If You Want to Know What Free Community College Will Be Like, Take a Look at Your Free Healthcare

Is anybody else in this country sick and tired of being treated like an idiot by our government?  I am only asking the question because it seems that no matter what we do, Washington D.C. never changes its tactics.  After two presidential election cycles of massive spending, lies, blunders and embarrassment, last fall we sent the Obama Administration a clear message--ENOUGH!  This week, a new Senate was sworn in and whether or not they do a good job, we as Americans made ourselves heard:  We're tired of all this nonsense.  We've had it.

You would think that Washington would finally understand.  Apparently not.  On Thursday, Obama reverted back to a familiar pattern.  I am going to promise you all the free stuff you want.  Never mind the cost--somebody else is going to pay for it.  This has disturbingly the same ring as the 2008 and 2012 elections--the government is here to pay for everything for you.  All you have to do is vote in another big government liberal in 2016.  Lather, rinse, repeat.

For the next two days, Obama's newest promise, #FreeCommunityCollege was a trending hashtag on Twitter.  Suddenly, everyone is excited over the idea of the first two years of school being provided free. For every person who wants to go to college, for every parent who had their savings wiped out and will have a college age student in a few years, this one's for you.

Unfortunately, the truth is that virtually nothing in this life is free.  The air we breathe is free.  Sunrises and sunsets are free (although our view of them is not).  If we are Christians we believe salvation is free.  That's pretty much it. Everything else costs someone money.  If I have lunch with a friend at a posh downtown Dallas restaurant, and my friend picks up the check, that lunch is certainly not free--I just did not have to pay for it. If the owner of the restaurant is a close friend and he comps the check for me and my friend, the lunch still is not free--the owner paid for the food and venue and cost of the service. There is never a point at which my lunch becomes free--it is just a matter of who pays.  And as adults we know this, but unfortunately, as we saw in the case of "free" healthcare we don't care.  We really don't care how much something costs or who pays for it as long as the party doing the paying is not us.  So when Obama promised Americans free healthcare they all rushed down and voted for him--twice--blissfully aware that, just as with lunch, healthcare can never actually be free but the cost was going to be paid by someone else.  We were very happy to vote in a system that would transfer the cost of our healthcare from us to the American taxpayer--oh wait, that actually turned out to be us!  Or maybe we could transfer it to the those evil rich people--unfortunately that turned out to be us too.  Free was not really free, free was subsidized and those who did not get the subsidy had to pay ten times as much for a product that was substantially inferior.

Now it is 2015, and we all know this.  Unhappiness over Obamacare was one of the reasons for the massive shift in control of the Senate last fall.  But Obama is starting all over again with free education.  But just as with lunch and healthcare and the rest of life, education is not and cannot be "free".  It can only be subsidized.  And as we saw with healthcare, it cannot be subsidized for everyone--just a select few.  Obama says that he wants "free community college for those willing to work for it".  That is as big a lie as "if you like your doctor you can keep it."  The trending hashtag should be #Freesubsidizedcommunitycollegeforthosewhoqualifyforeverybodyelseitwillcostmuchmuchmore.  At least that would be honest, though admittedly hard to tweet.

I taught at a community college for four years after I received my master's degree, so this is a subject I know something about.  I have family who work in the community college systems.  There is a place for community colleges.  In the late 1980's and early 1990s when I was teaching, there were essentially three types of students who went to community colleges.  The first were kids straight out of high school who had been given three options by their parents--go to school, join the military or get a job.  These were by far the least motivated students.  Most of them started classes and dropped them, but continued to hang out in the halls so their parents did not know they weren't in school.  The second block was older returning students who were picking up some courses for a job.  On the Mexican border we had several mothers who took English classes so that they could understand their high school age children who only spoke English at home.  There were men in their late thirties and early forties who needed courses for their jobs.  Most of these people were good students and finished the classes diligently, but they were not on a degree plan.

The third block was people in their twenties who wanted to get a degree but were put off by the cost and some of the difficulties of going directly to the university.  Every year I would open my classes by asking each student why they were taking my class and what they hoped to get from it.  There were always a few who were taking the history classes at EPCC because they had a better chance of passing.  History classes at UTEP averaged about 200 students and were mainly taught by a Teaching Assistant who was usually a grad student.  To be certain, there was a professor with his or her name on the class roster, but the TA was the only person with whom the students had any real contact.  The TA did a lot of the grading There was really no way to get any assistance.  History classes at EPCC were much smaller--about 50 students per class and were taught by an instructor with a master's degree in his or her field.  We did the grading and we interacted with the students.  After credits became fully transferable from the community college system to any state college in Texas, the community college became a better option for students who were taking difficult classes and could not get help in a bigger university setting.  Plus, the courses cost much less.

Interestingly, nearly all the students I taught were receiving financial aid.  One of my inlaws got his Associates Degree through EPCC and paid his own tuition.  He was in and out really quickly on registration day because he paid his own way and the line to do that was quite short.  The line for the financial aid students wrapped around the building.  As long as students stayed in class and earned a decent grade, they received their financial aid.

