While those who value effectiveness and efficiency over political patronage and wealth redistribution – upwards – prepare to fend off Democrat presumptive Pres. Joe Biden’s suspension of student loan debt, few states will see less impact from this than Louisiana even as the issue highlights where the state can do better. Why? The TOPS program.
To start, Biden’s idea of using executive branch discretion permitted in the law authorizing this lending by the federal government to forgive anywhere from $10,000 to $50,000 abuses the law and seems incredibly unlikely to withstand judicial scrutiny. Which is why he’ll try it, even if it is doomed to failure, and understanding the dynamics of the debt held explains this.
While the average debt outstanding was around $29,000 (in 2019), the median was only $17,000 (in 2016, when the average was about the same). This reflects a heavy skew towards graduate education and private schooling. In fact, the large majority of total debt is held by households with high incomes whose members attended expensive schools and/or pursued graduate – usually professional – degrees. The typical household could pay off that average amount at fewer than $200 a month for 20 years, and usually has income that can support that.
This policy mainly is a sop to wealthy backers of Biden, and secondarily to higher education whose members in the election largely supported Biden and at the most expensive schools nearly in lockstep. This only props up excessive to outrageous tuition and fees many schools charge, which feeds into more bureaucracy and employees and higher salaries for them, which then gets recycled into donations and other nonpecuniary support for Democrats and the political left.
Some people who took out loans and fell on hard times through no fault of their own would benefit from this, but more often those with loans who are scraping by find themselves underemployed for paying too much tuition in acquiring self-inflicted useless “educations” (not every one of them can get elected to Congress). It’s nothing more than reverse Robin Hood, violating every sense of decency for those who played by the rules and paid their student loan debt or who eschewed college yet will have to pay for other people going to it, in rewarding the rich and the unwise, the latter of which disproportionately populate the left of the political spectrum.
That payoff to the rich would be magnified as its portion of the debt-owing population in Louisiana. For one thing, Louisianans by average fall in the bottom ten states of debt owed, at an average of under $26,000, as well as proportion of students owing anything at just under half. In part this is due to the reasonable average of tuition and fees; for all the wailing and gnashing of teeth that occurs from some quarters about how much these have increased in the state over the past dozen years, this expense started at such a low base that it’s still in the bottom half of the states.
But the main reason stems from the Taylor Opportunity Program for Students, which serves as a kind of universal basic tuition payment since it has such low qualifying standards that theoretically permits a large swath of in-state matriculating secondary education population to attend a state college or university for only a few hundred dollars a semester. Its presence puts the state tenth from the bottom in terms of proportion of aid that is need-based, at 57 percent, explaining the contradiction of lower need-based aid and debt despite moderate tuition and fees.
Resolving this seeming conundrum, as well as noting how any forgiveness would affect Louisiana debtors less, should remind policy-makers of the necessity of bringing change to the state’s backwards method of aiding students. TOPS should become a true scholarship program where qualifiers get there on demonstrated merit rather than ability to perform with mediocrity, while the state beefs up its capacity for need-based aid.
Raising the TOPS ACT Test requirement from a minimum of 20 to 24, which encompasses the upper quarter of test takers nationally, rewards excellence, encourages greater effort in high school, and weeds out dilettantes while cutting TOPS’ cost almost in half. Then tripling current need-based GO Grant funding and doubling its maximum allotment to $6,000 annually would save the state nearly $100 million a year while helping out more deserving students from less-wealthy backgrounds.
Biden probably will try it knowing it’s likely the judiciary will invalidate the move in conformity with liberal principles that it’s more important to be seen trying to do “something” (especially in the minds of his supporters who directly benefit from the attempt) than to solve the actual problem. The threatened $400 billion hit (at the low end) to the American taxpayer would be cheered by Louisiana higher education institutions because it backs indiscriminate tuition and fee hikes, but other policy-makers should take it as a hint to reform Louisiana higher education that needlessly inflates from policy shoveling money at mediocrity.