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  • Matthew Barsky

Why Is U.S College Tuition So High? How Will It Be Affected By Biden’s Loan Forgiveness Plan?

Since 1980, the United States has seen a 1198.9% increase in college tuition costs. In the past 15 years, the United States' student loan debt has increased by $1.21 trillion. A college degree continues to become increasingly valuable in the ever-competitive job market. As a result, millions of Americans are either completely missing out on or are taking on crippling amounts of debt for opportunities to learn and secure a more stable future. Student loan forgiveness is a hotly debated issue. Still, before looking at Biden's proposed 300-billion-dollar loan forgiveness plan, it is crucial to understand the history of college tuition costs in the United States.

When looking at the average $102,828 cost of obtaining a 4-year degree, it may be surprising to some that this wasn’t always the case. In fact, up until the late 1960s, most colleges were either free to access or cost a few thousand dollars (adjusted for inflation). It should be noted that during this time, college enrollment was dominated by white, middle to upper-class men.

In the 1960s, with the context of the growing unsettlement with U.S. involvement in Vietnam, colleges became breeding grounds for protests and anti-government political action. At the same time, the Civil Rights Act was just passed, and college enrollment was starting to become more diverse. In 1966, U.S. colleges began to experience their first significant price hikes. Ronald Reagen (then governor of California) was uncomfortable with growing anti-government sentiments being spread on college campuses. In Reagan's educational advisor's own words, “we are in danger of producing an educated proletariat.” To combat this, he shut down UC schools and subsequently proposed tuition hikes with the intention to “get rid of undesirables […] those who are there to carry signs and not to study might think twice to carry picket signs.”

Reagan’s goal was to make college inaccessible to those who were not members of the white upper class - i.e., his supporters. As a result, Reagan and then president Richard Nixon began to move colleges away from the federal and state-funded model, which made colleges relatively accessible to the working class. With the loss of public funding, by the 1990s, almost all formerly public colleges in the United States relied on high tuition fees to cover their costs. This would then snowball into the student debt crisis, with millions of students taking on predatory loans in order to go to college.

In August, Biden proposed a three-part plan to tackle student debt relief. Part one of the plan regards the final extension of student loan repayment. The Biden-Harris Administration has repeatedly extended the loan repayment moratorium due to the economic difficulties brought on by the COVID-19 pandemic. As a result, since President Biden took office, no one with a federally held debt has been required to make any loan payments. The Biden-Harris Administration will prolong the suspension one more time through December 31, 2022, with payments beginning in January 2023.

Part two of the plan provides targeted debt relief to low- and middle-income families. Pell Grant recipients with debts held by the Department of Education will receive up to $20,000 in debt reduction, and non-Pell Grant recipients will receive up to $10,000 in debt relief. If a borrower's household income is less than $250,000 or their individual income is less than $125,000, they are eligible for this relief.

Part three makes the student loan system more manageable for current and future borrowers. The Biden-Harris administration is proposing a new rule to create an income-driven repayment program with the goal of reducing monthly payments for lower and middle-class borrowers.

For millions of Americans, this loan forgiveness will be life-changing. While $10,000 may seem small compared to the overwhelming amount of student debt, it will still go a long way for many students. Recipients of the loan interviewed by the NPR podcast have said that it will help them be freer to participate in the economy and pursue careers and graduate school much faster than they had expected.

Critics of the student loan plan say that it will increase inflation. However, Biden’s plan is two-sided. First, while an estimated 23 million Americans will receive forgiveness, it is coupled with the resumption of payments that were previously on hold due to COVID. This will ultimately have a deflationary effect to balance out the inflationary impact of loan forgiveness.

However, this plan does not address the root cause of the student debt crisis. Unless this student loan forgiveness program is recurring, new students will continue to take on more debt and replace those who were forgiven in a seemingly never-ending cycle of student debt.


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