Canceling Student Loans Won’t Solve Tuition Inflation | Opinions
Americans are currently divided on many issues — student loan debt being one of them. While the debate is usually about whether to write off student loan debt, there is a more effective discussion to be had about why people have to borrow exorbitant sums to pay for their education in the first place. According Axios, just over half of Americans said they support “the forgiveness or forgiveness of all federal student loan debt.” The real problem, however, is not necessarily student debt, but rather tuition inflation.
College tuition has increase 169% over the past 40 years — more than any other good or service other than hospital care — but wages only increased by about 9% over the same period. The difference in salary growth and tuition inflation shows the exponential growth of what universities charge students. The number of people going to university has been descending since 2010, probably because people can not pay tuition or they don’t believe their diploma enough to get enough work to pay their debts. Almost half of Americans think the government is doing too little to address student loan debt, and it’s clear from the decreases applicant and graduate data.
“The problem is that a lot of people are being driven away from going to college because of high tuition prices,” said James Weaverling, a Virginia Tech senior studying finance.
During his campaign in 2020, President Biden promised to cancel at least some student loans. In August 2022, as the midterm elections heat up, Biden announcement a program that would forgive up to $10,000 in federal student loans for non-pell grant recipients and up to $20,000 for pell grant recipients. The rebate program will not apply to anyone with income over $125,000 and will cost approximately $500 billion over the next ten years. The program is projected benefit the top 60% of people the most.
“I agree with Biden’s policy because of its widespread impact,” Weaverling said. “With countless students living much of their lives in debt, this is a step forward in making education a worthwhile investment. People who cannot afford college will reconsider this decision due to the possibility of greater debt forgiveness in the future.
Clearly, however, student loan forgiveness is more of a band-aid than surgery. A problem as costly and influential as this must be taken seriously: however, the solution will not be found in public spending alone. We should focus on solving bad policies – be it the glut of administrators to students, the criterion for receiving loans or the lack of competition between universities — instead of trying to solve the negative effects of these bad policies: namely, growing debt.
According Forbes“the immediate causes of tuition inflation are familiar: red tapeoverbuilding campus amenitiesa model dependent on well-paid laborand the easy availability subsidized student loans.
Higher education universities, such as Virginia Tech, have stretched administrator-to-student ratios while accepting more students each year, which increase in the salary budgets of professors and administrators and an overconsumption Approvals on campus for students. Students who are accepted can easily receive subsidized student loans – which need to be repaid – increasing the chances of them taking out loans they don’t need or simply increasing the total amount they will owe when they graduate.
According to Education Data Initiative, student borrowers pay an average of $26,000 in interest and take an average of 20 years to pay off their debt. The average graduate with a bachelor’s degree pays student loan providers nearly $500 a month. Exclusive federal student loan forgiveness is good short-term policy because it will indeed help millions of borrowers who have paid excessive amounts of loans and interest – but it is not the solution.
The solution must resolve fundamental tuition conflicts: rising faculty-to-student ratios, affordability and over-spreading of financial aid, overbuilding of campus amenities, and ever-growing demand.
Lack of competition between universities and colleges is another root cause of high tuition fees. Growing demand and the perceived educational gap between major universities and community colleges or trade schools are increasing tuition costs. Aspects of this problem include the federal government subsidiesstudents overestimating the return to their degree and the lack of transparency on university tuition fees.
“In a well-functioning market, competition eliminates cost inefficiencies and lowers prices,” The Foundation for Research on Equal Opportunities said. “Less-discussed explanations for tuition hikes include significant barriers to entry for new higher education institutions, as well as a surprising lack of price transparency regarding what students will actually pay for college. “
While Biden’s student loan proposal is a step in the right direction, the apparent solution to the problem of rapidly growing student debt is to fix the tuition problem. For this to happen, universities need to be transparent about financial aid, prices for particular services, and average earnings after graduation based on major. Second, there must be increased competition between universities; ppromote and incentivizing trade schools, community colleges, and industry certifications may be the competition needed to get traditional high-cost universities to start lowering prices. These two solutions should work together to reduce tuition costs, which will likely make people less pressured for financial aid: giving students crucial information about tuition, future income and repayment before they make the decision to take out loans.