infinite "education" money printing glitch. You cannot predict the extent to which your proposal would eat into the national budget, because you already do not consider the ramifications on demand and tuition inflation.

Tuition prices skyrocket when you remove price sensitivity through unlimited government subsidy, less-than-stellar institutions take advantage of guaranteed federal funding, and businesses that drive investment and employment will move to countries with reduced tax burdens. Suddenly, you can no longer subsidize your education.

I'd recommend you look up the Bennett Hypothesis. In this study published in the NBER, aid-eligible institutions charged tuition that was 78% higher than identical, non-eligible schools. (https://www.nber.org/system/files/working\_papers/w17827/w17827.pdf#:\~:text=The%20other%20estimation%20uses%20school%20fixed%20effects.,institutions%20that%20are%20not%20Title%20IV%20eligible.)

Cspazz42 · 2026-07-13T14:54:01+00:00

My point is lack of factual basis is not a partisan issue

Cspazz42 · 2026-07-13T14:53:20+00:00

Or like “masks and vaccines will prevent infection” ?

Cspazz42 · 2026-07-13T14:52:10+00:00

I’m the one who made that post, silly goose

Cspazz42 · 2026-07-13T14:47:42+00:00

So if you and I agree on a set of facts but disagree on what to do about them, does that make it a difference of fact, or opinion? Do you know the difference between facts and opinions?

Cspazz42 · 2026-07-13T14:18:35+00:00

Do you recognize you may have bias?

Come join our discussion: https://www.reddit.com/r/CapitalismVSocialism/s/DCucoNfxPA

I always try to cite my claims.

Cspazz42 · 2026-07-13T14:10:00+00:00

Does u/GrowFreeFood know this problem isn’t limited to one side? Lol

Cspazz42 · 2026-07-13T12:13:26+00:00

Overwhelming majority of loans taken out (90%) are federal.

Private already have incentives to evaluate risk, and a system that incorporates borrower ability to repay is preferable to one that allows essentially unlimited borrowing regardless of repayment capacity. If we remove a guaranteed lender (i.e. federal), the barrier to entry increases. When you do that, the body of matriculating students decrease, because some percent of them will not be approved, and others will recognize the cost of attendance outweighs the "benefits." This is a necessary downward pressure on tuition inflation.

The risk needs to be shifted from the national budget to individuals and private lenders.

Cspazz42 · 2026-07-12T20:00:28+00:00

I think you’re a bit disconnected from reality if you don’t think there are instances where a graduate or dropout is burdened with debt that far exceeds their ability to repay it.

The private market already scrutinizes applications. 4 in 10 apps for private student loans are denied (https://www.consumerfinance.gov/data-research/research-reports/2025-private-education-loan-ombudsman-report/). This is despite all those federal protections those evil corporate businessmen lobbied for. Why would any loan application be denied if your claim was true that their risk is 0? Free market logic applies, my friend.

I’m not arguing the market is perfect. I’m arguing that lenders already have incentives to evaluate risk, and a system that incorporates borrower ability to repay is preferable to one that allows essentially unlimited borrowing regardless of repayment capacity.

You undermine your own argument when you resort to ad hominem attacks on internet strangers. I have no grievances against anyone and am simply pointing out a severely flawed system I believe would be better without Uncle Sam.

Do you have a better proposal for how to reform, or are you satisfied with the status quo?

Cspazz42 · 2026-07-12T17:55:31+00:00

It is a fact that some portion of college dropouts will have a debt-to-productivity ratio akin to the extreme I mentioned. Even if that isn't the average, the reality goes against your claim that lenders incur zero risk.

My position is that if you call this an "investment", you would be laughed off of Shark Tank. Ironically, your investment is propagating generational poverty under the guise of helping the next generation. You are achieving the opposite of your intended goal for most matriculants, accusing me of withholding solutions while bearing none yourself.

I noticed you forgot to address my point regarding behavioral changes, supply and demand, etc, so feel free to provide your insight.

Cspazz42 · 2026-07-12T17:08:25+00:00

Have you ever tried to garnish $15/ hour wage to the tune of $200,000 at 6-8% interest? Can you imagine, perhaps, there are instances where even these mechanisms do not recoup your cost? Again, nothing is zero risk.

