Federal Aid, a double-sided sword

Have you ever had any problem that you don't know where to start? But surely recognizing its existence all the time? For instance, with the full realization of what I have done wrong after every presentation that I had, I simply couldn't fix my natural bad habits. Of course, I wish I could, but once again, have no idea where to begin. 

It might sound really odd, but the civic issue that I'm about to talk is quite analogous to that.

Even though we acknowledge that something is wrong with the rapid rise in college tuition, we simply don't know where all it started... 

Here are some clarifications... 

Ever since the government got involved with the higher education, it graciously entitled us to be bombarded with student loans and low possibility of living debt-free lives.

According to NCPA, 60% of college graduates end up with a minimum of $26,000 in student loan debt. Furthermore, during the 2013-2014 academic year, the amount of federal student aid reached $169 billion, aiding almost 9 million students across the nation. Basically, among st total undergraduate enrollment of 17.5 million back in 2013, 51% of them received any sorts of federal aids, ranging from a couple of hundreds to tens of thousands of dollars. From an international perspective, this phenomenon doesn’t seem to be a good omen at all. More government intervention in higher education, the more burdens on out-of-state students and international students’ shoulders.

But…. How in the world the government intervention is related to steeply rising college tuition?

As reported by the National Bureau of Economic Research, it found a critical relation between a huge increase in college tuition since 1987 and the increase in accessibility of student loans available by the federal government.

(Photo credited to writer, Dan Reimold)

The relativity between college tuition and governmental funding is also known as Bennett Hypothesis, a man who foresaw the current situation 25 years ago. In 1987, a secretary of Education William Bennett proposed the idea of increase in financial aid would inevitably backfire on college students no matter what. All blames must be put on two distinct goals set by the federal government: 1)every American must be accessible to education, and 2) all loans must not be dischargeable. 

The federal government is binding American college students under freedom education, but in fact, pushing them on the verge of cliff called student loans. Since the government is indiscriminately supplying money to aid students, numerous colleges and universities, clearly business organizations have no reason not to rais the tuition, due to unconditional payment from the students. The real sacrifices to this cycle of intervention are out-of state students and international students. For instance, while a normal inner-state American student pays $18,000 at the most, out-of-state and international students are paying as few as $30,000 and as many as $50,000. It is even worse for them who are not eligible for any kind of grants or federal aids except the institutions' own merits. 

My main point is that if the federal government withdraws from regulating tuition in higher education, other private corp orates will take its place. And due to the existence of competition in a capitalist society, college tuition will likely to go down. 

For instance, if the computer or telephone industries were solely controlled by the government, we would have been paying much higher prices for laptops, cell phones and wireless since there is only one company who sets price without threat of competition. 

Senator Ran Paul once quoted that if government steps back away from any economic activities, we, college students, would be paying the amount people paid back in 1980s. 

Fortunately, this world isn’t all that bad. There are some suggested solutions to this phenomenon.

A. Either convert student loans dis chargeable again, or limit the amount.

B. Above will result increase in competition among students to borrow money from private banks.

C. Thus, tuition will likely to diminish. And a good portion of students will less likely to come to colleges without sufficient amount of aids.

So next time, I’ll take a closer look in relations to practical approaches by any institution or Bureau of Education.