Fixing the Student Loan Mess
As the new Trump Administration enters its third week, amidst a vast sea of issues, a huge financial challenge awaits. Anyone paying attention knows that the student loan situation in the U.S. over the last few decades is out of control. Some 46.2 million students have taken out loans, currently averaging $38,000, which most of these borrowers will find difficult to pay back.
Loans are necessary for many people because college tuition continues to escalate. With a wave of a hand, the installed Biden-Harris Administration attempted to administer a loan forgiveness program that boggles the imagination and would create an unending debacle.
Any such forgiveness ploy is unfair to those who recently, or not-so-recently, re-paid their loans, including those who borrowed only the sum that they could repay, while working part-time to pay for the rest.
Out of Control
The Commonfund Institute reported that from 1977 to 2024, college tuition increased by an astounding 1,513%. This occurred via an average annual inflation rate of 6.10%, nearly double that of national inflation rate of 3.56% over the same time period. Why are college costs out of control? Administrators know that if they jack up tuition, the Federal government will merely jack up maximum student loan amounts.
Neither the universities nor government bureaucrats will have to payanything. The cost of this convoluted system ends up falling naive 17- and 18-year olds, or those with limited options. These poor souls are brainwashed into believing that they need to sign away their futures so that they can have a future!
Today, college administrators enjoy growth in wages that outpaces faculty growth in wages. Federal bureaucrats form a strange partnership with these profiteers to pauperize one in seven in our population.
Refuse to Abuse
One immediate solution is to refuse giving loans to students who attend colleges and universities which charge more than a modest tuition. Once the high-cost universities understand that gargantuan-sized loan amounts will no longer be approved, these universities will change. Like any effective enterprise, without customers, in this case students, the colleges will either lower their tuition or will go out of business.
Will such a scenario put an undue strain on universities? Not likely. Most have considerable flexibility to cut expenses. It is only due to the unholy alliance between the colleges and the federal government that, increasingly, the cost of a four-year education has far outstripped the cost of other goods and services.
How low would college tuition be if it rose only slightly, on par with what most of American industries experience? Even during Joe Biden’s hyper-inflated term, tuition increases that simply matched the rest of American enterprise would have been far less than what has been occurring for decades.
Woe is Us
College tuition could be 50% lower, or more, once colleges understand that their propagandized target market can no longer obtain the ridiculous-sized loans that the federal government had enabled in the first place. Hence, the escalating tuition spiral ends.
University administrators, of course, will initially protest. They'll say that tuition has to be raised to great heights because of salaries and labor costs, expanding sports and other program, the addition of fancy but unnecessary buildings and infrastructure, and so on. And don’t forget the cost of all but useless DEI officers which some universities will continue to harbor, despite the prevailing change in sentiment since Donald Trump re-gained the presidency.
Focusing on faculty cost, consider the number of high salaried instructors, including celebrities/politicians who do very little work. At best, they appear on campus once a week to teach a course, which is largely handled by graduate assistants. What’s more, consider the rising number of administrators compared to the student body, versus that same ratio a few decades ago.
Huge Salaries to Fill Stadiums
Top coaches in high-revenue college sports will continue to demand millions of dollars. A university can absorb the high cost of a few celebrity coaches if other salaries are more in line with the actual work that each faculty member does.
In any case, universities and colleges need to run their operations like the businesses that they are, without huge subsidies, which are dependent upon perpetually impoverishing many rising freshmen.
If this spiraling tuition phenomenon is not broken, our higher education system will begin to emulate traditional European royalty, where the upper class lived grandly at the expense of those deluded into being their supplicants.
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