The Price Is Not Right: Solving Student Debt Starts with Stopping Soaring Tuition Cost

(Source) On August 8, 2020, the former Secretary of Education renewed the suspension of student loans, stopped collections, and waived federal loan interest until the end of the year. The action taken by the federal government acknowledges that there is a problem but addresses only the immediate threat by providing temporary relief. In September, some senators called for the former President to cancel $50,000 of student borrower debt under the Higher Education Act, the effects of which would endure beyond the pandemic. However, both solutions are limited, as they fail to address the source of the student debt crisis: the precipitously increasing cost of higher education placing borrowers in a strenuous situation: paying off thousands of dollars in student loan debt for ages after graduation. Part of the challenge of addressing the larger problem lies in the lack of consensus about what causes the price of higher education to increase. Bill Bennett, the Reagan Administration’s Secretary of Education, launched one prominent theory on why tuition prices continue to climb. Commonly known as the Bennett Hypothesis, Bill Bennett blamed colleges for exploiting federal financial aid expansions by raising tuition prices, believing the subsidies would“cushion the increase.” He criticized colleges for being [read more]

Increased Tuition for an Inferior Product: The University’s Guide to Not Caring

(Source) Imagine you decided to go to the dealership to buy yourself a brand-new car. After carefully researching the model and make of car and shopping around for a good deal, you finally decide to make the purchase. When the car gets delivered, you are excited to take it out for a drive, only to realize that the dealer has sent you a Vespa (an electric scooter). You complain to the dealer and they tell you to “make the best” out of a bad situation. You might think this is ridiculous, but it is in fact the experience of almost every university-enrolled student during the COVID-19 pandemic. It is a poorly-kept secret that tuition rates in the United States have risen at an alarming pace. In 1963, the average cost of attending college was $9,918 (adjusted for inflation), while in 2017, the average cost was $23,091. This precipitous increase has led students to borrow alarmingly high amounts and at increasing rates, resulting in a cumulative student loan debt teetering over $1.5 trillion. Today, students are leaving universities crippled by student loans and, in many cases, unable to pay them back. According to the Federal Reserve Bank of New York, 10.8% of [read more]