A ‘frozen’ five-figure debt load is still unsustainable
The Virginia legislature is making an effort to “stem college tuition costs” by freezing them. This will not do. The average tuition at a Virginia college is around $16,000. A student who pays for none of that up-front, and who takes out loans to cover all of it, will be well over $60,000 in the hole when he graduates, and with a degree that has become increasingly devalued in the marketplace. Is this where we want things “frozen?”
The gargantuan increase of American college tuition in recent decades has been driven by a number of factors, chief among them what’s known as the “Bennett Hypothesis:” That easy financial aid from the federal government has enabled colleges to significantly jack up their prices. That, in and of itself, is unsurprising: Universities know that the money is going to come, and they know that it will continue to come even (perhaps especially) if they increase their rates. So the tuition goes up, the students can’t pay for it, the government makes up the difference, and the students are left holding the bag for all of that borrowed money at the end of it all.
A “freeze” of this scenario is not a favor to cash-strapped students who are going to be paying off these loans for decades already. A state government’s ability to bring down tuition may be somewhat limited: It can offer more funding to colleges and universities, but it’s entirely unlikely that schools will subsequently lower their tuition rates as a result.
The most likely solution here is for the federal government to dry up the cash flow: If Washington stopped sending unthinkable amounts of money to schools every year, it’s virtually certain that they would respond by dropping their prices, allowing students to attend school without taking on crushing levels of debt for a mere bachelor’s degree. After several decades of this system, it’s not likely it will change anytime soon. But we should at least be aware of the parameters of the issue, and not pretend that mere “freezes” are going to change much of anything.
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