Lehrer: Universities are corporate people, too

by R.J. Lehmann on October 24, 2011

Forgiveness of student loan debt, a rallying cry of many in the Occupy Wall Street (and other assorted thoroughfares) movement, would actually amount to an insidious form of corporate welfare, The Heartland Institute Vice President Eli Lehrer writes today at the Frum Forum.

While some OWS protesters have been vociferous in their calls to end corporate “personhood,” educational institutions of both the for-profit and non-profit types are governed by corporate charters, just as other firms are. In fact, sweeping student debt forgiveness would likely see even greater benefits accrue to the for-profit schools, who “encourage nearly all students to take out loans and can lose future loan eligibility (and thus their business) if too many students default,” wrote Lehrer, who also serves as director of the Center on Finance, Insurance and Real Estate.

All colleges are corporate entities. (Harvard University is actually the oldest corporation in the United States.) Unlike most other entities treated as charities or considered government agencies, they derive most of their revenue from the sale of services–education and research–to paying customers. Only a handful of institutions, maybe 400 of the country’s 4,000 or so colleges and universities, have endowments large enough that they don’t have to watch the “bottom line” for every single project they undertake. Even some colleges with big endowments–Johns Hopkins comes to mind–are fixated on growing revenue and surplus (profit). Explicitly for-profit colleges are just a little more honest about their status as businesses.

If all student loans were to be forgiven, they would almost certainly have to be forgiven for those currently enrolled. Forgiveness, furthermore, would create a precedent that tuition for all colleges would be essentially free going forward. This would amount to an open-ended subsidy that would benefit many of America’s largest corporations (the universities themselves) forever.

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