College students and their parents know all too well the punishing financial terms higher education can inflict. The price of a college education has increased 700 percent since 1981. Students are taking out many more loans, for much more money, than they did just a few years ago. The volume of student debt now exceeds the total for car loans.
Washington is full of prescriptions for how to fix this problem. Unfortunately, none of the proposals will do much to ameliorate it. That’s because all of the principal remedies would set caps on the interest charged–sometimes extremely low caps. At the same time, as a college degree becomes the new high school diploma, college enrollment rates have been trending upward.
This combination of increasing demand and tuition subsidies has inspired an orgy of profligacy at the nation’s colleges and universities that shows up in countless ways, from rock-climbing walls and gourmet dining halls to an explosion of do-nothing administrative bureaucracies. “A growing share of school funds is going to pay for layers and layers of administration,” according to a report last year by the American Council of Trustees and Alumni.
It is no mere coincidence that two of the economic sectors with the worst cost increases–higher education and health care–are those in which the federal government is most heavily involved in subsidizing consumption. Until Congress has the courage to address that, the problem will not go away.
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