Heavy student loan debt is national concern

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If we’ve said it before (and we have) — and we will say it again — the rise in college tuition in Washington state is unsustainable. The state needs to select a funding source to provide adequate subsidies to the state-run universities and colleges.

But this is not a problem only in the state. It’s a national concern, and it’s drawn the interest of the U.S. Senate Budget Committee, which is chaired by Sen. Patty Murray, D-Wash.

The debt created by college costs is dragging down the nation’s economy. College debt is now at $1.2 trillion (and recently passed national credit card debt) and is putting everything from home ownership to retirement security out of reach for millions of Americans.

Tuition at four-year public colleges and universities in Washington state jumped by an average of 60.7 percent, or $4,085 in inflation-adjusted dollars, between fiscal 2008 and 2014, according to The Seattle Times. The numbers were included in a May report by the Center on Budget and Policy Priorities.

Murray, in her opening statement at the Budget Committee hearing, said nearly one-third of young households now carry student debts that average out at $30,000 a student.

To this point, the government has tried to address the problems by making grants and low-interest loans to those with limited means.

It’s not working. The soaring debt numbers can’t be disputed.

A witness at the hearing, Richard Vedder, director of the Center for College Affordability and Productivity, told senators that grants and lowering borrowing costs do nothing to address the cause of double-digit tuition inflation.

Pell grants and other federal financial aid exacerbates the problem by providing fuel for price inflation, he said.

Vedder said that between 1939 and 1978, college tuition rose by an average of 1 percentage point above the inflation rate. Over the last four years, the advent of a huge infusion of federal tuition aid, the increase has averaged about 3.5 percent.

The grants and low-interest loans have made it easier to raise tuition, and thus collect a whole lot more money, because the government is going to pay whatever the increase is. And those who don’t get grants or low-interest loans have the credit to take out college loans.

If the higher tuition costs are being covered, colleges will keep raising them. But the overall amount of cash for the schools isn’t necessarily higher because legislatures continue to reduce taxpayer subsidies.

It seems it would be best if the Senate let the states handle this problem.

In Washington state, for example, taxpayers subsidized about 80 percent of the cost of an education at the University of Washington just 10 years ago. Today, the numbers have just about flipped, with only 30 percent of a UW education being subsidized by the state.

This has got to change. Publicly funded universities and colleges, owned and operated by the states, were established to make higher education available to more than just the wealthy.

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Comments

PearlY says...

Sounds like public college and university costs have been rising faster than health care costs. Maybe we should get the government to manage it more forcefully, like it's doing with health care. Oh, wait, the government already runs public colleges and universities! Well, I'm sure they'll do better with health care. /sarcasm off

Seriously, though. In this day and age, is there anybody who doesn't know that when you subsidize something, you increase the demand for it and in heavily regulated sectors with high start-up costs the price is bound to go up? Apparently, most politicians skipped the day that was covered in Econ 101.

Posted 8 June 2014, 6:52 p.m. Suggest removal

barracuda says...

I don't like the rumor about the student loan bailouts.

If you want to make a life change and feel college is you answer, More power to you, and kudo's for making a positive change for you and your future.

If you sign up for college and take out a loan to pay for it... You should stay responsible for that loan and honor your contract with the bank/government for the loan...

My home is a also life long investment, but no one will give me a break and pay my loan if I were to fall behind....

Posted 9 June 2014, 5:36 p.m. Suggest removal

fatherof5 says...

We are so programmed in this country to harness ourselves with burdens that we don't realize that in much of the industrialized world students who earn it are given a free college education and leave for the work force unburdened by debt. How terrible would that be? Virtually all of their early earnings would be spent in the economy, rather than on paying off debts. A good deal for them and for us.

Posted 9 June 2014, 7:32 p.m. Suggest removal

RetiredinWW says...

So is it not true that in those countries where higher education is free for the asking that income tax rates are 60% or so? And if so, is that not a burden on the entire society and therefore dragging down all instead of just those who elect to go to college? I know of a great many people with high school educations who entered the trades and made a much better living than many of those who went the extra four or more years of higher education.

Posted 9 June 2014, 8:30 p.m. Suggest removal

fatherof5 says...

Respectfully, I would submit that while we all know individuals who have made a good living on a limited education, statistically the odds are stacked against it. According to the Bureau of Labor Statistics, the average worker with a masters degree earns more than double the average full time worker with just a high school degree, and he's less than half as likely to be unemployed. Here's the link: http://www.bls.gov/emp/ep_chart_001.htm

I would also submit that the 60% tax rate paid in Denmark (you picked the highest rate in Europe) comes with some pretty great benefits that we pay out of pocket. I'd suggest this article for that perspective: http://www.washingtonmonthly.com/hows...

It may be that their system is not a perfect fit for our country, but I think we could learn a thing or two when it comes to not front-loading our students with college debt. You suggest their entire society is burdened and dragged down by their system, but yet people from Denmark and other European countries consistently score as high or higher than we do in overall happiness. Here's one measure from Forbes: http://www.forbes.com/sites/christoph... Here's another study where Denmark comes out on top: http://www.cnn.com/2014/03/20/travel/...

I love being an American, but that doesn't keep me from looking for ways we can improve.

Posted 10 June 2014, 6:55 a.m. Suggest removal

PearlY says...

The Forbes article doesn't measure "happiness" it measures "prosperity" through a liberal's mindset, i.e., where publicly funded health care equates to "happier" people.

Here's the reality: Denmark and the United States have very nearly the same suicide rates. Suicide is the quintessential proof of unhappiness, and the fact that our rates and Denmark's are quite close suggests that they are NOT noticeably happier than we are.

Given that what you consider an improvement I'd probably consider the opposite, "improving" our country by raising taxes higher and higher to fund your ever-growing wish list will result in no new net happiness. Any happiness it adds to your outlook it would take away from mine.

Posted 11 June 2014, 4:04 p.m. Suggest removal

PearlY says...

No, fatherof5, they do NOT "leave for the work force unburdened by debt." Historically, they have faced substantially higher unemployment rates and much higher taxes. Those are burdens on their future lives just as heavy as those our students bear in this country - they're just better hidden. When will you liberals learn there really is no such thing as a free lunch?

Posted 11 June 2014, 3:40 p.m. Suggest removal

cropcircles says...

College has become an expectation those without a degree are put down, and treated as uf they werent smart enough there are many jobs, great jobs, that dont require college other countries pay for college when its necessary, like doctors and teachers, but not for those that just want a degree because high schools and society expects it it's too easy to get a college loan for any degree regardless of the job prospects or income potential

Posted 14 June 2014, 10:02 a.m. Suggest removal

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