The Price of Student Loans Education has become one of the single most important factors of American development within modern society. Possessing both a high school, and more so a college education, lowers unemployment rates and supplies individuals with exceedingly high momentum to gain higher income jobs. (Sparshott 1). In addition, the more individuals with secondary education and degrees, the better off the economy will be in it’s entirety. But to acquire a legitimate college education, you must first receive sufficient primary instruction. As the majority of public high schools receive their funding from the tax payments of their surrounding neighborhoods and counties, lower income areas tend to possess far less effective education systems.
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Each year, the average student loan debts racked up by students in higher education have risen at a startling rate. The average debt for graduates has risen from approximately $10,000 in 1993, to just over $35,000 in 2015, according to a study regarding educational data collected by the government (Chart 2). Additionally concerning, is the supporting evidence surrounding several findings that this shockingly high number of loans pulled by the millions of college attendants, may be creating some unforeseen costs. Both unsubsidized federal loans such as Pell grants, and private, subsidized loans, could be inflating all college tuition prices (Lucca 1). An influential example of this phenomenon analyzes the private school sector, as according to reports on the topic, Private college tuitions are increased by approximately 65 cents for every dollar increase spent for subsidized loans, and for Pell grants, 55 cents for every dollar. (“Student loans…”). The following paragraphs will propose three possible solutions to this complex, influential …show more content…
As stated by William Bennet in 1987, “If anything, increases in financial aid in recent years have enabled colleges and universities blithely to raise their tuitions, confident that Federal loan subsidies would help cushion the increase. In 1978, subsidies became available to a greatly expanded number of students. In 1980, college tuitions began rising year after year at a rate that exceeded inflation. Federal student aid policies do not cause college price inflation, but there is little doubt that they help make it possible.” (Kelchen) The educational secretary put this idea, now named the “Bennett Hypothesis”, into words. Over the past few years, more and more loans have been requested at increasingly high rates, simply because they are so easy to procure. This sudden, rapid spike in loan use is almost certainly linked to the high increase in nation wide tuition costs. And one way to backtrack from this over-correction, would be to make the processes to apply for and procure loans significantly more difficult, deterring students from getting loans solely because they are readily available. But while those positive effects may occur, negative effects may as well; lowered rates in college applications, or perverse incentives such as students seeking other methods of procuring the cost of
Each year, the average student loan debts racked up by students in higher education have risen at a startling rate. The average debt for graduates has risen from approximately $10,000 in 1993, to just over $35,000 in 2015, according to a study regarding educational data collected by the government (Chart 2). Additionally concerning, is the supporting evidence surrounding several findings that this shockingly high number of loans pulled by the millions of college attendants, may be creating some unforeseen costs. Both unsubsidized federal loans such as Pell grants, and private, subsidized loans, could be inflating all college tuition prices (Lucca 1). An influential example of this phenomenon analyzes the private school sector, as according to reports on the topic, Private college tuitions are increased by approximately 65 cents for every dollar increase spent for subsidized loans, and for Pell grants, 55 cents for every dollar. (“Student loans…”). The following paragraphs will propose three possible solutions to this complex, influential …show more content…
As stated by William Bennet in 1987, “If anything, increases in financial aid in recent years have enabled colleges and universities blithely to raise their tuitions, confident that Federal loan subsidies would help cushion the increase. In 1978, subsidies became available to a greatly expanded number of students. In 1980, college tuitions began rising year after year at a rate that exceeded inflation. Federal student aid policies do not cause college price inflation, but there is little doubt that they help make it possible.” (Kelchen) The educational secretary put this idea, now named the “Bennett Hypothesis”, into words. Over the past few years, more and more loans have been requested at increasingly high rates, simply because they are so easy to procure. This sudden, rapid spike in loan use is almost certainly linked to the high increase in nation wide tuition costs. And one way to backtrack from this over-correction, would be to make the processes to apply for and procure loans significantly more difficult, deterring students from getting loans solely because they are readily available. But while those positive effects may occur, negative effects may as well; lowered rates in college applications, or perverse incentives such as students seeking other methods of procuring the cost of