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A student’s plea to Biden: do not cancel our debt… yet
Last week, the Supreme Court began hearing oral arguments on Biden’s Federal Student Loan Debt Relief, estimated to cost $30 billion a year over the next decade1. Simultaneously, the Biden administration has been pushing for an overhaul of income-driven repayment plans, which would pause interest or entirely erase payments for thousands of students: essentially turning federal loans into a $333 billion dollar grant program2.
On paper, I am precisely the demographic that should love this policy: a Gen-Z liberal college student, attending one of America's “elite” institutions. But, in reality, I am disgusted. Biden’s plan does not solve America’s higher education crisis– it just papers it over with hundreds of billions of dollars that could be spent on real reform.
American universities already have significant financial support from our government. In 2020 state and local governments spent 321 billion on universities 3, the Department of Education spent 63 billion4, and the federal government spent around 40 billion on university research 5, 6. These figures have over doubled in the past 40 years7.
Yet education remains absurdly expensive. Nine out of ten of the most expensive universities in the world are American. An Ivy League education costs students $332,184 ($239,940 with financial aid, funded by alumni donations)8. The real cost of a US education has increased by 748% since the 1960s (adjusted for inflation)9.
So, what is driving this massive increase? In short, colleges began operating like businesses. Elite universities have added marketing committees, massive bureaucracy, vanity projects (like galas and sports stadiums), stock portfolios, and slews of executives making hundreds of thousands of dollars. Numerous lawsuits and scandals expose elite institutions engaging in monopolistic price-fixing and manipulative advertising 10, 11.
Their new “moralistic” policies are, upon further inspection, merely opportunistic. After severe backlash, colleges now fill their brochures with glossy photos of diverse students, yet they remain incredibly economically segregated– with many universities having more students from the top 1% than the bottom 60%. When students protest for higher wages, better living conditions, or even basic health standards, universities resist this change tooth and nail 12, 13, 14.
Students are not spoiled or “living it up,” as is often the popular conception. We are facing food insecurity, feeling guilty for bankrupting our families, and stressing about how to make it all worth it 15, 16.
Meanwhile, the ripple effects of America’s privatized education sector can not be understated. The majority of student debt is held by the already shrinking middle and upper middle class households17. Young adults are robbed of the opportunity to save and invest. It is no surprise that home ownership, birth rates, and savings rates are falling even as salaries increase for college graduates18. The issue of education is at the core of our shrinking middle class and why Americans feel so poor despite making some of the highest salaries in the world.
But Biden's plan will not help. Providing subsidies to a non-competitive and inelastic industry does not decrease prices. The increase in federal spending over the past 50 years has quite evidently not made college any cheaper for students. De facto, Biden’s hundreds of billions will only allow for more price hikes. While the middle class (who does not qualify for these programs) will continue to suffer in silence. These institutions have a track record of scraping every dime from students. They will not change without pressure.
What we really need is competition. We need a government funded elite university that can financially pressure private universities, and provide another option for ambitious students.
Other countries (like Germany and Switzerland) have phenomenal universities that spend over half less per student than the Ivy League US schools, despite being quite comparable in caliber 19, 20. In fact, while education is nearly free for students in these countries, the German government spends almost as much as the US government per student 21, 22. Additionally, elite private education in these countries have tuitions that are less than half of US institutions, despite receiving minimal government support.
Biden's messy and expensive patchwork of policies is merely a band-aid that hides a rotting core. We need competition, competent policy, and reform.
Like so many other issues in the US, the answer is rather simple: be more like Europe. With their slightly outdated websites, non-existent PR team, no student engagement office, and no multi-million dollar stadiums, European universities remind me of a time long gone to the US: when universities were about education, not profit.
1. “U.S. Department of Education Estimate: Biden-Harris Student Debt Relief to Cost an Average of $30 Billion Annually over next Decade.” U.S. Department of Education Estimate: Biden-Harris Student Debt Relief to Cost an Average of $30 Billion Annually Over Next Decade | U.S. Department of Education, Press Office, Press@Ed.gov, 29 Sept. 2022, https://www.ed.gov/news/press-releases/us-department-education-estimate-biden-harris-student-debt-relief-cost-average-30-billion-annually-over-next-decade.
2. Paulson, Mariko. “Budgetary Cost of Newly Proposed Income-Driven Repayment Plan.” Penn Wharton Budget Model, Penn Wharton Budget Model, 30 Jan. 2023, https://budgetmodel.wharton.upenn.edu/issues/2023/1/30/budgetary-cost-of-proposed-income-driven-repayment.
3. “Higher Education Expenditures.” Urban Institute, https://www.urban.org/policy-centers/cross-center-initiatives/state-and-local-finance-initiative/state-and-local-backgrounders/higher-education-expenditures#Question2Higher. Accessed 4 March 2023.
