Matt Bowman Source 2

What is causing student debt to rise so much?

Clemmitt, Marcia. "Student Debt." CQ Researcher 21 Oct. 2011: 877-900. Web. 1 Mar. 2016.

Federal loan and grant programs for higher education are facing a tough challenge in acquiring funding as Congress attempts to decrease the federal debt across the board. After discussions on the debt ceiling, lawmakers have moved money to Pell Grants for low-income students. This money originates from loan programs for graduate/professional school students and students who pay back loans on time. In other attempts, the government has begun several new programs to increase loan fairness. They include making payments simpler for lower-wage earners and offering federal loans straight to borrowers (skipping the middleman of banks) to avoid subsidizing commercial institutions. Still, some say unless student debt follows more closely to most other debt and can be forgiven in bankruptcy, the loan system will never reach the desired levels of fairness. In the meantime, tuition has continued to rise drastically, reaching $830 billion in mid-2010 and still increasing today. As the article addresses these topics, it also answers a few main questions throughout: Are students acquiring too much debt from higher education? Is who attends and completes college being altered by rising costs? Have rising college costs been the aftermath of growing accessibility of student loans?

Before reading this article, being as uneducated on the system of debt and loans as any average college student, I had no idea that rising costs most likely came from schools offering more loans. That correlation isn’t one that presents itself to non-educators or non-economists. After reading this, though, I can easily see how it is possible. Just the same as increased availability of mortgage loans raised home prices, college prices have gone up with more college loans. As more money flows to students, colleges raise their prices, which causes the government to increase its limits on subsidized loans, and so on in a cyclical manner. I think it is summed up nicely with this quote: “Without anybody intending this, the subsidized student-loan programs actually incentivize states to raise tuition,” says Northwestern's Weisbrod. “Anything that makes it less expensive for a student to attend makes it easier for a school to raise the tuition.” However, I also see the merit in the simple fact that rising expected quality of education and technological advances make it impossible for schools to keep costs the same over time. This begins to answer my question of what is causing the increase in college costs in good detail. This article also shed some light on and caused me to think of the significance. We can see costs getting higher and debts continuing to grow, but is that really a problem? I believe it is because, as this article addresses, college loans burden students with long-term liabilities that can affect their choice of jobs and ability to pay things like mortgages. Nearly 10 percent of federal student-loan borrowers defaulted during the two years ending Sept. 30, 2010, a huge leap from 7 percent in 2008. This shows that a growing number of people can’t pay their debts. The other argument that average debt is reasonable paired with higher potential earnings is logical but doesn’t hold much merit with the fact that a growing number of college graduates are taking jobs where college isn’t necessary. I believe that debt is necessary but the higher levels we are experiencing are impossible for many to bear.

I think this article converses nicely with my first source because it shows that maybe the problem isn’t that students don’t understand loans, there are just too many out there and not enough government intervention in the wake of rising college costs. Myself not understanding that that could be a cause for higher costs shows that many others probably don’t realize it either. After reading these two articles I feel like the start of a solution might be found in educating students on policies for loans rather than just the loans themselves. We may also need to have more students weigh the pros and cons of college, and then what field, compared to their other options, as money-centered college degrees are increasing rapidly and stagnating many areas of society. This could solve the problem of student ignorance and, in turn, solve the problem of loans running rampant throughout our system of higher education, potentially negating a large chunk of the problems found in both articles.

Now that I have a better grasp of why college costs are rising in the first place, I can start to see better what needs to be done. I want to look next for something that can show me the direction being taken by the government and colleges to lower costs, since most agree that it is or soon will be a problem. Now that I have some answers on how students and policy makers view debt and why it is there in the first place, I think I can start to assess the meatier side of things: a solution.