With interest resuming on college loans, why can’t regular folks get some help?


With student loan interest resuming after a 3-year hiatus, the cost of college is once again top of mind for Americans burdened with sky-high tuition and fees.

As a parent with two kids in college, the financial cost is almost unthinkable. Back when I started college, 50 years ago, the total annual cost was about $15,000 at my private university. Prestigious private universities are costing $85,000+ nowadays.

I know there are less expensive colleges that provide excellent educations, but no matter where you go, the prices are pretty steep. Of course, part of the reason is very few students pay the actual sticker price. Some colleges subsidize as much as 40–50 percent of the costs in scholarships, grants, and other aid to compete in the marketplace for students shopping for the best deals. But, still, students and parents often have to take out loans to pay the rest.

What really bothers me is that with all the controversy over forgiving student loans — with even the Supreme Court declaring it unconstitutional for the president to unilaterally forgive part of that debt — there was hardly a peep when the federal government came rushing to the rescue of those with deposits in the failing Silicon Valley Bank, guaranteeing they wouldn’t lose a dime as the bank went under.

Think about it: there is more than $1.7 trillion in federal and private student loan debt. More than 43 million borrowers have federal loan debt.

In the case of Silicon Valley Bank, the Treasury Department, the Fed, and the FDIC, intervened to guarantee depositors’ funds — an estimated $175 billion — even if they had more than the $250,000 FDIC limit in the bank. There was no hand wringing or challenges to the Supreme Court over that.

Why the difference in bailing out those with student loan debt and rich techies with their money in a bad bank situation? Why no life raft for borrowers making $125K or less buried under crippling student loan debt?

The argument that those loans were taken out voluntarily with eyes wide open falls flat. Those depositors put their money in that Silicon Valley Bank knowingly, too, and got favorable loans and interest on their deposits. It was a choice.

The system works in not so mysterious ways when it comes to regular folks and rich folks. The wealthy get a hand when they get in trouble, and the average Joes get left holding the bag. It’s blatant structural economic inequality.

Having served on college boards of trustees, I know there is great sympathy for those paying these high prices. But trustees have a fiduciary duty to preserve the university, and to do so, they must generate revenue. And revenue comes from tuition increases.

There are lots of reasons for the steady rise in college costs. Decreased state funding for colleges and universities is a big reason for the large tuition increases year over year. Implementing mandates around Title IX were costly and remain so. Modernizing campus facilities have come with a hefty price tag, although most of those construction costs tend to be covered by gifts from alumni (although expensive maintenance costs often come out of operating budgets).

Then, there’s the cost of educating the kids themselves. More than I’d like to admit, the professors we pay the most, and who have tenure, seem to be in the classroom less and less — instead doing research, writing books, leading and assisting campus task forces, and serving in other ways.

As a result, a shadow faculty has sprung up with associate professors and adjuncts taking on increasing roles in the classroom — at a cost that is passed on to students. On top of that, the administration at many colleges and universities have expanded with directors, deputies, and chiefs of staff. And the list goes on. In reviewing many of today’s university structures, you’d think you were looking at a typical corporation with a full band of COO, CFO, and CMO titles, all in addition to traditional academic positions.

At most colleges, raises and benefits for faculty and staff are generous compared to what the folks paying the tab are seeing in their workplaces. All of that adds up to a price tag that is pushing the cost of college beyond the means of many Americans.

With the federal government making student loans so readily available, it’s no wonder why prices keep going up and up. But students are the ones on the hook for these eye-popping costs when the loan comes due. Some borrowers wind up paying off student loan debt into their fifties and beyond.

Surely, we can do better than this. Maybe I’m just complaining because it’s my turn to pay the tab.

But the powers-that-be need to figure out ways to help everyday Americans reasonably afford college and not just help the fat cats when they get in a jam. Offering tax breaks for tuition payments would be a good start. The point is: Everyday Americans are in a jam right now. It’s time to figure out a lifeline for them, too.