Compromising Into A Trap: Progressivism, Neoliberalism, and the Student Loan “Industry”

This article was originally published by Eric Haas of the Rockridge Institute on September 19, 2007.

In a recent op-ed, Michael Kinsley describes the “wacky” and illogical student loan situation for higher education. It’s a broken system that has been around for more than a decade. Progressives will have an uphill battle making substantive changes. Many progressives have accepted the neoliberal and, indirectly, the conservative views about higher education and markets and now they are trapped in this logic and resulting programs. The current student loan debacle is another lesson that progressives must lead with their values.

In a recent op-ed published in Slate and the Washington Post, Michael Kinsley describes the “wacky” and illogical student loan situation for higher education. In a nutshell, Kinsley writes that conservatives have created a for-profit student loan “industry” where the federal government pays part or all of the interests on student loans made by private banks and loan companies and guarantees them as well. The rate the government pays is higher than if the government were loaning the money directly to the students, and the government is liable for the debt if the student defaults. As a result, the federal government is spending hundreds of millions, possibly billions, of dollars annually in loan payments that they don’t need to. Here’s the link to the article: Wacky World of Student Loans: How Government Created an ‘Industry’ (9/15/07).

Why has this been happening? Greed and interest politics is surely part of the answer and Kinsley acknowledges this. But there is more, and it has to do with conservative, progressive, and neoliberal modes of thought.

First, we know how conservatives see the purpose of higher education, public or otherwise: it is a private good that you buy so that you can get a better, higher paying job. It is a commodity. There is more, but that is the key purpose related to financial aid. As a result, not everyone will be able to afford to go to college and that is inevitable and necessary. “Give-aways” or “entitlements” make people lazy. People need to work for what they need and when they don’t get it, they are motivated to work harder. The market is the best place to engage in this competition and a moral way to determine college attendance is through who can afford student loans.

Progressives have been not been as clear about their view on the purpose of public higher education. Progressives should be saying that education is part of the government’s moral purpose to empower its citizens: we become fuller people—by making more informed choices in our lives, by more fully experiencing art and literature, by being more productive workers, and by giving back to society. People are motivated to work harder when they have enough support to grow and be successful. The more people who go to college, the better they will be and the better society will be. Education is an investment in people and our government should support as many people as possible to go on to higher education. (See Thinking Points, Chapters 4 & 5 for an overview of Conservative and Progressive morality and Government v. Free-Market governance.)

But there is a split among people with progressive values about how to expand access to public higher education. Many progressives believe that public higher education should be directly supported by state and federal funding, so that tuition can be low and grants or very low interest government loans can be readily available. This is part of our government’s moral purpose to empower us, the citizens.

But there is another mode of thought, neoliberal thought, that many progressives use when it comes to education. In brief, the neoliberal mode of thought accepts the progressive ethic of empowerment through education and agrees that more students should be able to go on to public higher education. Neoliberalism also agrees with the conservative logic of the market, education as a private commodity, and the ability to afford student loans as an appropriate part of determining college attendance. Student loans distributed through private, for-profit banks, not grants and lower tuition, are acceptable as the central means for expanding access to public higher education. There is no inherent problem in tinkering with the current student loan system so that the final compromise will reach more students. (See Thinking Points, Chapter 3 for The Problem of Rationalism.)

This broken system has been in place for a more than a decade. Now scandals and mismanagement are being regularly reported, and progressives have an uphill battle in returning to more government financed student loans or beyond that, to an increase in student grants or lower tuition through more direct state aid to public higher education. Many progressives have accepted the neoliberal and, indirectly, the conservative views about higher education and markets and now they are trapped in the logic and resulting programs. Conservatives, and likely neoliberals, will probably counter progressive attempts at substantive changes with the Bad Apple frame: the solution is to punish the wrongdoers, not replace a good market-based system that has enjoyed bipartisan support. At most, a few more regulations are needed to ensure that similar bad apples don’t re-emerge. It is harder, now, for progressives to argue otherwise. (See Thinking Points, Chapter 8, p. 126, for the Bad Apple frame.)

The current student loan debacle is another lesson that progressives must lead with their values. These are empathy and responsibility, with the result that government has a moral purpose to protect and empower its citizens. Education is a clear aspect of empowerment. That’s where substantive fixes to the student loan system need to start.


Cognitive Policy Works specializes in providing organizations and individuals with frame analysis, policy briefs, strategic advising, and training.

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