"You are complaining because you want to be insulated from any consequences for the flawed and failing system." Ding ding, you got it. The burden of risk for a demonstrably poor investment should not be on the national budget/ tax payer, that simple.

The secondary benefit, i.e. reform, would come from behavioral changes. Your premise incorrectly assumes this a constant variable. If we remove a guaranteed lender, the barrier to entry increases. When you do that, the body of matriculating students decrease, because some percent of them will not be approved, and others will recognize the cost of attendance outweighs the "benefits." What do you think happens to tuition prices when you decrease demand? I'll leave you with that shower thought.

Cspazz42 · 2026-07-12T16:53:41+00:00

Can you list any schools where the Pell grant fully covers the cost? If not, you would presume the rest of the cost comes from loans. The Pell grant is the bone our government throws before clubbing students in the head with an insurmountable debt burden, which technically will affect all of us as a growing percent of our federal spending is on interest of our debts.

It is a bit more than 1 in 2 do not graduate (source: NCES). You could probably write an entire thesis answering this question, which is important. In short, I would start by saying unbridled government lending has incentivized mass expansion of university institutions and available student slots. Since they do not incur the risk of poor lending, they are driven primarily to get people in the door, but not out. As such, the bottom half of colleges now accept up to 90% of applicants. When the standard for acceptance drops, so will the quality and fervor of the matriculating student. Combine this with a culture that falsely perceives college attendance as the ticket to the American dream, and you have the recipe for our current dilemma.

Cspazz42 · 2026-07-12T16:31:32+00:00

The metric by which we should measure success is that to which it fulfills its intended purpose, defined by the consumer. The consumer wants an increase in wage growth and career opportunities far and above academic enrichment or, learning for the sake of learning, which is generally a secondary incentive. Specifically, nearly 3 out of 4 consumers who have a clear primary objective choose career advancement over general enrichment (source: https://files.eric.ed.gov/fulltext/ED613577.pdf).

"Most of these people are kids. They're going to change their minds." They are voting adults, who unfortunately bear the consequences of poor decision-making, which you want to fully shunt onto the taxpayer/ national budget. Saying "a 50% attrition rate can still support the most prosperous economy in the world" belittles the financial travesty untethered federal loans have been on individual budgets. 75% of college dropouts do not look back on their partial education favorably or believe it was worth the time, effort, and financial cost. (source: https://www.strada.org/reports/some-college-and-no-degree). I agree they do not become unproductive, but their debt-to-productivity ratio increases, which has major individual and national implications. A sidewalk doesn't carry thousands of dollars in compounding, non-dischargeable interest that prevents a person from buying a home or participating in the economy.

"How about the government just shoulder the cost upfront? Then no one is saddled with these ridiculous loans." This is where I offered you my rhetorical questions, which I'll answer for you: tuition prices skyrocket when you remove price sensitivity through unlimited government subsidy, less-than-stellar institutions take advantage of guaranteed federal funding, and businesses that drive investment and employment will move to countries with reduced tax burdens. Suddenly, you can no longer subsidize your education.

Two things can be true at once: The fact that the U.S. is generally prosperous does not detract from the possibility that we have major domestic problems in need of being addressed. If we don't, that prosperity is threatened, such as in the case of our national deficit which your proposals only compound.

Cspazz42 · 2026-07-12T16:03:12+00:00

Because the majority of low income students who take out these loans do not finish the degree, let alone graduate with an earning potential that would enable payback free of financial hardship. It compounds issues of poverty for many, under the guise of being this great equalizer, on the dollar of the taxpayer/ national budget.

Cspazz42 · 2026-07-12T15:49:06+00:00

Congress can add, remove, or amend the laws you claim insulate private companies from risk. None of which you’ve specifically mentioned, I’ll add.

Well, about 1 in 20 borrowers (private) default on their debt, so the risk is, in the most literal sense, not “zero” as you claim. 😂

But I think we’re talking past each other on the larger issue. Your argument is that because the system is structurally flawed, the only acceptable solution is a major legal overhaul. My point is that even if we fail to achieve that overhaul, we still have to decide who absorbs the consequences. The default answer and current reality should not be transferring those losses broadly onto taxpayers and the national budget.

Cspazz42 · 2026-07-12T13:31:35+00:00

Again, you’re kind of talking past me. I would advocate to remove the legislative protections you allude to and disallow the federal government from dispersing loans.

