I. The Problem

Why Is This Important?

Accessible education is a gateway to a lot of long term benefits, such as long term economic growth, a decreased need for government aid, increased tax revenues for the government, and much more (Lumina Foundation).

Increased education tends to mean an increase in income, as shown by the graph created by the U.S. Bureau of Labor Statistics. As a result, an increase in education leads to an increase in tax revenue and a decrease in the need for government assistance, both of which allow for the government to have more funds to spend on other issues.

Source

Issue Overview

(Lumina Foundation)

Description

Over time, post secondary education tuition prices have risen drastically, significantly faster than inflation rates resulting in many lower income and middle class families struggling to keep up with the high prices of tuition. As a coping mechanism, many students and families take out student loans or apply for student aid to help pay for the cost of tuition which has led to the student debt crisis in the past decade in the US. One of the most common causes of high prices is the regression of government funding and a lack of money to give as funding, resulting in these institutions needing to raise prices to make up for the funding that they are no longer receiving in order to maintain their staff and facilities.

Government Disinvestment

The U.S. government has barely invested in education. This led to a steep decline in education quality, particularly for public institutions. The per-student spending has dropped by 25% between 1980 and 2000. This drop has continued to fall since the 2008 recession (van der Zwaan).
Between 2008 and 2013: 11 states have shown a massive drop in spending towards higher education, cutting it down by a third.
Comparison to Canada:
- - - Contrary to the US government, Canada spends more than 30% of its budget on improving access to higher education and lowering financial burdens on the public (van der Zwaan).

Source

Affordability

Prices of post secondary education have increased at a rate greater than inflation
- - - 747.7% increase in price since 1963 adjusted for inflation (Goodkind)
    - 169% increase in price between 1980 and 2020 adjusted for inflation (Federal Reserve)
Lack of transparency in college pricing models make it more difficult for students and families to plan for the total cost of education (Lumina Foundation)

High cost of tuition and associated expenses are the biggest problem when it comes to pursuing higher education.
- - - Average tuition and fees for in-state students:
      - Public: $10,740
        Private: $39,400 (Education Data Initiative)
Many students graduate with substantial debt: The average federal student loan borrower owes $37,574. This is due to rising textbook and living costs as these progressively get more expensive, leading to negative contributions when it comes to accessing higher education. (Education Data Initiative)
Lower-income families are affected by rising costs substantially more than others due to the regressive nature of prices, meaning that rises in the cost of tuition unfairly affects lower income families, widening education attainment gaps (Lumina Foundation).
Tuition prices increase at a much faster rate than wage rates and inflation. Meaning that on average, people are being charged more than what they can afford trends (Lumina Foundation)
- - - Based on the average household savings of $5,011 in 2022, it would take 75 years to save up enough money to pay for a single student to attend a top rated US university (Goodkind)

Socio-Economic Impact

Inequalities

Black and Hispanic demographics are more likely to rely on loans. Dependency on loans makes them more prone to financial problems.
- - - Owe an average of $25,000 more than their white counterparts (Lumina Foundation).
Hispanic students - Higher rates of part-time enrollment (Lumina Foundation)
Becoming more prone to financial problems is a disadvantage that could have a great impact on likelihood of degree completion as well as discrimination in the labor market (Marcus)
Enrollment rates for low-income students are lower: Rising costs would be the reason for this because lower income students would not be able to afford. This only adds to the cycle of poverty (Marcus)

Human Capital Theory

The human capital theory states that improving and investing in education would contribute positively to the economy (Houle).
- - - Education increases efficiency and productivity in the workforce
    - Due to this theory, if costs for tuition goes up, more people are unable to afford tuition. Meaning that less people have higher education degrees in the workforce. This could result in suboptimal performances and poorer hiring choices, negatively impacting the economy.

Social Mobility

Social mobility is the ability of one to move up in the social hierarchy, typically to do with income and wealth. Higher education promotes social mobility and rising tuition costs make this much harder to occur. (Haveman and Smeeding)
It is important to note that top universities serve mostly high-income students–three fourths of the joining class belong to the highest socioeconomic quartile. Therefore, low-income and minority groups have a much harder time trying to find financial aid due to lack of resources. (Haveman and Smeeding)

Lack of Financial Aid and Middle Income Squeeze

Worsens the impact of rising tuition fees
Increases gap between income groups in terms of education
FAFSA’s limitations also play a role in worsening the problem
- - - FAFSA leaves around $10,000 as an annual funding gap for middle income families, meaning that middle income families are often underfunded by such programs. This results in middle income families either dropping out or vastly increasing their loans to attain their degree (Federal Student Aid).

Disagreements Over the Problem

Department of Education Debate

Currently, the Department of Education provides all educational funding to schools across the country including funding for Title I which provides support for low income students and families (U.S. Department of Education).
President Donald Trump and other Republicans have called for the dismantling of the Department of Education, claiming that its programs are ineffective. With its closure, there would be no government department to enact policies regarding post secondary tuition prices (Meckler and Timsit).

Federal v. State Power

Almost everything regarding education is left up to the states to decide, leaving some states and even some people feeling that the federal government is overstepping its boundaries when influencing or enacting policies regarding education, a reserved power (Pelsue).

Older Generations

Older generations of citizens and others that have completed their post secondary education commonly find spending money on education as a waste, seeing as they seemingly do not benefit from its funding and thus, oppose the idea of more education funding (Allegretto et al.)

Current Policies

FAFSA

The FAFSA program (Free Application for Federal Student Aid) is an application to request federal financial aid when paying for tuition at post secondary institutions. Currently, it aims to aid low income families that are unable to pay for the costs of post secondary education (Federal Student Aid).

The form currently suffers from incorrect submitted information and other common problems such as not being able to find the proper information to fill out the form, a long filing process that can deter many from even filling it out in the first place, and a lack of localization as the form is only available in English (Bettinger, et. al).

Source

Pell Grants

The Pell Grant program is designed to provide grants to low income students to help pay for post secondary tuition.

When initially introduced in the 1970s, the grant covered roughly three quarters of the tuition cost to attend a four year public college. Now, the grant covers less than thirty percent of the tuition cost (Andraea).

Why Government Intervention is Needed

Rising tuition costs affects the nation as a whole. Education is the backbone of the country and its economy and Federal Government action is needed in order to properly make uniform decisions and changes that solve the problem on a large scale.

Budgets

States are limited when it comes how much they can spend on investments. Due to this cap, it constraints their ability to invest in higher education. Additionally, the use of categorical grants further restricts states’ ability to use funding.

Control

Programs such as FAFSA that aim to lessen the financial burden of college are controlled by the federal government. To change FAFSA’s policies, federal action must be taken, involving the government on a federal level.

Uniformity

The purpose of government is to make uniform decisions for the nation as a whole. Large scale problems such as nation wide tuition prices require the ability to make decisions nationwide, something that individuals and state governments do not have.

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