I stopped teaching in 1993 and moved into the private sector, but I did revisit the community college systems.  I taught for a summer in 2006.  During my six years on the board of the El Paso Hispanic Chamber of Commerce I became friends with the then president of El Paso Community College and attended programs at the campus.  I currently have family members employed by the Dallas Community College.  The model has not changed, but it has expanded. Today, many high schools offer programs that allow students with good grades to earn their last two years of high school and their first two years of community college in the same program.  Far from being less accessible, community college is actually more accessible than it was when I taught.  According to the Heritage Foundation, the average cost of a community college today in 2015 is $3800.00 a year.  That works out to a little over $300.00 a month.  For the student graduating this year who will not receive any help from Mom and Dad toward higher education, that figure is low enough so that he or she can work and pay for classes to earn a two year degree.  In Texas, those credits are fully transferable to any state university.  So conceivably, with a little planning, a student could pay $7600.00 for his first two years of college, and then transfer 100% of those credits to the University of Texas system and get a degree that could help him land a job.  It is an option that makes sense for working families.

If, however, community college becomes "free", that option will go away.  Whenever the government begins to subsidize anything for a select group, the price for everybody skyrockets.  So "free" community college will mean much higher tuitions for those who don't get the subsidy--just like Obamacare.  An option that allows young people to get a degree affordably is suddenly going to be a lot more expensive--out of reach of the private pay.  When the government starts tossing around the "F" word whatever they are subsidizing becomes really expensive.  Not only is it not "free"; it's also no longer "affordable".

The irony is that by their nature community colleges are heavily subsidized--through state governments, through federal grants, through private foundation grants, etc. Subsidies and grants pay for the entire system. This is just the federal government seeking more control--disguised as another freebie which in the end will have a huge price tag.  But as long as that price tag is being paid by somebody else, we are not supposed to care.

After everything we have already been through with Obamacare, with Dodd Frank, with the Obama phones, and all of the other "free" stuff over the last six years. I would like to think the American people are way too smart to fall for this again.  But then I look at the 2012 election, and I'm just not sure.  So what about it?  Are you tired of it yet?

 Alexandra Swann is the author of No Regrets: How Homeschooling Earned me a Master's Degree at Age Sixteen and several other books. Her novel, The Planner about an out of control, environmentally-driven federal government, is available on Kindle and in paperback. For more information, visit her website at http://www.frontier2000.net.

2015--The Year of Housing Change

The new year is off to an amazing start.  Only 9 days in, we are confronting yet another year of massive change.  Many of those changes are coming to the housing sector, and they will affect you whether you want to buy, sell, or merely refinance your home.

1. After months of speculation, yesterday Obama announced a .5% drop to FHA MIP.  This is an executive action order which does not have to go through Congress.  Of course, the stated purpose of increasing the premiums in the first place was to help FHA attain solvency, which the Administration says it has now achieved.  Regardless, this drop will make FHA a more desirable option for borrowers, and with new increased loan limits in many counties and dropping interest rates we can expect to see more borrowers and lenders choosing FHA over tougher to qualify for conventional loans.

2.  And speaking of tougher to qualify for...Fannie Mae and Freddie Mac are implementing their new collateral underwriting system for appraisals on January 26th.  This new system will turn warnings into hard errors for appraisals submitted to Fannie Mae.  It is also going to make underwriters responsible for finding and verifying additional comps, which may result in a lot of delays getting appraisals approved and loans to the closing table.  

Although the powers that be seem to believe that an increasingly automated system for identifying comparables makes property valuation more secure, the truth is that only a qualified human can often really judge whether two properties are really comparable.  A custom built home with fixtures imported from Italy may be the same square footage as the high end track home that is one step above builder grade, but the properties are not actually comparable.  A trained appraiser knows that; a computer program does not.

It is going to be really interesting to see how this works out as the system is implemented on January 26th.  Will we see the normal pattern for real estate over the past six years--extreme paralyzing over-caution in the beginning followed by a loosening of standards later as underwriters get used to the new rules? Fannie Mae and Freddie Mac are supposed to interpret the new rules very differently from each other, creating yet another series of obstacles for lenders.  If FHA does not adopt similar rules, the new guidelines may  encourage more buyers to turn to FHA.  Time will tell.

3.  This is the HUGE one.  In August the CFPB is finally to going to combine the two most important forms in the mortgage world into one new monstrous form.  It seems impossible that it has already been five years since the 1 page, easy to understand Good Faith Estimate was morphed into a 3 page, difficult to understand Good Faith Estimate and the Truth in Lending became a contractual document which had to be  re-disclosed if the APR went up more than .125%.  In 2015 these two long, confusing forms will become one new long confusing form.  The HUD settlement statement is going away too; it will be replaced by a five page form which must be delivered to the buyer three days before closing.  Oh--and there won't be any more real estate closings after August 2015--after that date there are only "consummations."

To paraphrase Betty Davis in one of her most famous roles, "hang on to your hats; it's going to be a bumpy ride."

Alexandra Swann is the author of No Regrets: How Homeschooling Earned me a Master's Degree at Age Sixteen and several other books. Her novel, The Planner about an out of control, environmentally-driven federal government, is available on Kindle and in paperback. For more information, visit her website at http://www.frontier2000.net.