The rising cost of tuition has college students struggling with debt payments. Prospective students may also be turned away from college altogether due to the high price tag. A small government solution to this issue may seem counter-intuitive, but economic concepts lend credence to this approach.
One possible solution: end government subsidies for student loans. Share it: Tweet
The National Center for Education Statistics reports that tuition costs have risen every year since it started collecting the data in 1980. When adjusted for inflation, the average cost of one year at a public university has risen by about $9,000 from 1980 to 2011. Tweet stat: Tweet
Government subsidized student loans create a larger demand for college education. When demand is higher, schools are inclined to increase their tuition costs. With more money circulating in the higher education market, institutions do not necessarily run the risk of losing a significant amount of applicants.
Admittedly, the effect of ending federal student loans will equate to less opportunities to attend 4-year universities. This approach may not be reconcilable with the belief that everyone has the right to a college education.
The Chronicle of Higher Education stated that about 40 percent of undergraduate students drop out. As a result, some students may end up with mountains of debt and no degree, but had the chance to take college courses.
LearnLiberty, an online resource for ‘the ideas of a free society,’ took this information and went a step further by stating that not all college graduates go on to earn better incomes. Instead, small government advocates contend that apprenticeships and training programs are viable paths to better earnings while keeping costs to students significantly lower than many universities. Share article: Tweet
Former governor of New Mexico and 2012 Libertarian presidential candidate, Gary Johnson, agrees that student loans have been a contributing factor in the rising cost of tuition. From Johnson’s point of view, guaranteed loans give universities no reason to lower their asking prices:
“I suggest that if student loans did not exist–and I am not advocating that–tuition would be a lot lower because colleges and universities want to deliver their product, and if there weren’t as many kids going to school because it costs too much, they would find ways to lower their price. They haven’t met that necessity; they don’t see that as a necessity because all students can get student loans.”
There is no definitive set of rules for what constitutes a small government approach to education, but these concepts are closely associated. Ending or reducing federal subsidies for student loans would help to slow or possibly reverse the unstoppable growth in tuition for higher education.
American University Economics Professor Daniel Lin explains how federal subsidies can affect tuition rates: