California’s College Dreamers.
This article speaks to two issues. American’s belief that every kid is “entitled” to college. And politicians use of defined benefit pension programs that no one can afford. Show me one non-union private company in America that still provides a traditional defined-benefit pension program. Business moved long ago to 401K type programs where both the employee and to varying degrees the employer contributed to the retirement program. If the stock market goes up, the employee does better, if the investments go down then he has to work a few more years.
But government and union dominated companies alone persist in keeping defined-benefit pension programs. And guess what happens when these programs over promise and don’t have enough funds to pay the commitments they have made? You guessed it; the federal government comes to the rescue.
The notion that a California firefighter can work from the age of 20 to the age of 50 and then retire with 90% of his salary for life just does not compute.
College costs have been driven up by these subsidies. Yes, subsidies eventually increase costs rather than reduce them. A combination of federally guaranteed student loans and state funding of $2.6 billion in California to the 10-campus system have allowed the costs to go up faster than they otherwise would have. Absent these subsidies, students shop around far more and push back on high prices. We have seen the same impact of subsidies in health care and home-ownership; the subsidies make the service more expensive rather than more affordable.
So California is going broke and the federal government is experiencing defaults of about 40% on their college loan guarantees. These California Dreamers are protesting the symptom rather than the root causes.
No comments:
Post a Comment