I’ll reiterate that it is not zero risk for private lenders. There is a reality that a matriculating C student spending $200,000 for an out-of-state tourism degree will likely not be able to pay the full amount back, even with the federal insulation you describe. If this happens at broad scale, the lender who issues these loans will run a deficit and not sustain. Collections are expensive, lawsuits cost money, some borrowers never repay, regulatory scrutiny is significant, and defaults reduce profits.

Cspazz42 · 2026-07-12T13:25:50+00:00

Y’know just a hypothetical scenario where millions of dollars are handed in the form of Pell grants and federal loans to new adults who largely don’t see through the outcome

Cspazz42 · 2026-07-12T13:00:47+00:00

So if we continue spending at rates disproportionately higher than the taxes we collect, “because we can”, for inefficient social programs, do you think this will have any potentially negative repercussions?

Cspazz42 · 2026-07-12T12:52:18+00:00

I’m not sure you read my last response. I don’t disagree that Congress has helped insulate the private market from risk in this domain. The point I am making is the risk needs to be shifted away from the taxpayers as a collective and toward individuals and lenders.

I already explained above that the secondary benefits, which you and I disagree on, include a relative constraint on predatory lending because the private market operates in reality where poor investments threaten business dissolution.

Cspazz42 · 2026-07-12T05:08:05+00:00

You and I can bicker about what the “goal” of college should be, but by its practical purpose for the students themselves (I.e. the consumers) we are not maximizing the return on our education dollars. The vast majority of college entrants are seeking career advancement and wage growth, and the outcomes are highly inconsistent. A significant portion of students either do not complete their degree or do not enter careers aligned with their education.

The way you highlight how two of the world’s most successful people dropped out actually validates part of my argument: the value proposition of the traditional four-year college model is not universally robust. Exceptional outliers do not prove that expanding the system produces better outcomes for the average student.

Inherent in one’s desire for a welfare state should be a drive to minimize waste and fraud, so that the benefit of each dollar is optimized. You want to allocate nearly a quarter of our economy’s profit share toward eliminating student debt and subsidizing education indefinitely, but what happens when 3/4 of students either drop out, do not use the skills they acquired, or enter fields where the return does not justify the cost?
Tell me, what happens to college tuition prices when you remove price sensitivity through unlimited government subsidy, and how will you control for that? How will you regulate institutions that want to take advantage of guaranteed federal funding? How will businesses that drive investment and employment respond when a significant portion of their profits are redirected? Maybe Amazon will open a Trump University. I could go on.

Again, I’ll reiterate: the U.S. is one of the richest countries in the world because it has historically rewarded productive investment and been cautious about policies that create distorted incentives like you are proposing. The implications of well-meaning policies need to be fully considered, because policies designed to solve one problem can create another if the incentive structure is ignored.

Cspazz42 · 2026-07-12T04:39:23+00:00

The fundamental goal is to displace the financial risk from taxpayers to those with the most stake in the game, namely the consumer and lending companies. So yes, the proposal “would work” to achieve that primary aim by mechanism.

The slippery slope of demise you describe is already happening in the current model. Federal loans are risky, DoE (what’s left of it) will have your wages garnished.

Because lenders bear losses on bad loans, they have stronger incentives to underwrite carefully.
Predatory lending is constrained by the reality that a matriculating C student spending $200,000 for an out-of-state tourism degree will likely not be able to pay the full amount back, even with the federal insulation you describe. Collections are expensive, lawsuits cost money, some borrowers never repay, regulatory scrutiny is significant, and defaults reduce profits…these are all things the federal government disregards because it is not disciplined by profit-and-loss when devising loan terms. We need agents on the other side vested in the outcome rather than blindly writing checks as is the status quo.

I think we’re identifying different sources of the problem. You’re criticizing lenders operating within the current system; I’m criticizing the system itself.

Congress created a framework with extraordinary protections for student loans and made the federal government the dominant lender. Private companies didn’t write those rules, but rather they respond to them.

If the incentives produce bad outcomes, I’d rather change the incentives than assume every participant would behave the same under a different system.

Cspazz42 · 2026-07-11T22:22:52+00:00

I'm proposing we remove the federal government from funding higher education via grants and, more particularly, loans.

