How Can We Solve the College Cost Problem?

How Can We Solve the College Cost Problem?
Abstract
This essay analyzes the growing issue of expensive college costs and student debt concerning economics, internal politics, and different cultures in the American population. It will also state possible proposals, institutional changes, and lessons from other countries.
Education is described as the key to success; however, much is not being said about the sacrifices needed to succeed. At the point of writing, the national student debt is estimated to be
$1.6 trillion held by more than 44 million Americans. This number is gradually growing with the concurrent rise in the cost of attending a college. Development in technology has revolutionized the workplace such that earning a living wage is more challenging without an advanced degree. College graduates earn 80% more than their counterparts with a high school diploma (Hess, 2020).
Consequently, there is a desperation among a majority of the population to attend college in hopes of a well-paying job or a scholarship pathway into sports superstardom. Covid 19 forced the United States to enter a recession in February 2020. The coming months of March through June saw over 42.6 million Americans filing for unemployment. In the 2008 recession, there was increased compulsion for people to go back to school searching for new skills. Since then, the cost of a four-year college degree has been 25% more expensive, with student debt increasing by 107% (Hess, 2020).
Overview.
The United States government has lowered numerous entry bars to universities except for the tuition prices, despite enforcing innumerable laws. This is due to their efforts to find a new solution to increase access while also cutting government costs. However, achieving such as balance has proved impossible, and the population ends up with the majority of the financial burden. The tax revolt of the 1980s saw Reagan's administration passes a tax and expenditure limitation bill to restrict States governments to a limit of taxation and expenditure (Hayward, 1998). Consequently, the States would cut back their spending on college education, causing universities to raise the tuition fees. The same trend was seen after the 2007 recession, where Federal and State made massive cuts in higher education funding. Therefore, there is a reason to believe that the government will take the same measures as the economy tries to recover from the Covid-19 pandemic.
Therefore, government funding is the primary influence in reducing and increasing college tuition and student debt. However, with every recession, the government cuts the funding of colleges that play a part in the increased education. Since the 2008 great recession, tuition costs and student loans have increased; however, government funding has not returned to the heights of the pre-2008 period. In 2018, the funding for two- and four-year public colleges was estimated to be over $7 billion less than in 2008 (Hess, 2020). Despite this, the United States has maintained its status as one of the high spenders in college education. Luxembourg is the only country that spends more per student than the U.S. however, a college education is free for their students (Ripley, 2018).
Therefore, in the case of the United States, funding is not the issue; instead, mismanagement and lack of priorities is the main issue regarding higher education funding.
Possible solutions.
The obvious solution for such a problem is cutting the cost for the students. For instance, universities might encourage students to live at home to reduce their costs. It is estimated that students studying in their State had an average tuition cost of $21,950 for the 2019-2020 academic year. This number rose to $38,330 for out-of-state students at public universities and
$49,870 at private non-profit universities (Hess, 2020). An average American family was estimated to spend $3,370 on dining and rooms per student, three times more than other developed nations. For instance, countries like Canada and France tend to have fewer dormitories and dining halls on their campuses. The recently released 2020 budget for New York University showcases how expensive the operation cost is. Apart from the NYU Langone Health, the budget totals $3.762 billion responsible for all academic, auxiliary, and administrative roles at NYU New York, NYU Abu Dhabi, the New York-based budget of NYU Shanghai (NYU, 2021). However, even if these services are done, the U.S. would still spend more students than other countries and second to only Luxembourg (Ripley, 2018). Therefore, reducing healthcare, transportation, meals, and housing funding is not a complete solution. Others can argue that it is essential to invest in student welfare services to increase higher education (Ripley, 2018).
The demand for a college education has always been high, even with the risk of falling into debt. According to the Department of Education, U.S. colleges expected enrollment of about 20 million students in the fall of 2017. Fast forward to the fall of 2020, three years later, the number has reduced by 5.1 million students (Hoffower, 2019). For most people, the advantages college offers outweigh the cost; therefore, there are more likely to seek out the loan. However, this notion is starting to change as there is a reduction in investment costs. This is while other sectors such as teaching, healthcare, and nutrition rise in price. The education sector is labor-intensive, and teachers require to be compensated fairly. Colleges spend much of their money on paying professors and increased benefits such as healthcare insurance. Conclusion: there is a way such costs can be lowered, such as increasing the size of lectures. Fewer full-time professors, shorter hours of teaching, fewer books in the library are some of the proposed solutions; however, they remain unpopular among the students and parents.
Government Policies
Another solution is a regulated tuition education system proposed by Sen. Elizabeth Warren's Student Loan Fairness Act. Her proposal seeks to eliminate up to $50,000 in student loan debt for 42 million Americans, equating to 95% of student borrowers (warren, 2019). The act proposes the regulation of interest rates and tying them to the federal reserve discount windows. At the moment, students are likely to pay almost nine times more than banks are allowed to borrow. Consequently, the act will regulate interests to ensure students pay through
Rates subsidized by the federal government. Students are also in line to receive benefits such as the 10/10 loan repayment plan, limiting their student loan payment to 10% of discretionary income. This benefit is already being offered through the Income-Based Repayment; however, the act's proposal provides a maximum capitalization of 10% of the loan taken out (Roseth, 2019). Consequently, the student's loan balance will never surpass their original balance plus the 10%. Students can also convert their student loans into federal loans dependent on some qualifications.
Writing off the debt entirely is a more forgiving approach and possibly the best course of action given the severity of the loan problem. An example of this is the proposal by the Levy institute to cancel all outstanding student debt. This situation will mean that the federal government will write off existing debts as the majority creditor, assuming paying the loans on behalf of the borrowers. Such an action would instantly reduce the student loan balance to zero. However, the main question is how economically sustainable the action will be and its potential effects on the economy. Economists argue that the cancellation of student debt would act as a stimulator to the larger economy, consequently increasing the annual GDP by $86 to
$108 billion per year. They suggest that there will be an increase in labor demand which will help solve the problem of unemployment. The main point of their argument is that student loans heavily impact families' balance sheets, which hold back economic growth from a grassroots level.
To Sen. Bernie Sanders, his solution is to make college free. His proposals involve the implementation of free tuition in public colleges and universities. This action will eliminate the predatory nature of the federal government profiting off student loans. Students that already possess the loan will be allowed to refinance them with the interest rates of today's marketplace. Lastly, the proposal wo...