September 27th, 2019
Blame placed for college cost game
WED. | 04-07-21 | OPINION
At $25,864 for public schools on average and $53,949 for private schools on average just for one year of education, it’s no wonder students are fighting for lower college costs or to even eliminate the cost to attend college altogether. These arguments are valid and they come from individuals who have felt, or will feel, the weight of college costs. But it is also important to know why college costs stand at where they are today, and what caused them to reach these mind-boggling amounts.
College costs weren’t always five figures. In the sixties and seventies, paying tuition and fees at a four-year public college would set you back $2,000 (adjusted for inflation), before room and board alongside other fees were calculated. For a private four-year college, tuition and fees ran in the $8,000-$9,000 range (adjusted for inflation).
So what happened?
Many people are quick to point fingers at capitalism and the greedy nature of institutions being the cause behind high college costs. This seems like a reasonable explanation as well, and would naturally give one cause
Graphic contributed by educationdata.org
to hate the system under which this college layout exists. But those individuals would be torn to find out that this isn’t necessarily the case.
Like many other things throughout history, high college costs are the result of a useless government interfering in a system that does not need it to.
The federal government took over as the primary provider of student loans in 1965 as part of the Higher Education Act signed by Lyndon B. Johnson. This gave them the authority to place themselves right at the heart of the college admissions and payment process. The federal Pell Grant was introduced and allowed for individuals who struggled with paying for college to receive money from the federal government (but more realistically, from taxpayers) to cover some of their expenses. This was a genuine attempt by the government to help its citizens, but like all things, the government feels the need to overextend itself. As part of the Higher Education Act, the government also issued a guarantee that student loans would be provided to each and every person by banks and lenders. This was initially to provide an opportunity for students of color to receive loans since banks prior to the 1965 Act would lend based on color. For a short period of time, the system worked. Students were able to attend college and take out loans based on their financial standing, and the federal government would provide grants to students who needed an extra leg up. It wouldn’t work for long, however, because as always, all good things must come to an end.
In 1976, the federal government prevented student loans from being dischargeable on bankruptcies unless individuals had met a set of guidelines. This meant that from this point forward, student loans could not be listed as a debt on bankruptcy documents (dischargeable) unless the borrower 1) had entered into the repayment process more than five years ago, or 2) was able to prove that having the debt remain against them would cause undue hardship— something the federal government never bothered to properly define. The ramifications of this single action has been one of the biggest contributors to the problematic college pricing we see today.
When a person declares bankruptcy, it is a desperate plea for their debts to be halted or removed in order for them to regain financial footing. During this process, their assets are evaluated in addition to their outstanding debts, and a decision is made on whether there is a dire need to discharge the debts that have been levied against an individual. It can often involve the liquidation of assets like bank accounts, cars, or in some extreme cases, your home, if part of your debt lies within a mortgage (Chapter 7 Bankruptcy), or a restructured payment plan where debts are required to still be paid off, but organized in a more manageable manner that allows for completion within three to five years (Chapter 13 Bankruptcy).
Here’s where it gets fun.
When the federal government announced that student loans were non-dischargeable, they made it nearly impossible for hurting college students to declare student loans as a debt on bankruptcy forms, unless they had already met those qualifications mentioned earlier. For many students, this meant that they could not list student loans unless they had already been paying them for more than five years if they were unable to prove undue hardship. Imagine if the government said that you could no longer declare bankruptcy for medical bills unless you had already been paying on them for more than five years? Every hospital in the country would sprint to hike prices up, simply because they knew that those bills could not be bankrupted on for a minimum of five years unless the person in question could prove they were experiencing the aforementioned “undue hardship,” which has no official definition.
Same applies to the cost of college.
The government felt the need to include itself in a process that it wasn’t required to be included in, and when they did, they actively made laws and mandates that opened the door for colleges to raise their prices as much as they want.
In addition to non-dischargeable and hard to navigate student loans, financial aid has also been a culprit of higher college price tags. The more aid the government offers at the taxpayers’ expense, the more colleges can charge for their education. The government has quadrupled the financial aid it provides to students in the last thirty years while college tuition has tripled in the same amount of time. Colleges recognize that when they raise prices, rather than the government backing down from additional aid, they meet them at the new price and offer more money to pay for a now higher tuition. The federal government has failed to “grow a pair” and put its foot down and the only group of people paying the literal price for it is the American citizen. Inevitably, this will continue, and the government will keep ponying up to the demands of the colleges, and each and every one of us will see yet another tax raise to pay for the government’s inability to take charge.
So why do we put up with it?
We have grown up in a society that now believes that we can’t be successful without a college degree, and most employers are looking for individuals that have a Bachelor’s in a field similar to the position. We have drilled it into the minds of Americans that without a college degree, they are useless to society, and colleges know this. Together, this has created a perfect storm that has paved the way for college attendance costs to continue rising, and the American people can’t keep up. The solution isn’t to make college free and increase taxes levied on already suffering taxpayers, nor is it to raise the minimum wage to provide an easier way to pay for college. The problem lies at the heart of the federal government, and the only way to rid ourselves of the problem for good is to remove the entity that started it.
If we want to solve the student loan debt problem, and if we want to see college prices become fair again, we have to remove the government from the process. Colleges thrive knowing that they can place any price tag they want on their university, and people will flock to it thinking they need a college degree. Colleges know that attendees can not default (fail to pay) on their payments without hefty consequence or get rid of them via bankruptcy (which carries even more consequences) in most cases for at least five years.
And when they know students can’t escape paying for their education, regardless of price, they will make it any price they want.
One of the best ways we can prepare students to take on these college costs is to provide them with financial literacy. Both the government as well as colleges know that students are severely unprepared to handle the economic aspect of attending college and neither of them works incredibly hard to change that. As we discussed before, the government is so aware of students being unable to pay their loan debts that they made it impossible for them to get rid of them. Doesn’t that sound like a government that works for you? Including courses regarding financial literacy and requiring students to take a class dealing with navigating loans and loan debt will be indescribably helpful to those students when it is time for them to make one of the biggest decisions in their life. The government must also remove the red tape surrounding the difficulty of claiming student loans on bankruptcies as well as removing the strict guidelines to determine the extent to whether those loans should be forgiven. When colleges are met with students who are no longer required to bear the heavy burden of these loans in order to attend their school, they will have no choice but to lower their cost of attendance to keep the student body they have.
America is in fact facing a student debt crisis at the hands of an incompetent government, but our solution to this crisis should in no way be additional government intervention. That would be like trying to stop a house fire with a flamethrower. We must realize that our enemy is not each other, but rather a government that has effectively pitted us against each other without our knowledge. When we make that connection, that will be where a true solution is found, and progress is made.