The Student Debt Debacle: Rising Costs, Decreasing Public Support

[Celerity]

https://washingtonspectator.org/student-debt-debacle/

College debt is approaching $2 trillion, more than all other types of household debt except mortgages. Fueled by tuition that exceeds $25,000 a year (room and board adds another $11,000), Federal student loan debt averages more than $37,000 among those with any student debt. Following a hiatus of more than 3 years, 45 million Americans have had to resume repaying their student loans in October. For those struggling to pay their bills over the past 3 years, this additional burden (averaging around $500 per month) will require large spending cuts and will bring additional financial stress.

It will also affect the jobs they can take, where they can afford to live, and whether they can buy a home or save for retirement. Worse yet, many Americans have made payments regularly but have seen little change in their student debt balances because illness, caregiver responsibilities, or unemployment forced them to miss some payments. Twenty years after graduation, half of student borrowers still owe more than $20,000. This debt cannot easily be dismissed via bankruptcy. At retirement, any remaining balances get taken out of Social Security benefits. It should be clear to everyone that tens of millions of Americans are being crushed by their student debt.

In contrast, college debt is not a problem in Europe. Residents of Denmark, Finland, Germany, Scotland, Slovenia, and Sweden enjoy free tuition. Elsewhere in Europe tuition varies from a few thousand dollars to around $7,000 per year. Until the 1980s the situation in the US was similar– college education was relatively cheap. The annual cost of attending a public university– tuition, room and board– was around $9,000 (in 2023 dollars). As in Europe today, college graduates typically had little difficulty repaying their loans. A college education was an opportunity to better oneself and achieve a middle-class existence. College costs in the US then soared, increasing more than almost everything else. Tuition, room and board is now several times what it cost in 1980 even after controlling for inflation. Different mindsets can explain the difference between Europe and the US.

Europe sees college education as an investment in the future and a government responsibility. Some benefits are political. A more educated population is more likely to vote and be better citizens. There are also economic gains. College graduates make more money, and are more likely to make discoveries that enhance everyone’s life. To secure these gains, European governments keep tuition low, which both encourages college enrollment and keeps down college debt. This mindset was predominant in the US until the 1980s, when a college education began to be viewed in terms of personal gains. Consequently, we made people responsible for financing their education, rather than having taxpayers foot the bill. And these individual gains are huge. An average US college graduate earns $1 million more during their working life compared to someone without a college degree. It is tempting to come after some of this money.

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[pwb]

1. Joe tried to fix it.

I think he will still.

[hildegaard28]

2. We're going to

Have to completely reorganize our way of funding and charging tuition in this country. It would be a good start if we stopped providing financial aid, either through grants or loans, to private colleges. Even when the Pell grant is maxed out it barely puts a dent in private school tuition, so students who choose to attend those schools end up taking out ridiculous loans. We need to take the money we give spend on grants and loans into our public university system and make it so that everyone in the U.S. gets charged in-state tuition for any public university or college. If we did that we could probably give everyone an affordable education. If someone wants to spend the money on private school tuition that should be on them. Public schools, from preschool through college, should be either free, or as close to free as possible.