The Higher Education Act of 1965 was promised to be a reliable pathway for students and families to receive a high-quality education and equip themselves with the skills needed to find a good-paying job.
The Higher Education Act of 1965 was promised to be a reliable pathway for students and families to receive a high-quality education and equip themselves with the skills needed to find a good-paying job. Half a century later, the law has resulted in six different types of federal student loans, nine different repayment plans, eight forgiveness programs, thirty-two deferment and forbearance options, higher tuition rates, longer completion times, over a trillion dollars in student debt, and six million unfilled jobs.
Leaders in education policy and economics from both sides of the aisle recognize that unprecedented levels of student debt are having an impact on students and families, and creating a major drag on economic growth:
“Some schools are paying more to hedge funds and private-equity managers than they are spending on tuition and tuition assistance, while taxpayers are guaranteeing hundreds of billions of dollars of student loans to pay for rising tuition costs. We have to take care of our students. [Schools] need to use the money to cut the college debt, and they have to cut the college tuition. They have to do it.”
—President Donald J. Trump
“In higher education, meanwhile, the federal government has played a much more active role, and the result, not surprisingly, has been a disaster. In the last several decades, middle-class families, and those who hope to give their kids a chance to enter the middle-class, have faced enormous increases in the cost of college, as tuitions have been rising at about twice the rate of inflation. Washington has responded to this explosion of growth by turning America’s young people in debtors to their government—essentially nationalizing the college-loan market while, in some cases, allowing families to borrow without limit up to the full cost of tuition.”
—Speaker of the House Paul D. Ryan (R-WI)
“Student debt now stands at $1.3 trillion. More than half of student borrowers are unable to repay their loans according to the original terms. In a well-intended but poorly executed effort to make college broadly accessible, the government has lent freely to students, with little attention to whether they can repay those loans. The result is millions of young people with debt they cannot afford.”
—Sheila Bair, 19th Chair of the FDIC
“Lawmakers and college access advocates routinely charge that the federal government’s hodgepodge of programs to help students finance their educations are needlessly complicated. The complexity causes students to waste time and resources. It also obscures prices, making it difficult for families to know ahead of time what college costs them. And, most troubling, complexity can trip up the students from low-income families that the programs are predominantly meant to help.”
—Andrew Kelly, higher education analyst, American Enterprise Institute
“Our current system of higher education funding leaves too many millennials with mountainous debt, questioning the cost of the degrees they worked so hard to earn. $1.2 trillion in federal student loans are outstanding spread among 37 million borrowers, 5.4 million of whom have already defaulted, while tuition and fees at public four-year colleges have nearly quadrupled from 1979 to 2015 … Indeed, universities have every incentive to jack up tuition and hope the federal government will pick up the tab in the form of government loans. As a result, there is little incentive for universities to care about their students’ long-term career success—they get paid either way—while millennials get stuck with the bill.”
—Jon Hartley, Cofounder of Real Time Macroeconomics and Jeb Bush Jr.
“Federal student loans were never meant to be handouts, but increasingly that’s what they have become. More and more students have piled up massive debt. And Washington politicians, always eager to spend other people’s money, have adopted policies such as loan forgiveness and income-based repayment that allow students to delay payments or have them discharged altogether. When this happens, the federal government keeps lending to students, and taxpayers find themselves stuck with an ever-increasing tab for outstanding student loan debts. It’s time to break up this government monopoly and let private lenders restore some common sense and discipline to the student loan process. A competitive loan market would put downward pressure on tuition prices, save students from taking on crippling amounts of debt and protect taxpayers from having to assume debts not of their own making.”
—Mary Clare Amselem, Institute for Family, Community, and Opportunity at The Heritage Foundation
For more on how current higher education policies are contributing to higher debt, click here.
