Duncan Calls for Action to Reduce Student Loan Debt
Mr. Speaker, costs simply explode on anything that the Federal Government subsidizes because there are simply not the same incentives or pressures to hold down costs as there are in the private sector.
Over the last several weeks, many thousands of young people have graduated from our colleges and universities burdened with sizable student loan debts.
It shocks the students of today when I tell them that tuition cost only $90 a quarter my freshman year at the University of Tennessee in 1965-66--$270 for a whole school year. I once heard House Minority Whip Steny Hoyer say it cost only $87 a semester when he started at the University of Maryland.
Students today think the Federal student loan program is one of the best things that ever happened to them. Actually, it may be one of the worst. Until that program started in the mid-1960s, college tuition and fees went up very slowly, roughly at the rate of inflation.
After the Federal Government decided to "help" students and start subsidizing these costs, tuition and fees started going up three or four times the rate of inflation almost every year.
Last year, columnist Kathleen Parker wrote in The Washington Post that since 1985, the cost of higher education has increased 538 percent, while the Consumer Price Index--inflation--over the same period has gone up 121 percent.
Colleges and universities were able to tamp down opposition to fee increases by telling students not to worry, they could just borrow the money.
When I was an undergraduate at UT and later in law school at George Washington, students could work part time, as I always did, and pay all their college expenses. No one got out of school with a debt because of tuition and fees. Now almost everyone does.
Now, 40 million Americans owe money on student loans. Outstanding student loan debts now total over $1.3 trillion. Some analysts think it may be a bubble about to burst.
Floyd Norris, writing in the International New York Times, said: ``Student loans are creating large problems that may persist for decades. They will impoverish some borrowers and serve as a drain on economic activity.''
Hedge fund manager James Altucher wrote that ``we're graduating a generation of indentured students.''
Ohio University economist Richard Vedder several years ago wrote a book entitled, ``Going Broke by Degree.''
Richard Vedder, in an article last August, wrote that ``a political storm is brewing in Washington over the consequences of rising college costs.'' He added that ``the biggest single cause of this financial problem, and a contributor to many other weaknesses in our economy, is the dysfunctional, Byzantine system of Federal financial assistance for college students.''
Mr. Vedder pointed out that before the late 1970s, Federal financial aid programs for colleges were modest in size, and tuition went up an average of only 1 percent above the inflation rate.
"Since 1978,'' he wrote, ``in an era of rapidly growing Federal financial assistance programs, annual tuition increases have been 3 to 4 percent a year beyond the inflation rate.''
In 1987, William Bennett, the Secretary of Education, said: ``Increases in financial aid have enabled colleges and universities to raise their tuition, confident that Federal loan subsidies will help cushion the increase.''
From 1939-1964, Federal student aid--mainly the GI bill--averaged just 2.5 percent of university spending.
From 2002-2014, Federal student loan aid spending averaged a whopping 33 percent of university spending.
Several things, Mr. Speaker, could and should be done to start helping solve this problem.
First, Federal and State legislators, parents, and even students themselves should speak out against tuition increases higher than the rate of inflation.
Secondly, colleges and universities that hold these increases down, or hopefully someday even lower their costs, should be given priority and rewarded in Federal and State grants and appropriations.
Third, the Congress and State legislatures should hold hearings that feature people who have been victimized by taking on heavy student loan debts at the start of their careers.
Fourth, every college or university that receives Federal money--99.9 percent--should be required to give financial counseling or at least some type of simple, easy-to-understand document to every person receiving a student loan warning about potential problems.
Lastly, but most important of all, Federal and State governments should give incentives to schools that require professors to teach classes rather than writing for obscure journals or doing esoteric research that produces no tangible results.
Too many professors have lost their desire to teach. They seem to think 6 hours a week is heavy load. The result is that too many students cannot get the classes they need to graduate, and it is now taking 5 or 6 years to get a 4-year degree.
This is a very serious, fast-growing problem, Mr. Speaker, that needs major reforms sooner rather than later.