By Greg Harvey, Treasurer
Published in November 20, 2014 issue of The Voice
Let’s state the obvious: college
isn’t cheap, and it’s getting more expensive. Total student debt in the United
States is at record levels. Truly, something needs to be done. However, before
we start offering free, government-paid tuition to all students, let’s review a
few reasons for the costs and see if there are any less dramatic approaches we
can take.
There are a number of reasons
why student debt is exploding. The most major, of course, is rising tuition
costs at universities. However, that doesn’t tell the whole story. According to
the higher education think-tank Minding the Campus, there are more students
than ever attending out-of-state colleges and paying more for their education
than in-state students. In addition, as much as 40% of the increases have been
from room and board. Collectively, these account for much of the student debt
increase.
Right away, there is a simple,
though unpopular, solution: more students can stay in-state and commute when
possible. Commuting costs half that of living at an in-state institution and a
third of living at an out-of-state one. Speaking as a senior who’s commuted my
whole career, I can attest that, while commuting isn’t fun, the lower tuition
makes up for it. This is a simple solution that requires no government
intervention; instead, it depends on students making better choices.
Similarly, the subjects students
choose can be just as important as where they attend. According to The Economist, much of college’s ROI
depends on one’s major. Those who study technical fields like engineering do
much better than those in the arts. It’s just the way it is. Therefore, another
easy fix for students to lower bills is to compare the costs and benefits of
particular majors before choosing.
Another major reason for
increased tuition costs is, not surprisingly, governmental regulation. As
Arthur Kirk, Jr., president of Saint Lao University, states, his college has hired
a plethora of staff to meet regulatory requirements and spends thousands of
hours annually completing federal compliance forms. If we made universities
more public, these costs wouldn’t go away; instead, making higher education
free would eliminate the incentives colleges have to manage costs.
Now I must address the points in
last week’s article. First, forgiving all current student loans is infeasible.
There’s over $1 trillion in such debt outstanding; simply writing it off would
cause massive losses to the federal government and private lenders. While the
idea sounds good, it would be catastrophic in reality.
Finally, completely subsidizing higher
education is impossible in the United States. Think of it this way: the Federal
Government runs a massive deficit each year and states struggle to balance
their budgets. Governments don’t have a lot of money available to pay for
tuitions. Cutting other spending to make room in the budget sounds good, but other
programs can’t make money like colleges do. Is it really fair to cut funding
for roads or pensions to pay for higher education, when colleges can raise revenue?
Therefore, we’d have to raise
taxes, likely on the rich. However, higher earners are more likely to be
college graduates. Therefore, raising taxes would actually cause students to
pay for their education over a lifetime instead of a defined period. If you run
numbers, you’ll find that even small tax increases on the wealthy would cause
them to pay vastly more than under a normal student loan. In other words, if we
try to make college free, it’ll actually become more expensive for those who succeed.
In conclusion, student debt is a
problem, but the solution isn’t massive government reform. Rather, we need to
make better choices about the schools we attend and what we study. Will higher
education ever be free? No, and it’s pointless to think so. But if each student
worked harder at reducing their own college bills, we’d see immediate decreases
in personal debt, and it’s the only guaranteed way we can achieve that.
