What’s driving the $ 1.5 trillion student debt crisis
College is expensive. Since the 1999-2000 academic year, the net price of tuition, fees, room and board at a four-year public college has increased 68%. The amount borrowed to go to college each year has double at the same time. Today, federal cumulation student loan the debt is over $ 1.54 trillion, more than double the amount in 2010.
Much of the focus on student debt is on rising tuition fees, and for good reason. As states divested in higher education, tuition fees rose across the country. Tuition Fees Posted at Four-Year Public Colleges increased by 36% from 2008 to 2018. In many states, tuition fees have increased further. Today, state student funding is 8.7% less than it was before the Great Recession, which should be a wake-up call given the current economic situation.
This is why many have proposed to make public colleges free. But that alone won’t solve student debt in the future, as tuition fees aren’t the only driver of student debt. The total cost of the university also includes living expenses, such as textbooks and accommodation and food, whether or not the students live in camps. The cost of living is actually higher than the price of the tuition sticker.
In fact, tuition and fees are just 48% of the total cost of the college in a four-year public college. In two-year public colleges, it’s an even smaller share at 29%, with the cost of living accounting for almost two-thirds of the cost of enrollment. And that’s just the sticker price. The tuition fees themselves are sometimes reduced with institutional scholarships, before federal aid is applied.
So just covering the tuition fee on its own will not eliminate the need to borrow for many students. Many of the existing “free college” proposals would continue the Pell Grant program and allow low-income students to use the grant to cover living expenses, which would help low-income students. But the Pell grant did not keep up with the rising costs of the university. The maximum grant covers only half of the living costs of students in a four-year public college.
Not to mention, only about 22% of undergraduates receive the Pell grant, and not all of those who receive the full amount. The average grant received is approximately 32% less than the maximum amount. Several advocates have proposed double the Pell grant, as did Democratic presidential candidate Joe Biden, which would help more people cover the costs. However, many still have to find a way to cover their living expenses.
There is also another factor that plays an important role in increasing student debt: higher education. Last year, the number of dispersed loans for graduate studies represented 16% of all federal student loans Posted. Although these are a small number of loans issued, they actually accounted for 41% of all federal loan dollars scattered around. It is because of the amount that graduate students borrow. Often, graduate programs are more expensive, or students receive fewer scholarships, and they also borrow for living expenses.
While many often talk about borrowers with six-figure student debt, these aren’t undergraduates. According to federal data, the average debt of a bachelor during the 2015-2016 academic year was just under $ 27,000. This is partly because they are cheaper, but also because there are strict federal limits on undergraduate borrowing. But that’s actually not a lot of graduate students. The same federal data shows that there is only one level of education where the median borrower exceeds six digits. These are professional doctorates – think law, medical, or dental schools.
On top of all this, another factor in the rise in student debt is that the number of people attending university – and therefore borrowing to do so – has also increased. Undergraduate enrollment increased by more than 3.5 million students since 2000. And more people are also going to university. From 2000 to 2018, graduate studies increased by 41%.
The increase in cumulative debt looks amazing, but it’s also important to consider all of the context that is contributing to the increase. If people are serious about eliminating student debt, a way will have to be found to cover college tuition, as well as living expenses. And no plan exists to ensure that all students can enroll at Harvard for free.