As the second Trump Administration enters its fourth week, amidst a vast sea of issues, a huge challenge awaits. Anyone paying attention knows that the student loan situation in the U.S. over the last few decades is out of control. Some 46.2 million students have taken out loans, currently averaging $38,000, which most of these borrowers will find difficult to pay back.
Loans are necessary for many people because college tuition continues to escalate. With a wave of a hand, the installed Biden-Harris Administration attempted to administer a loan forgiveness program that boggles the imagination and would create an unending debacle.
Any such forgiveness ploy is unfair to those who recently, or not-so-recently, re-paid their loans, including those who borrowed only the sum that they could repay, while working part-time to pay for the rest.
Not on Cruise Control
The Commonfund Institute reported that from 1977 to 2024, college tuition increased by an astounding 1,513%. This occurred via an average annual inflation rate of 6.10%, nearly double that of national inflation rate of 3.56% over the same time period. Why are college costs out of control? Administrators know that if they jack up tuition, the Federal government will merely jack up maximum student loan amounts.
Neither the universities nor government bureaucrats will have to pay anything. The cost of this convoluted system ends up falling naive 17- and 18-year olds, or those with limited options. These poor souls are brainwashed into believing that they need to sign away their futures so that they can have a future!
Today, college administrators enjoy growth in wages that outpaces faculty growth in wages. Federal bureaucrats form a strange partnership with these profiteers to pauperize one in seven in our population.
Abusing the Vulnerable
One immediate solution is to refuse giving loans to students who attend colleges and universities which charge more than a modest tuition. Once the high-cost universities understand that gargantuan-sized loan amounts will no longer be approved, these universities will change. Like any effective enterprise, without customers, in this case students, the colleges will either lower their tuition or will go out of business.
Will such a scenario put an undue strain on universities? Not likely. Most have considerable flexibility to cut expenses. It is only due to the unholy alliance between the colleges and the federal government that, increasingly, the cost of a four-year education has far outstripped the cost of other goods and services.
How low would college tuition be if it rose only slightly, on par with what most of American industries experience? Even during Joe Biden’s hyper-inflated term, tuition increases that simply matched the rest of American enterprise would have been far less than what has been occurring for decades.
When Their Market Evaporates
College tuition could be 50% lower, or more, once colleges understand that their propagandized target market can no longer obtain the ridiculous size loans that the Federal government enabled in the first place. Hence, the escalating tuition spiral ends.
University administrators, of course, will initially protest. They’ll say that tuition has to be raised to great heights because of salaries and labor costs, expanding sports and other program, the addition of fancy but unnecessary buildings and infrastructure, and so on. And don’t forget the cost of all but useless DEI officers which some universities will continue to harbor, despite the prevailing change in sentiment since Donald Trump re-gained the presidency.
Focusing on faculty cost, consider the number of high salaried instructors, including celebrities/politicians who do very little work. At best, they appear on campus in once a week to teach a course which is largely handled by graduate assistants. What’s more, consider the rising number of administrators compared to the student body, versus that same ratio a few decades ago.
Gargantuan Salaries to Fill Stadiums
Celebrity coaches in high revenue college sports will continue to demand millions of dollars. A university can absorb the high cost of a few celebrity coaches if other salaries are more in line with the actual work that each faculty member does.
In any case, universities and colleges need to run their operations like the businesses that they are, without huge subsidies which are dependent upon perpetually impoverishing many rising freshman.
If this spiraling tuition phenomenon is not broken, our higher education system will begin emulate traditional European royalty where the upper class lived grandly at the expense of those deluded into being their supplicants.
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Jeff Davidson is “The Work-Life Balance Expert®” and the premier thought leader on work-life balance, effectiveness, integration, shift, blend, and harmony. Jeff speaks to organizations that seek to enhance their overall productivity by improving the effectiveness of their people. He is the author of Breathing Space, Perfect Timing, Simpler Living, Dial it Down, and Everyday Project Management. Visit BreathingSpace.com or call 919-932-1996 for more information on Jeff’s keynote speeches and seminars.
