Tuition Frozen, But Student Loans Still A Problem

This week’s Courier Herald column:

Good news was delivered to my inbox this week, which will be appreciated by students and their parents across the state.  For the third time in five years, the University System of Georgia will freeze tuition and fees for the upcoming school year. 

While holding the line on the cost of in-state higher education has been a priority for outgoing Chancellor Steve Wrigley during his tenure, his final year’s budgeting was made easier by over a billion dollars in federal Covid relief funds.  Despite a persistent myth that lottery funded HOPE scholarship dollars are responsible for driving up the cost of attending a Georgia college, it should be noted that USG tuition rates are in the bottom quartile of state schools found in the southeast.

Still, we have a national overhang from the costs of college education that saw decades of costs rising significantly faster than the rate of inflation.  Added to the official costs of attending most universities is the rising standard of living expected by today’s students, including the costs for upscale housing and dining options.

The result has been ever increasing student debt. Unlike other credit facilities, student loans have almost no underwriting standards – at least those related to the ability to repay the obligation. 

Instead students and their families, sold on the idea that the college of their choosing is the ticket to the good life, are told not to worry about that pesky cost of four years of education. A “generous financial assistance package” will help them make sure they can enroll.  Much of that assistance is in the form of debt that will be with them during many of their prime earning years.

Not all of the students who take on debt graduate.  Not all degrees provide a pathway to careers that would allow the retirement of the loans accumulated in a reasonable amount of time.  All of these loans are almost impossible to discharge in bankruptcy proceedings.

As a country, we’ve now amassed $1.7 trillion in aggregate student loan debt.  To put that into perspective, total outstanding credit card debt for Americans is about $800 billion.  Clearly, for those with student loan debt, the burden is real.

The current popular solution to this problem is to eliminate up to $50,000 of debt per borrower by the US government.  “Popular” applies to those that owe the debt, and those within the higher education establishment who want to continue business as usual without anyone asking difficult questions such as “If the product you’re selling to these students is worth what you’re charging, why can’t the borrowers pay this money back with the increased income levels you promised them to get them to attend your school?”

I’ll save the moral hazard arguments as America jumped the shark on government bailouts long ago, and others can and will make those effectively in their own spaces.  What I would like to focus on is the discussion that isn’t happening: What reforms will be demanded within higher education to make sure we don’t end up here again?

Most solutions related to college debt forgiveness are to make college “free”.  This is yet another in a long line of things that too many wish to turn into entitlements that rich people will pay for.  Spoiler alert:  With trillion dollar deficits as far as can be projected, we’ve already spent what the tax dollars of the rich can afford.

Instead, colleges need more skin in the game.  At least some portion of student loans extended for those who do not graduate should be the responsibility of the institution.  Schools with a high percentage of graduates either in default or with loans not retired after a decade should also face monetary consequences.

Too many schools are charging too much and providing students too little in return. There is no reason for taxpayers to continue to underwrite this system as it currently exists without significant increases in accountability from our institutions of higher education. 

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