The Student Debt Crisis
The tuition rate has quadrupled over the past 35 years. Students will get into the college of their dream, only to realize they cannot afford it and will settle for a cheaper college that won’t provide the same level of education. Students who take out loans for the more expensive colleges don’t have a much brighter future due to the debt. These tuition rates are in place due to high spending by the universities. If universities could be incentivized to lower their spending, then tuition prices would also fall.
“Over half of college-bound seniors rule out their first choice institution based on price alone.”
High tuition prices are forcing students to make tough decisions. Students must choose between their unaffordable dream college, and a cheaper, less attractive college. The extremely high prices also affect families who cut back on needs around the household just to leave a budget for their child to attend college.
“Published tuition and fees rose about 3% from last year even though the government reports there has been little inflation in the rest of the economy.”
Tuition has been rising faster than the rate of inflation for decades. The average income of families has remained stagnant, meanwhile the average cost of college has risen 3% or $2,000. This brings the average instate tuition price to $9,410, putting a strain on many college students.
Rising tuition is a consequence of the greediness of the top executives at universities. They want to be able to build better programs at the expense of their students. The ranking of colleges plays a part in this spending. In order to move up the rankings, each university must improve their school. Unfortunately, upgrades usually cost money.
The number of students graduating with excessive debt has grown steadily. More people with debt negatively affects the economy. If graduates are still in debt years into their careers, they won’t buy houses or start families until later in life. Most repayment plans for loans start on an unrealistic 10 year term, but the average time to pay them off is 21 years.
Owing money that you do not possess is terrifying. If life throws a curveball at you, things can go downhill quickly. Alan Collinge had a simple goal in life. He wanted to graduate college, get a job and start a family. After graduating, he found a job that was enough for him to live off of while repaying his student loans. One month, he was short on his loan payment and was told he would be charged a one time late fee, but was charged every month after. Thinking this was a mistake, he called his lender, but no one would help him. Due to the laws stating you can only consolidate your student loans once, he was stuck with the same company that was sucking his bank account dry.
Collinge quit his job in hopes of finding a position that would pay for his growing needs. With the economy struggling, he was unable to find one. His student loans defaulted and the consolidation company denied his request for economic hardship forbearance, then ignored his calls. The next two years his debt grew by more than he made. By the age of 33, he owed $95,000, and his dreams of a house and family had vanished. He felt as if his education had hurt him far more than it had helped him.
College tuition is a problem that needs to be solved. Nonetheless, there are still some people who seem to deny reality.
“Sticker prices at private nonprofit four-year institutions rose by around 60 percent, while the actual price paid by the average student rose by only around 30 percent over the same period.”
The reality is that Americans are graduating with debt that they must immediately work to pay off. Some people argue that the increase in college tuition pricing is not as bad as it seems. They believe that the “sticker price” may keep rising, however through financial aid and other scholarships, the actual price is offset.
We cannot throw our hands up and say, “we solved the tuition crisis by saying that there is no problem!” An increase of 30 percent is an unacceptable amount. The median income for a male in 2012 was around $34,000. The average cost of tuition at a private university was $29,557. Almost 87% of their income being spent on college, leaving barely $4,000 to live off of for the year.
One approach towards the problem would be to have schools lower their spending. To ensure that this happens, we would lower government funding at schools that don’t lower their spending, while incentivizing schools that do cut spending. In 2013 the federal government spent nearly $76 billion on higher education. With this much money at stake, any threat to take it away would influence institutions to make changes.
“Since 1987, states have cut funding for schools by about 44 percent.”
This is the opposite of what they should be doing. For the states to help, they would only have to raise taxes slightly to fund the incentives. This money would then be given to those institutions who lower their spending.
The drastic increase in college tuition that this country has seen is a problem that needs to be acted upon. Many Americans are living in a hole of debt today because they chose to pursue higher education. No one should feel as if their education hurt them. If we don’t lower tuition prices the problem will worsen.