President Bush, on September 27th, signed into law, the College Cost Reduction and Access Act. There are several important and QUESTIONABLE provisions in this legislation.

Student loan forgiveness for public service employees. Without getting into details, it appears that loans will be forgiven for most any public service employee after 10 years of on-time payments. Employees in “public education” are specifically covered, as an example whereas employees in private education are not mentioned. What about the poor guy that worked hard and paid his loan off in 10 years just before this legislation was enacted? Sounds a bit like the efforts to bail out homeowners that bought homes they didn’t need under terms they couldn’t afford!

$375 million for TEACH grants (better description here). A TEACH grant is a $4,000 or $8,000 gift for under-graduate or graduate students, respectively, that wish to go into the teaching profession. The recipients must teach “high need” fields in “high need” schools for 4 years. TEACH grants are “targeted at mathematics, science, a foreign language, special education, bilingual education, reading specialists, other documented high-need fields”. Hmm. I wonder who decides what a “high need” field is? If we MUST shell out $375 million, why don’t we do it AFTER the recipient has fulfilled his or her obligation?

Earlier versions of the bill included language for such nonsense as:

  • (Sec. 502) Expresses the sense of the Committee on Education and Labor that there is a need for sustainable economic and environmental practices and rigorous sustainability academic programs on college and university campuses to encourage increased public awareness of the need to “go green.”
  • (Sec. 702) Prohibits military and civil authorities, federal, state, and territorial, from carrying out death sentences on pregnant women.
  • (Sec. 801) Expresses the sense of the Senate that detainees housed at Guantanamo Bay, Cuba, including senior members of al Qaeda, should not be released into American society or transferred stateside into facilities in American communities and neighborhoods.

No wonder those people can’t get anything done!

More importantly, the “College Cost Reduction and Access Act” pumps another $20 billion into higher education Pell grants raising the maximum grant to $5,400 from $4,310 by 2012. It also cuts the interest rate on federally backed student loans in half to 3.4%. (Associated Press)

Unfortunately, this legislation will only achieve the opposite of intentions…higher cost and less access as already proven by (at least) 29 years of government adulteration. (Chart) (Data)

I could find solid information on post-secondary tuition, grants and loans only back to 1977. At that time, tuition at all post-secondary institutions averaged $924, while Federal grants and loans totaled $223 (per student). If we fast forward to 2006, we find that inflation adjusted (base year 1977) tuition and fees should be somewhere around $3,077, yet the actual amount is more than double that at $7,601! This dramatic increase in post-secondary tuition can unequivocally be attributed taxpayer funded grants and easy credit backed by the taxpayer (or our “lenders” since we’re $9 trillion in debt) since 1977. (See Tuition, Loans and Inflation Chart and the data behind the chart)

According to College Board, Bachelors degree recipients in 2004 graduated with a median debt of $19,300 and it has certainly increased since then. Some economists predict the cost of attending state colleges will soar to $120,000 by 2015. The infusion of cash, be it easy credit, grants or subsidies (in this case, tax breaks) will inflate prices. Have we not observed this in health care? Have we not observed this in housing?

Post-secondary education costs have outpaced inflation by a margin of about 2:1, about the same as health care. We need not wonder why; both have been terribly adulterated with government programs.

Chuck is self-employed in agri-business in Virginia. He can be contacted at

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