As we’ve watched student debt climb up to a trillion dollars and speculated about it being the next big bubble, there’s been a lot of hand wringing and bickering, but not much action. There have been a few new federal programs to help borrowers pay back their loans in more manageable chunks, and even a few much-debated forgiveness programs. But none of these addressed the problem of why there’s so much student debt; of why it’s so expensive to get an education in this country.
Congress is finally preparing to address the increasingly absurd cost of tuition, and to help make sure young people know what they’re getting themselves into when they accept student loans. Most people enter college at 18, when they’ve never been financially independent before, and are not fit to understand the significance of a loan of tens of thousands of dollars, the concept of compound interest, or the salary levels they can expect with various degrees.
One proposal is to require that colleges use a standard financial-aid award letter, so students can easily compare offers, according to Bloomberg Businessweek. This makes total sense, much like how grocery stores are required to post unit prices so that shoppers can actually tell where the best value is.
Another proposal is to reward colleges with moderate tuition increases and good educational outcomes, and pull funding from colleges that raise their tuition too drastically. President Obama has proposed $1 billion in grants for schools that strive for affordability.
The effort — a bipartisan effort, no less — to address the cause of the rising student debt in this country is admirable, and I hope it works.
“In 2003 and 2008, colleges beat back other cost-control measures,” the Bloomberg article says, “dismissing them as Soviet-style price controls and meddling with academic freedom and student privacy.”
But in 2003 and 2008 we weren’t as starkly aware as a nation of the potential impact an unsustainable financial bubble can have on the economy, and student debt hadn’t yet surpassed credit card debt. Hopefully awareness of the urgency of the problem of student debt is high enough now that some actual progress can be made.