Debt cancellation and free tuition proposals target student loan crisis in first big push to expand college access since World War II

Most Americans see college as excessively expensive, but it wasn’t always that way.

Over the last decade, the cost of attending a four-year public college or university has grown significantly faster than income.

Deep cuts in state funding for higher education contributed to substantial tuition increases and pushed more of the costs of college onto students, according to an analysis by the Center on Budget and Policy Priorities, a nonpartisan research group based in Washington, D.C.

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At private four-year schools, average tuition and fees rose 26% in a 10-year period. Tuition plus fees at four-year public schools, which were harder hit, jumped 35%.

Because so few families can shoulder the higher cost, they have increasingly turned to federal and private aid to cover at least some of the tab.

Roughly half of families now borrow, or take out loans, according to Sallie Mae’s most recent “How America Pays for College” report, pushing outstanding student debt to a stunning $1.7 trillion.

The typical senior now graduates with nearly $30,000 in debt.

Although getting a college degree is, in general, increasingly important for those aiming to get ahead in today’s economy, price has become a deterrent, particularly among low-income families.

“There is a recognition that college prices are out of control and not just at the top end but even at community college where tuition is relatively affordable,” said Mark Huelsman, director of policy and advocacy at the Hope Center for College, Community, and Justice.

Now, for the first time since 1944, when Congress passed what’s now known as the GI Bill — which helps veterans cover the cost of tuition, books and housing — there are two pieces of legislation to make higher education more accessible.

Student debt forgiveness

For those already struggling under the weight of hefty student loan bills, there’s a chance that borrowers could see their balances reduced or eliminated entirely.

“It’s more likely we will see some sort of broad loan forgiveness versus anytime in the past,” according to higher education expert Mark Kantrowitz.

President Joe Biden said he supports erasing at least $10,000 for all borrowers — a move he could potentially make through executive action.

If we don’t do something that prevents this problem from happening in the future, we are going to be here again in five years.
Mark Huelsman
director of policy and advocacy at the Hope Center for College, Community, and Justice

Alternatively, if the White House leaves student loan forgiveness to Congress, Democrats could use the budget reconciliation process to get it done.

Either way, if all federal student loan borrowers get $10,000 of their debt forgiven, “it erases the debt of about a third of all student loan borrowers,” according to Kantrowitz. And, the outstanding education debt in the country would fall to around $1.3 trillion, from $1.7 trillion.

However, “it’s after the fact,” Kantrowitz added. “It doesn’t make college more affordable and it doesn’t increase the number of students going to college or graduating from college.”

Further, “if we don’t do something that prevents this problem from happening in the future, we are going to be here again in five years,” the Hope Center’s Huelsman said.

Tuition-free college

Kevin Dodge | The Image Bank | Getty Images

That’s where free college comes in.

To be sure, free community college is not new. As of the latest tally, 26 states already have some type of program in place.

Most are “last-dollar” scholarships, meaning the program pays for whatever tuition and fees are left after financial aid and other grants are applied. In other words, students receive a scholarship for the amount of tuition that is not covered by existing state or federal aid.

The Democrats’ $3.5 trillion spending plan, if left largely intact, would make community college tuition-free for two years across the board — a move President Biden has also been advocating since the campaign trail.

Under this plan, states would no longer have to fill the gap between scholarships and tuition. If they opt into the program, student tuition is paid for entirely by the federal government.

Enrollment at four-year private colleges would fall by about 12%, while enrollment at four-year public universities and community colleges would rise by roughly 18%, according to a study on the economic impact of making some college tuition-free by the Campaign for Free College Tuition and the student-led advocacy group Rise.

“You’ve got a net effect of almost 2 million more students enrolled in college,” said Robert Shapiro, lead author of the study and a former economic advisor to President Bill Clinton.

“Every state that’s done it right has seen an enormous increase in enrollment, particularly among women and minority groups,” said Morley Winograd, president and CEO of the Campaign for Free College Tuition.

Graduation rates would also rise, Shapiro found, resulting in an increase in social mobility and higher incomes overall.

In the aftermath of the pandemic, “it’s very timely,” Huelsman added. “College enrollment is down.

“Something like free community college could spark college-going again,” he added.

“When you think about the fact that those students would also be earning more money, that’s an enormous boost to the economy,” Winograd said.

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