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Earlier this year, newspapers reported that student loan debt approached $1 trillion (yes, trillion) and eclipsed credit card debt for the first time in history. One of the major reasons for the ballooning student loan debt in this country is soaring college tuition. When I started at BU back in 2003 (not even 10 years ago), tuition was already sky-high at about $28,000 per year. Now, undergraduate tuition at BU is more than $40,000 per year. Add in room, board, supplies, and cost of living, and it can cost an undergrad nearly $60,000 each year. This isn’t just BU, of course. These tuition rates are mirrored at private colleges and universities across the country. And even public university students are seeing soaring tuition rates as states grapple with budget crises and cuts to education funding (because really, in times of economic turmoil, it makes sense to go after education funding first, right?).
There’s no doubt that tuition is a major factor in the explosion of student loan debt over the past 20 years. In his State of the Union address and his recently-announced budget proposal, President Obama is touting a few new initiatives designed to reign in the cost of college. The initiatives center on two main areas:
- Increasing the availability of college-based financial aid, including low-interest Perkins Loans, federal grants for students with financial need, and work-study funding.
- Changing federal aid regulations for colleges/universities so that schools that maintain or lower their tuition rates will receive greater federal funding than those that increase tuition.
My opinion of these proposals is mixed, to be quite honest. Much like President Obama’s recent student loan initiative, the policy proposals are rather limited in scope. The proposed increase in financial aid opportunities will certainly help some students, but it is unlikely to have a substantial and broad impact in closing the gap between what a middle-class family can afford and what the actual cost of a college education is. As for the federal aid regulations, the proposed changes would certainly be a dis-incentive for schools to raise tuition, but there is no actual mandate to lower tuition. Importantly, all of these proposals need to be passed by Congress, and given today’s political climate, who knows whether that will happen.
At the same time, I try to keep everything in perspective. The fact that the President is acknowledging that student debt and soaring tuition are serious problems in America is a big deal. And policy changes that essentially trim around the edges of the problem are better than inaction or policies that make things worse. We’ll see where this goes and what becomes of these proposals. In the meantime, make sure your voices are heard on these issues, it’s the only way we’re going to see real changes.
To read more about the President’s proposals, click here.