Wednesday, September 25, 2013

An Open Letter to Al Franken

I received an email from Senator Franken. Among his accomplishments touted was supposedly keeping college affordable for Minnesotans, accomplishing this by keeping student loan rates low, and trying to expand the issuance of Pell grants and other sources of financial aid. 

This was my response to the Senator:

Dear Senator Franken 
While I appreciate your wanting to keep the cost of education affordable for all Minnesotans, your solutions appear to be centered on only one side of the equation. 

While I applaud your efforts to keep interest on student loans low, and to expand the availability of Pell grants and other sources of financial aid, I must wonder what is being done on the other side of the equation-- to keep college costs down? 

What is happening in colleges seems to be highly analogous with what is happening in health care. In health care, raises in prices are passed on to health insurance companies, who in turn merely charge higher premiums to their users. There is no competition nor pressure brought to bear on medically-related institutions to hold the line on costs, as they simply pass the costs, almost whimsically, back to the consumer. 

In the same manner, as colleges raise their tuition rates with impunity, government responds not by holding educational institutions accountable for their costs, but by increasing the levels of debt on the part of students and/or cost to the taxpayer in terms of financial aid subsidies. This necessarily keeps tax burdens on individuals and businesses elevated, and necessarily increases the already insurmountable mountain of debt incurred by students. 

What is the threshold under which government will put a ceiling on financial aid? 

If government places such a ceiling on the level of financial aid given to students, colleges will necessarily need to adjust tuition and other associated costs or face severely declining enrollment. 

In other words, competition and market-driven forces will bring pressure to keep the costs of college at affordable levels. 

And, incidentally and likewise, competition and market-driven forces will force health care providers to keep their costs at affordable levels (I present the lowering costs and higher quality and availability of laser eye surgery as a shining example of this concept). 

Senator Franken, at the beginning of this screed, I didn't think about tying these concepts, health care and higher education, together. But now that I am typing this, I have come to the conclusion (and I hope that you can follow me) that what it comes down to is this: what is missing from Higher Education and what is missing in health care--including Obamacare--is the very thing that will alleviate issues in both of these problematic areas-- the introduction of market forces to bring costs down to affordable levels. 

Sir, I have little hope that you will take this to heart, as no doubt your partisan blinders will prevent you from seeing the inherent similarities between these two out-of-control aspects of our society, and that these two sectors share a nearly identical solution (market-driven forces); but then again, one can certainly dream. 

Sincerely, 

Leo Pusateri