COMMENTARY: Combating college tuition inflation, unlimited student loans
In the late 1970s, the U.S. experienced a period of rapid inflation, which affected nearly every sector of the economy, including higher education. To make college more affordable, the government expanded federal student loan programs. What was meant to make higher education accessible, instead fueled a cycle of cost inflation that has burdened generations of students with crippling debt.
Prior to the federal government expanding the student loan programs, the cost of attending college was far more affordable. Public universities, in particular, offered a path to higher education that was within reach for many families without requiring significant financial sacrifices. In 1963, the average tuition cost was approximately $12,000. By 2022, it had more than doubled, even as inflation fluctuated.
Colleges began to expand while dumping the expenses onto students. The steady flow of federal loans is hypothesized to insulate students from the immediate impact of these rising costs, allowing colleges and universities to surreptitiously increase tuition year after year. This trend continued for decades, with tuition costs often outpacing general inflation.
In the early 1980s, college tuition was already on a steady upward trajectory, driven not by market demand but by the availability of federal loans. The Bennett Hypothesis explores this phenomenon through the passthrough rates, which determine how increases in borrowing amounts affect tuition costs. The New York Federal Reserve proved this hypothesis.
Their findings stated that "for every dollar increase in the federally subsidized loan maximum, the cost of attending college increased by 60 cents, and for every dollar increase in the Pell Grant maximum, college tuition increased by 37 cents," as the Berkley Economic Review reported.
Today, the average student graduates with tens of thousands of dollars in debt without guaranteeing their degree will lead to a job that justifies the expense.
To reverse this trend, federal student loans must be eliminated. Without the artificial demand created by easy access to loans, colleges would need to compete for students based on price and value. Tuition costs would then begin to reflect the true market value of college education, correcting the inflated pricing that has plagued higher education for decades.
Eliminating federal student loans would also tackle the issue of underemployment rates among graduates. Currently, many students pursue degrees that do not provide a sufficient return on their investment simply because loans make it possible.
Without federal loans, students would be more inclined to explore alternative education options, such as vocational training or apprenticeships, which often lead to debt-free, stable employment.
This shift could also lead to an optimal level of college enrollment. Not every career requires a four-year degree, and by removing unlimited federal loans, we could encourage a more balanced approach to education that aligns with the needs of the labor market. In the long run, this would reduce the number of struggling graduates trying to justify the cost of their education.
As the best-equipped candidate to represent New Jersey's Sixth District, I understand the heavy burden that rising tuition and student loan debt place on families.
My platform is focused on addressing these economic challenges with practical solutions. I'm committed to reducing financial barriers to education while promoting alternative pathways that better meet the needs of our workforce. By putting an end to federal student loans, we can create a more equitable and efficient education system that benefits both students and the broader economy.
The time for change is now. Let us work together to build a fairer, more prosperous future for all.
Fahad Akhtar is running in the 2024 United States House of Representatives elections in New Jersey’s sixth congressional district.
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