President Joe Biden didn’t fix the student loan crisis—he just delayed it. Here’s a detailed plan on what to do next.
of outstanding student loan debt from under $500 billion in 2006 to over $1.7 trillion today was caused by several key factors.Historically, state governments have been responsible for keeping undergraduate education affordable. Many states have reneged on that obligation, driving up public university tuition and creating an affordability gap filled by federal loans.
There are also no price controls attached to federal financial aid. This, too, is unusual—if hospitals want to serve Medicaid patients, they agree to be paid Medicaid rates. While the Department of Education limits undergraduate borrowing to about $31,000 over four years for students of traditional university ages, many colleges circumvent those limits by offering additional federal loans to students’ parents.
For two- and four-year undergraduate degrees, there’s no need to reinvent the wheel. For more than a century, states have been providing public colleges and universities with a certain amount of money per student, in exchange for the schools agreeing to charge affordable tuition. Some are still doing this today. We should adopt the same approach at the federal level, by building off the Biden free community college plan.Photo illustration by Slate.
That law would have provided roughly $5,000 per student to states in exchange for them agreeing to charge $0 tuition at two-year colleges. The subsidy should be increased to $10,000 per student and expanded to include four-year universities. In exchange, institutions would agree to a standard affordable tuition schedule. Families earning less than the median household income—currently about $70,000—would be charged $0 tuition.