Posted On: Friday - October 10th 2025 9:07PM MST
In Topics: University Trump Economics US Feral Government
A pin prick usually refers to something causing very minor harm, but that's not the case when that pin pricks and pops a big bubble. It seemed as if I were missing something as I wrote the post the past May University Bubble Housing. How would this bubble of fancy-living college students more and more yearly, livin' large on American taxpayer-backed loans be popped?
We thought about (with much more on each in that old post):
1) College student age population - steadily decreasing, but not at any. high rate.
2) The financial burden of student loans - how long would students and parents want to keep getting into near-mortgage-sized debt, most with not much advantage in life to show for it?
3) The point of going to college - this goes along with (2), but even with the big student loan money burden notwithstanding.
As is the case on Peak Stupidity, we've had some good thoughtful comments under Wednesday's (our most recent) post, with the first of 4 (updated) updates, on this U-Bubble, resulting in discussion. This led me to remember that I left something out in that post from May. Here's possible pin prick #4, and I think this one could pop the living daylights out of the U-Bubble.
4) Trump. - OK, that's the abbreviated heading for this. What if the Feral Gov't dropped the loan guarantees and direct loans to university students? As with all kinds of welfare (and anything non-free-market like this is a form of welfare), a big feature for those involved, and a bug for the rest of us, is its inability to be reversed without PAIN, lots of financial pain. Oh, and there will be turmoil too.
Could a President just do this, first of all? Can he? This student loan business just so happens to have had.a SCROTUS case recently decided in regards. Can a President legally forgive a portion of these loans on his own... you know, to help string students along for votes, if nothing else... you don't really have to do it? SCROTUS said 6-3 In June of '24 in Brandon v Nebraska:
... that the Secretary of Education did not have the power to waive student loans under the HEROES* Act.Well, Brandon tried to forgive the loans anyway... wait, actually, does the SCROTUS have jurisdiction over automatic pens? See, there's another case for ya', guys and gals of the highest court... Peak Stupidity may even turn in an Amicus Brief on behalf of the pens. The Constitution doesn't say anything about pens, but hell, it was written in pen.
Well, Trump is our new King. It's more likely he and his DOGE committee or the like would make an effort to cancel this whole moral hazard of a shebang than anyone else I can think of.
I go back to my college days and remember that maybe 1 in 3 or 5 students I'd talk to had ANY loan taken out (with med students being a big exception- most had to borrow in the 10's of thousands). Those that did have loans had perhaps half of tuition and dorm room rent borrowed - the frugal ones lived at home. That tuition was so much lower though, 1/5 to 1/10 of the current amount.
As we discussed in the comments mentioned, the students live large today. Looking back, it was not like this. Our State government ponied up what the students' very reasonable tuition payments didn't cover.** Imagine this, the State working to better the population of (mostly) State residents. That was the idea, it occurred to me, or likely somebody explained. It was good for our State to have more educated people (when it meant something), more engineers for local manufacturing industry, more doctors to serve the people, and so on.
Just to confirm I'm not just making this stuff up, I found this paper that describes decreases in State funding. (It was someone at the Univ. of S. Carolina's senior thesis - Good on her.)
State funding has decreased on average by 40.2% between 1980 and 2011.*** While two states (Wyoming and North Dakota) have increased or maintained their portion of funding, the remaining forty-eight states have cut their funding by 14.8 to 69.4%.Besides that our State government funding is peanuts compared to Big Fed, I can see why the legislature doesn't want so much to do with higher ed now. Why spend our State's money to educate mostly foreigners in the grad schools and loads of undergrads too? How exactly does that benefit our State?
The Federal funding is indirect. It's the complete availability of big student loans that allows the U's to increase tuition ("We'll make sure your daughter ..." - 60% chance it's a daughter - ".. can borrow enough to pay for everything." - Student Financial Aid office) to the sky to allow for the fancy campus living. (Let's not forget the D.I.E. offices and all that "necessary" overhead.)
If this loan money were cut off, say, with no backing of private loans either such that risks of payback were taken into account as back in the day, there would be a CRASH like we've never seen. If you couldn't afford it, your kid couldn't attend college - what a concept. There'd be tremendous pressure to lower tuition, so that more could attend. This would mean the cutting of the huge administrative overhead along with all the fancy dorms, gyms, pools, the works. It'd be very hard for the U's to go back to frugality and serving good students and their own States - to paraphrase a certain political candidate from yesteryear, we'd hear a giant popping sound.
In the long run, the popping of this bubble would be for the best. Even in the short run, these examples of the Long March of Communism through the American Institutions deserve to suffer. For those housing developers who started Peak Stupidity writing about the this subject lately, sorry, but we coulda' told you. Maybe go with Section 8.
* HEROES, OMG!
** I can remember a number of times there being some minor protests or campaigns to get the legislature to come up with more of State taxpayers' dough or at least not make a planned cut.
*** I gotta assume this is in nominal dollars, so after taking inflation over those 31 years into account, the drop is far more than 40%.
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