Jack P. Carroll ‘24
In recent news, the Biden Administration’s Department of Education announced that it will be cancelling $1 billion in student loans for those “who previously had some student loans cancelled, but will now get full student loan cancellation.” While this may appear as a major form of relief for the 72,000 student loan borrowers the program is intended to help, the consequences that are likely to follow could result in decades of financial suffering for current and future generations of students.
For one, the cancellation of student loan debt will encourage colleges and universities to further raise the cost of tuition. If the federal government uses taxpayer dollars to ensure that a given school receives the money it’s owed, then colleges will have no incentive to decrease the price of tuition. This is not a newly discovered phenomenon. A 1987 article in the New York Times reported that beginning in 1980 “college tuitions had been rising year after year at a rate that exceeded inflation.” The same article partially attributed these tuition hikes to the expansion of federal loan subsidies two years prior in 1978.
To those who may speculate the relevancy of this data, bad news awaits. A recent NBC News article reaffirmed these trends: researchers Grey Gordon and Aaron Hedlund used quantitative models to find that raising subsidized loan limits led to a 102 percent increase in tuition between the years of 1987 to 2010. The article further specified that (inflation-adjusted) federal government spending has increased from $50 billion in the 1999-2000 school year to $87 billion in 2019-2020.
It is important to note that the data presented thus far has only focused on the effects of government loans. With the rollout of student debt forgiveness (and more to come) our country is entering uncharted territory. By paying back student loans, the federal government is inadvertently telling colleges and universities to maintain reckless spending habits and high tuition costs. Ironically, our nation’s students may never escape the consequences of their own relief.
In addition, issues surrounding equity accompany student loan cancellations. How does the federal government respond to the hardworking families who took out students loans and paid them back? Or how about the students who–after years of endless studying, sports practices, and extracurricular commitment—opted not to attend their top choice school as a result of high tuition costs? Short answer: it doesn’t. This response is evidenced by a video in which Senator Elizabeth Warren, on the 2020 campaign trail, replies “of course not” to a frustrated father who asks if he will receive any money after years of saving for his daughter’s education to avoid taking out student loans.
It is also worth noting that the federal government’s involvement in higher education has done very little to ensure student success inside the classroom. Drawing from the National Center for Education Statistics, the Washington Post reported in 2018 that fewer than 40 percent of students enrolling for the first time at a four-year institution graduate in four years. With community colleges included, over half of students who start college drop out in six years.
As the Biden Administration proceeds to roll out student loan forgiveness, the rising costs of higher education await. Hopefully both parties eventually acknowledge the damage of student loan forgiveness and one day use this issue as a platform for bipartisan unity. Until then our nation will continue to do what it does best: celebrate the illusion of progress.
The online version of this article was revised on Saturday, May 22nd 2021 to correct article references.