In recent years, the rise of the student debt crisis has intensified at an alarming rate. As people are sold on the idea of an American Dream that requires an expensive education, many find themselves crushed under the weight of thousands of dollars of debt following their graduation as they face an uncertain job market. And the problem can persist through their lives to when they should be thinking about retirement, as well.
According to reports by both the New York and Cleveland Federal Reserve Banks (as reported by Student Loan Hero), 2016 college graduates take an average of $37,000 in student loan debt with them when they leave school and Americans, in total, owe $1.3 trillion dollars to lenders for the cost of the college experience. After leaving the college campus behind, the nagging debt is taking its toll on borrowers’ places in the greater economy. Due to the cost of education, many millennials are putting off buying homes, having children, and starting new businesses. Not only does this lead to a depressed economy, but it also widens the wealth gap and causes many people to be left behind financially just as their adult lives are beginning.
With this existing as such an ever-present problem that touches the lives of approximately 44 million Americans and counting, let’s examine the cost of college and what the Trump administration plans to do about all of this.
Why The Hell Does College Cost So Much?
There are a lot of factors that have contributed to the staggering cost of education and the accompanying size of our collective student debt. The cost of tenured and publishing professors and a higher standard for amenities to attract potential students are factors, but the fact that students are shouldering a majority of the cost instead of the state is hugely responsible. According to the Washington Post, the amount of funding going towards education is not equivalent to the rising numbers of students. When looked at by a student-by-student percentage, the amount of money going towards public higher education is its lowest since 1980. This is becoming a uniquely American problem, as well. Germany, Finland, France, Sweden, Norway, Slovenia, Brazil, Luxembourg, and Iceland are offering higher education for free. However, while these countries are working to make education accessible, the United States is not even keeping pace with inflation.
“Sure, in actual dollars, spending on higher education by the states is up, but it hasn’t kept pace with the rise in enrollment during the last decade, especially as more students go to public colleges. If the current trends continue, beginning in 2022 spending on higher education will reach zero in states such as Colorado and Alaska, and by the 2030s in South Carolina and Massachusetts.”(via)
On top of faculty, expensive sports programs, and other high-tech facilities also add to the high price tag of tuition. But there’s another growth area that is responsible for winning students and rising costs.
“Schools are all going after a fairly small pool of students who are high achieving and high income and able to pay much of their own way to college. They’re trying to build more amenities — so you hear about the rock climbing walls and the lazy rivers,” Robert Kelchen, a professor at Seton Hall University’s Department of Education, told CNBC.
And with the addition of these new programs and student services, that also creates a whole host of new positions that need to be filled and salaried, which also adds to the price of tuition.
The wealth gap also pertains to educational institutions, with the top 40 richest schools receiving over 60% of gift endowments. According to analyst Pranav Sharma‘s remarks to CNBC, “This growing gap will pose increasing competitive challenges for institutions that do not have the resources to invest in facilities, financial aid and other strategic initiatives at the same level as their wealthier counterparts.” So, with a smaller percentage of schools receiving this increase in revenue (the top 50 richest schools had a median endowment of $3.5 billion, while the rest of the list had a median was just $113 million), students are left to take on more debt to make up the difference.