If “common sense” were truly common, we wouldn’t really need a word for it, would we?
If you give people money to do something, they will take it. If you give them more money to do the same thing, they will take more money. Put another way, the more money you provide for a good or service, the more the apparent cost of that good or service will be.
It seems so simple, doesn’t it?
Not simple enough for higher education policymakers, naturally.
Federally guaranteed student loans, as a cause-and-effect relationship, have made a college education unaffordable:￼
Secured financing of student loans resulted in a surge of students applying for college. This increase in demand was, in turn, met with an increase in price because university administrators would charge more if people were willing to pay it, just as any other business would (though to be fair, student loans do require more administration staff for processing). According to Forbes, the average price of tuition has increased eight times faster than wages since the 1980s. In 2018, the Federal Reserve estimated that there is currently $1.5 trillion in unpaid student debt. The Institute for College Access and Success estimates that in 2017, 65 percent of recent bachelor’s degree graduates have student loans, and the average is $28,650 per borrower.
The government’s backing of student loans has caused the price of higher education to artificially rise; the demand would not be so high if college were not a financially viable option for some. Young people have been led to believe that a diploma is the ticket to the American dream, but that’s not the case for many Americans.
Financially, it makes no sense to take out a $165,000 loan for a master’s degree that leads to a job where the average annual salary is $38,000—yet thousands of young people are making this choice. Only when they graduate do they understand the reality of their situation as they live paycheck-to-paycheck and find it next-to-impossible to save for a home, retirement, or even a rainy-day fund.
And yet there are far too many people profiting from the current arrangement for any real hope of change.￼