As conservatives and leftists argue whether canceling the student debt is fair or not, the main issue that needs to be addressed is “the exorbitant cost of getting a college degree”. The key question the Americans should be asking is why college education is so expensive in the US?
Almost 30 years ago in 1992, an undergraduate degree used to cost around $2,300 from a public university and around $10,500 from a private university. Now the average costs are $12,000 for public institutions and $44,000 for private institutions, respectively. This indicates that there has been a 495% increase in public college education costs and a 425% increase in private ones.
Since these price hikes were about 5-times the increase in inflation rates during that period, it can be ascertained that the cost of education isn’t high because of skyrocketing operational costs. Universities only found ways to leech off of taxpayers by using students as a scapegoat.
In 1992, President Bush also put forward the Higher Education Act that let students take thousands of dollars as college debt loans, which were to be repaid after they get done with college. This made more and more people want to go to college. With this massive flow of students, universities realized they could make money off taxpayers. These universities were already enjoying funds, donations, and endowments.
Elite colleges benefitted the most as they knew parents were eager to send their children to acclaimed institutions. Universities already have a non-profit status which makes them exempt from tax. Back in 2018, around 4000 American universities made more than $1 trillion in revenue, free of tax. This amount averaged around $250 million per school.
The main lesson here is that instead of wiping away the student debt, it is important to bring down the costs of getting a college education by regulating the tuition fees, faculty salaries and boarding and mess expenses.