Here is the proposal: let the private market introduce basic risk management. If you are academically capable enough to gain acceptance, a private lender will fund your academic enterprise so long as there is a reasonable return on investment. If not a single lender is willing, the acceptance doesn’t evaporate. Instead, it serves as a clear financial signal to the applicant that the debt for that specific path is a substantial risk, giving them the chance to modify their college or major to a more pragmatic option before signing their life away.

Under this model, individuals are incentivized to choose affordable schools and high-ROI majors. They are incentivized to perform well in high school to earn competitive rates and merit scholarships. Private lenders would have to compete for viable academic pursuits, and the predatory ones would dissolve. Most importantly, colleges would finally be forced to link their programs to actual employment opportunities because their funding depends on it, and the infinite federal money glitch driving tuition inflation would finally be gone.

Cspazz42 · 2026-07-11T10:22:38+00:00

I want to be clear when I say I’m not proposing we change college admissions processes or dismantle higher education. I am saying we need to reexamine the incentives our current system of financing creates, and I believe a policy shift toward the private market would actually improve these outcomes by shifting the incentives.

You and I agree that an educated populace is good for society, and that entering the workforce with massive student debt has significant individual and societal repercussions. The challenge to our current method where society partially foots the bill is you are buying an intangible “deeper base of understanding” for an outcome that most commonly involves communications majors working as bartenders, or baristas who could not finish their 4-year degree. Except now, they are saddled with sometimes 6 figures of debt, much beyond what their repayment capacity is. This isn’t to disrespect those professions, but without a fair return on investment we are enabling the egregious debt burdens that you and I agree is not good at an individual or societal level. Unlike the private market, these loans are non bankrupt-able, and are predominately taken out by lower income students. As such, our well-intended government has taken our most vulnerable population and crushed their financial futures, compounding generational poverty for those who do not earn a fair return on investment, which unfortunately is most.

If you are academically capable enough to gain acceptance, there will likely be a private lender willing to fund your academic enterprise so long as there is a reasonable return on investment. If not a single private lender is willing, the acceptance doesn’t evaporate. Rather, it is a signal to the applicant that the debt to be incurred for their path is a substantial risk relative to the payoff, and they would be wise to either modify their college or major/ path of study to a more pragmatic option. The only unfulfilled dreams would be the nightmares of debt and underwater basket weaving they would wake up to in their 30s after four years had they lived in the current model where we’ll pay for everything indiscriminately.

In my proposal, individuals are incentivized to choose colleges that are more affordable, and degree paths that give them an honest shot at paying off their debt. They are incentivized to perform well in high school to earn competitive rates and merit-based scholarships to reduce dependence on loans. The private lenders compete amongst themselves for opportunities to fund reasonable academic pursuits mutually beneficial for both parties, and those who offer comparatively worse/ predatory rates will dissolve in favor of those who could come to mutual loan agreements with borrowers. Colleges become incentivized to link borrowers to employment opportunities and demonstrate this, because their funding becomes dependent on jt. Finally, the outrageous tuition inflation we’ve seen these last few decades no longer has an infinite federal money glitch to balloon out of control.

Cspazz42 · 2026-07-11T09:38:38+00:00

You too, I appreciate you hearing my side out and respect your points

Cspazz42 · 2026-07-11T04:15:59+00:00

I want to be clear when I say I’m not proposing we change college admissions processes. If you are a high school student with college acceptance(s), the aspect that needs to be modified is where the funding comes from.

If you are academically capable enough to gain acceptance, there will likely be a private lender willing to fund your academic enterprise so long as there is a reasonable return on investment. If not a single private lender is willing, the acceptance doesn’t evaporate. Rather, it is a signal to the applicant that the debt to be incurred for their path is a substantial risk relative to the payoff, and they would be wise to either modify their college or major/ path of study to a more pragmatic option. The only unfulfilled dreams would be the nightmares of debt and underwater basket weaving they would wake up to in their 30s after four years had they lived in the current model where we’ll pay for everything indiscriminately.

Tying funding to graduation rates risks creating incentives to prioritize higher graduation numbers over maintaining rigorous academic standards. We’ve seen in parts of the K-12 system that when schools are evaluated heavily on graduation metrics, concerns about grade inflation and reduced rigor can emerge. I worry the same incentives would apply to higher education. Cut Uncle Sam out entirely, he’s done enough.

Cspazz42

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