Libertarian Gary Johnson Is Very Confused About Student Loans

Do the stated
positions on higher
education policy
from both major presidential candidates leave you feeling sad, and like you are
choosing between two bad options? Maybe you
could vote for Gary Johnson, candidate for the Libertarian Party
and former governor of New Mexico. Yes you would throw away your vote, but perhaps
he has some smart things to say about higher education.

He does not.

Johnson is deeply confused about
higher education policy. He believes that the reason college costs are so high
is because of the “guaranteed
government student loans.”

Linking college costs to federal
aid is not a fringe theory—it’s called the Bennett hypothesis, named after
Ronald Reagan’s education secretary, and there’s some
evidence that federal student loans may lead to increased tuition (although
it’s not the main reason costs
have increased). But what’s worrying about Johnson’s statement is that he
called federal student loans “guaranteed.” That word has a very particular
meaning in federal student loan policy, and it refers to a program that was
abolished in 2010.

Before 2010, banks
would issue student loans and the federal government would “guarantee” those
loans. That program was wasteful corporate welfare, and the government
saved billions of dollars per year when it switched to loans issued directly by
the federal government.

Granted, new federal loans are
still “guaranteed” by the government, but that’s a very strange word to use in
light of the program’s history. Why not call them “government” or “federal”
loans? It suggests that Gary Johnson simply hasn’t read up on the federal
student loan program since 2010. Which is… concerning.

But it gets worse. Johnson has
publicly stated that he’s
in favor of reducing interest rates on federal student loans, which is also
known as “refinancing”.

I would really take a hard look at
how students might, I don’t know, receive some sort of benefit or reduced
interest rate. I mean, if we can–if the Federal Reserve can bail out all the
big banks, it seems to me that we might arrange lower interest rates for these
loans to get paid back.

So here’s a guy who believes that
federal student loans shouldn’t exist and are the primary cause of increasing
college costs. But he also believes that we should offer lower interest rates
on those existing loans. A recent estimate suggests refinancing would cost taxpayers $55 billion.
Not only is refinancing expensive, but it’s also highly regressive because
borrowers who have the highest level of debt (and thus benefit the most from
interest rate reductions) have college degrees and tend to earn higher incomes
than the rest of the population.

Except Johnson seems to believe
it would cost nothing because maybe the Federal Reserve could do it. And in
that way, Johnson is also keeping company with Green Party candidate Jill
Stein, who wants to erase all student debt using quantitative easing. Jordan
Weismann at Slate does
a great job of explaining why Stein’s proposal makes no sense. As far as
Johnson’s statement goes: the main bailout of the banks came from Congress, not
the Federal Reserve. And I can’t quite figure out what Johnson would expect the
Federal Reserve to do. Also, Johnson can’t tell the Federal Reserve what to do.

Even more confusing, Johnson doesn’t
believe the Federal Reserve should exist.

By the way, Gary Johnson also wants
to abolish the Department of Education. As
I’ve written before, that idea has become more popular in recent years, but
also leads to difficult question. Does Johnson, who wants vouchers for K-12
schools, really want to get rid of Pell grant program, the most successful and
popular voucher program ever? Given what he’s said so far about student loan
policy, I’m not sure I want to know his answer.