It appears that college tuition is insulated from the general economy. Recession proof. Enrollments are going down, state support for state colleges and universities are being cut, yet the cost of attending college goes up.
How does this work? More students are borrowing money to pay higher tuition’s. In the 2008-2009 academic year loans grew about 25% OVER THE PRIOR YEAR TO $75.1 BILLION. The average debt load is now $23,186 Two thirds are now borrowing to finance college. Just a dozen years ago that number was 58% and the post-graduate debt was $13,172.
The Federal Government just made moves to take over 100% of student loans.
Let’s see if I understand this. We, the taxpayer, loan money to students to finance a university education. The academic world hikes tuition and other costs to attend. More and more students have to borrow money to afford higher costs. Is this a reminder of the housing bubble?
Can you say Freddie and Fannie? Housing prices go up, loans go up, more and more mortgages are given to those who can’t pay. Bam, the house of cards fall.
If the Federal Government is fueling the rising cost of education by doling out more and more loans allowing universities to raise prices while attendance shrinks, will this house of cards fall too?
Paying back these loans is causing graduates to fore go buying a house, marrying and spending money.
As long as the government keeps doling out the money, there is no incentive for universities to cut costs and adjust to a smaller student population or to grow enrollments.
Just look anywhere the government is involved in anything and you will find these kinds of problems. Good luck with health care reform.