4. “Department of Education (ED) | Spending Profile | USAspending.” USA Spending, https://www.usaspending.gov/agency/department-of-education?fy=2023. Accessed 4 March 2023.
5. Khan, Beethika, et al. “The State of U.S. Science and Engineering 2020.” The State of U.S. Science and Engineering 2020 | NSF - National Science Foundation, 15 January 2020, https://ncses.nsf.gov/pubs/nsb20201/u-s-r-d-performance-and-funding. Accessed 4 March 2023.
6. Gibbons, Michael T. “Higher Education Research and Development: Fiscal Year 2021 | NSF - National Science Foundation.” National Center for Science and Engineering Statistics, 15 December 2022, https://ncses.nsf.gov/pubs/nsf23304. Accessed 4 March 2023.
7. “Higher Education Expenditures.” Urban Institute, https://www.urban.org/policy-centers/cross-center-initiatives/state-and-local-finance-initiative/state-and-local-backgrounders/higher-education-expenditures. Accessed 4 March 2023.
8. “How Much Does an Ivy League Education Cost?” The Balance, 27 September 2022, https://www.thebalancemoney.com/can-you-afford-an-ivy-league-education-for-your-child-795012. Accessed 4 March 2023.
9. Hanson, Melanie. “College Tuition Inflation : Rate Increase Statistics.” Education Data Initiative, 10 August 2022, https://educationdata.org/college-tuition-inflation-rate. Accessed 4 March 2023.
10. “16 Ivy League and Elite Universities Sued for Alleged Financial Aid Conspiracy.” NBCNews.com, NBCUniversal News Group, 11 Jan. 2022, https://www.nbcnews.com/news/us-news/16-ivy-league-elite-universities-sued-alleged-financial-aid-conspiracy-rcna11643.
11. Bauer, Jeremy. “Columbia University sued by students alleging they were misled by potentially false U.S. News ranking data.” Higher Ed Dive, 3 August 2022, https://www.highereddive.com/news/columbia-university-sued-by-students-alleging-they-were-misled-by-potential/628835/. Accessed 4 March 2023.
12. Snyder, Susan. “Civil trial in lawsuit over the death of Penn student Ao 'Olivia' Kong has begun.” The Philadelphia Inquirer, 8 February 2022, https://www.inquirer.com/news/university-of-pennsylvania-student-suicide-lawsuit-olivia-kong-20220208.html. Accessed 4 March 2023.
13. Williams, Tyger, and Susan Snyder. “Students call on Penn to drop discipline against protesters, fully divest from fossil fuels.” The Philadelphia Inquirer, 30 November 2022, https://www.inquirer.com/news/university-of-pennsylvania-protest-students-discipline-fossil-fuels-20221130.html. Accessed 4 March 2023.
14. Coleman, Abbie. “Virginia Tech graduate students fight for higher wages.” WSLS, 3 March 2023, https://www.wsls.com/news/local/2023/03/03/virginia-tech-graduate-students-fight-for-higher-wages/. Accessed 4 March 2023.
15. McCoy, Maureen. “Food Insecurity On College Campuses: The Invisible Epidemic.” Health Affairs Forefront. Health Affairs, https://www.healthaffairs.org/do/10.1377/forefront.20220127.264905/#:~:text=The%20root%20causes%20of%20food,obligations%2C%20and%20student%20loan%20debt
16. “Is 60% of student debt held by 'rich and upper-middle class'?” Austin American-Statesman, 13 June 2022, https://www.statesman.com/story/news/politics/politifact/2022/06/13/student-debt-60-percent-held-rich-and-upper-middle-class/7586541001/. Accessed 4 March 2023.
17. “Is 60% of student debt held by 'rich and upper-middle class'?” Austin American-Statesman, 13 June 2022, https://www.statesman.com/story/news/politics/politifact/2022/06/13/student-debt-60-percent-held-rich-and-upper-middle-class/7586541001/. Accessed 4 March 2023.
18. “Average wages college graduates U.S. 2021.” Statista, 27 October 2022, https://www.statista.com/statistics/642041/average-wages-of-us-college-graduates/. Accessed 4 March 2023.
19. “Funding.” TUM, https://www.tum.de/en/about-tum/facts-and-figures/tum-in-figures/funding. Accessed 4 March 2023.
20. “Budget - LMU Munich.” LMU München, https://www.lmu.de/en/about-lmu/lmu-at-a-glance/facts-and-figures/budget/index.html. Accessed 4 March 2023.
21. Hanson, Melanie. “U.S. Public Education Spending Statistics : per Pupil + Total.” Education Data Initiative, 15 June 2022, https://educationdata.org/public-education-spending-statistics. Accessed 4 March 2023.
22. Füller, Christian. “More money for schools and universities.” Goethe-Institut, https://www.goethe.de/en/kul/wis/20925479.html. Accessed 4 March 2023.