Conspiracy Theory of the Week

Today we start a new feature on DLCINCI—the Conspiracy Theory of the Week. These theories will range from the so-plausible it’s probably happening, to the insanely bizarre that probably aren’t, to obscure historical rants that will bore 99% of any readers to tears and lead them to question my sanity.

Furthermore, I intend to adopt a very broad definition of “conspiracy.” This column will not be limited to tinfoil-hat conspiracies that imagine stereotypical groups of middle-aged white men huddled in a smoke-filled room, hatching obscene plots of profit and world domination, but will also touch on events where the “conspirators” may never have explicitly intended or articulated the goals of the conspiracy, nor even met or communicated with each other directly, but whose actions, intentional or not, created a sinister result.

With that in mind, here is the inaugural conspiracy. Please note that any views expressed below do not necessarily represent the views of Drinking Liberally, DL-Cinci, or even me. I make no representations that any facts or opinions stated below are accurate, well-thought-out, or even researched all that well. Nevertheless, enjoy.


THE STUDENT LOAN CONSPIRACY


A confluence of factors in the 1950’s and 1960’s emerged that led to two decades of unprecedented growth for higher education: (1) The launching of Sputnik in 1959, coupled with Kennedy’s call to put a man on the moon by the end of the decade, and the subsequent huge investments in basic and applied research; (2) the Ford Foundation’s transformation from a local Detroit charity into a massive source of funding for colleges and universities all over the country and the world (and perhaps a conduit for channeling CIA money into higher education as well), (3) draft deferments for college students, encouraging young men to enroll and stay in college as long as possible; and, most importantly, (4) the massive baby boom generation all starting college at once. Combined, these developments allowed for a great expansion in the number and size of institutions of higher learning.

By 1978 that was all over, and America’s colleges and universities were in serious trouble. The economic shocks of the 1970s had begun, shrinking public and foundation purses; the stock market stagnated, limiting the growth of university and foundation endowments; and the baby boom was out of college, and universities saw their enrollments drop precipitously. Universities built for 20,000 students frequently found themselves with fewer than 10,000. Steep declines in enrollment and government funding forced colleges to increase tuition at a time when recession and inflation were making it harder for families to pay. The only choice was contraction: new construction and hiring slowed or stopped; salaries were frozen or cut; campuses were shrunk or closed altogether.

So, in 1978, the federal government came to the rescue. Less well publicized than Carter’s bailout of Chrysler, the Federal bailout of higher education was in a similar form: loan guarantees. And not loans to the universities themselves, but to their customers, the students. The federal student loans program, started as one of LBJ’s Great Society programs, was originally intended to provide aid only to the truly poor. The innovation of 1978 was betrayed by its title: the Middle Income Student Assistance Act of 1978. Now, anyone who wanted one could get a loan for higher education. Families who previously may have sent their kids to commuter schools in their hometown could now finance sending their kids to faraway public and private schools; students could now attend extremely expensive elite schools that previously would have been far out of reach.

So far, all of this sounds pretty good-who could object to making college easier to pay for? No one, certainly, and least of all me--but that’s not what expanded student loans accomplished, nor is it what they were intended to do. Rather, they were intended to financially support the universities. In the 1970s, universities had to raise tuition merely to continue operating; however, any increase in tuition would decrease enrollment, as many middle class students would be forced to delay or forego college altogether. Student loans avoided this trap, by allowing the student’s ability to pay to expand as fast as tuition could.

And universities were quick to take advantage. Tuition increases have increased much faster than inflation in the intervening years. Professional schools, especially in business and law, have similarly expanded on the tide of freely available loans.

As a result, universities are now big businesses, with huge marketing departments focused on getting as many creditworthy students as possible; tuition increases are continuous and steep; states are responsible for less and less of the costs of so-called “public” schools; financial institutions make billions in interest payments and fees, and students and their families are saddled with decades of debt.

The debt itself has other, more pernicious effects. Students who once may have pursued careers in public service, as social workers, teachers, organizers, legal aid attorneys, and so forth, are instead forced to seek out higher paying alternatives in the corporate world. Our best and brightest become corporate drones so they can finance their education. The corporate world, of course, has its own, conservatizing effect on people. As Upton Sinclair once wrote, “It is difficult for those to see whose paycheck depends on them not seeing.” People dependent on corporate checks for their financial health are less likely to question their legitimacy, or support left-leaning causes and candidates who do.

So: in 1978 the government expanded access to student loans. This seemingly benign act had far reaching effects: it rescued colleges from imminent financial collapse, generated windfall profits for banks, saddled students and their families with decades of payments, deprived public service agencies of many otherwise willing talents, and enabled the further rightward tilt of the country. Pretty good for one law.