How Can We Lower Tuition and Student Debt?
- The federal student loan market is a disaster waiting to happen.
- The average student graduates more than $40,000 in debt. Most won’t finish paying back their loans until they retire – if they don’t default first. The repayment burden falls not on those who benefited from the loan, but on taxpayers.
- We can lower the cost of higher education without reducing the qualify of education.
Tuition Rates and Student Debt Are Too High
As more and more students enter college, the amount of federal loans now exceeds $1.3 million. The average student graduates with more than $40,000 in debt. Most won’t finish paying back their loans until they retire. Nearly 11% default on their loans, damaging their credit scores at a very critical juncture in their lives. And the repayment burden falls not on those who benefited from the loan, but on taxpayers.
The Cost of a Diploma Increases But Not Its Value
Colleges cannot increase enrollment to meet the demand for college degrees, so they raise tuition. This raises the cost of higher education. As higher education costs rise, the federal government is pressured into granting more student loans. As the number of student loans increases, more student apply for them. All this revenue goes to the colleges, so there is no incentive for them to cut cost.
Lower the Cost of Higher Education Without Reducing Quality
We can lower the cost of higher education without reducing the qualify of education. But students, parents, colleges, and lenders will have to accept changes to the way loans managed. Deduct loan payments directly from the graduate’s income based on a percentage of that income. Determine loan amounts by the student’s major and potential earnings after graduation.
Colleges should cut costs by reducing the number of years needed to earn a degree. They should reevaluate the high salaries paid to presidents and coaches. They should stop marketing worthless degrees. And end the current rage to compete in providing “luxurious” lifestyles in their residential centers.
Finally, reevaluate the need for loans in the first place. There are many well-paying, critically important jobs in fields that require only training and experience, not a four-year degree.
Cutting Tuition and College Costs
- Students should pay back their loans their income, based on percentage tied to their annual income. Do not require interest payments. This will make loan repayment more manageable and easier and mitigate default.
- Base the amount of a student’s loan on their major and potential future earnings. Loan amounts should not exceed a defined percentage of future earnings. Tying loan size to the choice of major ensures the student an handle payments.
- Colleges should cut costs by reducing non-academic salaries, doing away with 4-star college dormitories, and stop marketing worthless degrees.
- Reevaluate the need for everyone to get a college degree. There are many well-paying and critically important jobs that require skilled workers with training, but not a four-year college degree.