Over the past few decades, tuition has risen two to three times the cost of inflation. In the last 10 years, tuition at public four-year colleges has increased about 75 percent, and at private colleges by about 25 percent – all at a time when median family income has fallen. The total amount of student debt has reached $1.2 trillion, and an increasing number of students find themselves burdened by tens of thousands of dollars of debt that they’re unable to repay, and that even a bankruptcy declaration can’t diminish.
According to the latest data released this week from the National Center for Education Statistics, a majority of undergraduates – 57 percent – are now receiving some sort of federal financial aid, up from 47 percent four years ago, the last time the NCES released statistics. Some 42 percent of undergraduates took out loans, up from 39 percent four years ago.
While the federal government ostensibly has little direct involvement with the financing of either private or public colleges, it issues about $150 billion a year in financial aid – all of which plays a key part in the budgets of most higher education institutions, and which comes with few strings attached to the institution.
There has long been a heated debate about the degree to which expanding federal financial aid has fueled tuition hikes and spiraling college costs. Some critics see the huge expansion of loans and grants as directly responsible, saying they provide misguided incentives to college and universities, and essentially shift costs away from the schools to the federal government and the families who are borrowing.
Others agree that tuition would not have been able to rise without the loan programs, but they also believe that the federal aid programs are needed to promote access to higher education. Still others discount the hypothesis entirely as a misguided attempt to get the federal government to reduce much-needed aid to students.