Chances are if you’re reading this right now, you have student debt. According the Institute for College Access & Success, more than 65 percent of college seniors graduated with student loan debt in 2017. Among them, the average loan debt totaled in at a whopping $28,650.
Nearly $30,000 of debt is a huge burden to carry when coming out of college. It represents money that could go towards a down payment on a house, a new car or an investment towards your financial future. With all of this debt, it comes as no surprise that millennials are refusing to buy homes and that the auto industry is having trouble selling upscale cars to people our age. We simply can’t afford those luxuries.
Presidential hopefuls like Bernie Sanders and Elizabeth Warren have both rolled out plans to have Wall Street pay to eliminate this debt. While this would no doubt help the millions of us who currently hold student debt, the process of eliminating all student debt would have harmful unintended consequences.
Let’s focus on what got us here in the first place: rising college tuition rates. According to the College Board‘s 2017 college pricing report, students are paying 213 percent more to attend public universities today than they were paying in the late 1980’s. There are more people going to college than ever before — demand is higher than it has ever been. An increase in demand always results in an increase of prices. However, this alone can’t explain the dramatic rise in tuition rates.
In the 1970s, when college was extremely affordable compared to today, financial aid programs were almost non-existent. Then, at the tail end of the decade, Congress passed the Middle Income Student Assistance Act, which was effectively the start of federal financial aid for college. Ironically, almost as soon as the government started assisting students with paying for college, tuition started to rise.
In a Business Insider article from June on the link between government assistance and rising tuition, Ohio University economics professor emeritus Richard Vedder explained: “Knowing that students will get financial-aid money, the university raises fees and takes advantage to capture that themselves.”
Universities know that most students can’t afford college. But they also know that the government will help pay for what students can’t afford.
So why not raise tuition? Students will still attend, the government will pay the higher tuition rates and the university can suddenly build a new football stadium or hire an “assistant dean of pedestrian crossings.”
This is perhaps the most frustrating feedback cycle facing our generation today. The more the government pays to try and help students, the more universities raise their tuition. No one benefits but the colleges themselves.
By paying off all student debt through a tax on Wall Street, the government would yet again be handing over a blank check to universities. If students are willing to accept any price and the government is willing to pay entirely for college, universities have no reason not to continue increasing tuition. The social pressure to attend college will ensure that students won’t refuse the increasingly unaffordable tuition rates. While eradicating the student debt one time may mean our generation gets off scot-free, the next generation of college students would face higher tuition than ever.
Instead, our government should focus on lowering the cost of tuition by implementing policies such as faculty-to-student ratio caps, which help ensure that the bulk of student’s tuition isn’t spent on administrative bloat. Even more radically, the government could actually limit access to federal student loans.
Why does the government make it so easy for an unemployed twenty-year-old to take on six figures of student debt in the first place? Everyone should have a right to attend college if they want to, but there’s nothing wrong with forcing them to think long and hard about paying for it.
I believe that we have a crisis on our hands when it comes to student debt. However, I fear that simply having the government pay it all off will only worsen the issues that got us here. There are other steps to take that will create lasting change, rather than just allowing one generation to win the federal financial-aid lottery by having their tuition paid for. Our generation owes it those who follow us to focus on solutions that will create real, lasting change. Eliminating all student debt for one generation isn’t a permanent solution: it’s a death sentence for the students to come.
Tristan Korff is a sophomore in economics and finance. The views and opinions expressed in this column are those of the author and do not necessarily reflect the official policy or position of the Collegian. Please send comments to firstname.lastname@example.org.