Holding colleges accountable for the student loan crisis in the United States.
Although his administration has already granted more student debt relief than any other in history, reports suggest that President Biden is seeking to forgive even more student loan debt. Whether the president adopts his campaign proposal of up to $10,000 in debt relief or provides more targeted loan forgiveness (he should help those who need it most), one thing is certain: universities and American colleges will once again get a free pass for the financial mess they helped create.
Since the 1970s, American higher education institutions have done everything to avoid tough decisions that would reduce tuition fees. Rather than cut wasteful spending and bloat, colleges and universities quickly expanded their administrative staff and built new infrastructure in an effort to “keep up with the Joneses.” Administrators now outnumber teachers in a growing number of schools. For example, the number of administrators at Yale University today slightly exceeds the number of professors (5,066 managers and staff versus 4,937 instructors).
Meanwhile, college and university presidents seem far more interested in building dormitories and state-of-the-art amenities like “lazy river pools” to attract more paying customers, rather than upgrading and innovating. their school’s outdated higher education model.
What’s worse is that our nation’s higher education institutions have funded this spending boom on the backs of students and their families. Since 1970, average tuition in the state has increased by more than 2,000% in public and private schools, while average student loan debt has jumped an average of 317%.
Most school administrators act as if college loans are a trivial inconvenience to students and their families, as a former college dean once told me, no more than the cost of a loan for a car cheap. And when pressed on why tuition fees have risen so quickly, the most direct blame is the lesser government support for American colleges and universities. In fact, national investment in higher education in the United States is much larger today (in inflation-adjusted dollars) than in the 1960s. For example, the defense budget is about 1, 8 times higher today than it was in 1960, while federal appropriations for higher education are more than 10 times higher.
Looking at the astronomical increase in the cost of earning a bachelor’s degree since the 1970s, it’s clear that most college and university presidents see nothing wrong with raising tuition every year. In fact, some colleges have increased tuition fees to improve their reputation as elite institutions. As Stephen Trachtenberg (former president of George Washington University) acknowledged in 2012, “people equate price with the value of their education.”
Unfortunately, while student debt relief would benefit millions of current and former students, it would only exacerbate the underlying problem that colleges and universities have no incentive to rein in the costs or to modernize their educational requirements. To avoid another student loan bailout down the road, President Biden should aim to lower the price of a college degree, pursuing policies that lead to lower tuition for all students. For example, colleges should be challenged to accept at least one semester of Advanced Placement (AP) credit for students who score a 3 or higher on their AP exam. In addition, Congress should ban the use of Pell Grants, Guaranteed Student Loans, and other federal aid at post-secondary institutions that raise tuition faster than inflation or some other measure. Finally, schools should be required to offer “no frills” degrees where students can opt out of costly services such as job placement programs, access to athletic and social facilities, and the requirement to live on campus. .
Providing targeted student loan relief, such as expanding and reforming income-tested repayment programs that directly tie debt cancellation to the borrower’s ability to pay, could provide an economic lifeline for people in need. But broad debt cancellation, especially without holding schools accountable for their irresponsible financial management, would only reverse the funding problem for higher education.
If the past is any example, college and university presidents will almost always choose to force students to borrow more rather than cut spending on administrative costs and amenities that have little to do with their basic educational mission. This must stop before we indebt another generation of students and their families.