The Two-Income Trap - Elizabeth Warren [25]
In the absence of rising demand, this arms race of prestige just wouldn’t have been possible. If Americans had not come to view a college degree as equivalent to an “admission ticket to good jobs and a middle-class lifestyle,” then demand for a university slot would have been much less intense.96 As a result, parents would have been much freer to shop for a college on the basis of price or to forgo higher education altogether if the price seemed too high. All but the most elite universities would have felt far more pressure to keep costs down. Colleges might have been forced to make some painful cuts, but university tuition would have behaved more like any other rational marketplace, in which supply and demand are balanced and price holds relatively steady.
Time for a Tuition Freeze?
Whenever the problem of college costs are discussed, conservative policymakers typically focus on making more loans available to families. But is this really a solution? In 2001, over 5 million students had borrowed $34 billion in federal student loans—more than triple the amount borrowed just ten years earlier.97 Student borrowing from private lenders has grown even faster, increasing fivefold in just six years.98 Nor do college students bear the burden alone; parents are also going deep into debt to pay for their children’s education. Every year, more than a million families take out a second mortgage on their homes just to pay for educational expenses.99 Borrowing does not reduce the costs; it simply means that families can pay and pay and pay some more. At what point do we agree that families have taken on all the debt they can handle? The debt load tripled in the past ten years—do we intend to let it triple again over the next decade? Offering these families more debt is like throwing rocks to a drowning man—it won’t help.
Liberals, for their part, regularly call on taxpayers to foot more of the bill. But taxpayers are paying more. Over the past two decades, states increased per-pupil appropriations to public universities by 13 percent (adjusted for inflation).100 How much more are taxpayers supposed to pay? Are state governments supposed to write a blank check for higher education, allowing universities to increase costs with abandon? College administrators point out that a 13 percent increase in public funding fell far short of the 41 percent growth in university expenditures, which is why they were forced to raise tuition so much. That may be true, but that simply says, “We’re spending more than the state will give us, so we pass the costs on to families.” That is not a ringing endorsement of the frugality of the current system.
The more-taxes approach suffers from the same problem the more-debt approach engenders. It gives colleges more money to spend, without any attempt to control their spiraling costs. Perhaps it is time to shake things up with a hold on price increases. A multi-year freeze on tuition at all our state universities would prompt an intensive discussion of higher education priorities and some hard choices. Do they all want to offer expensive sports programs? Should some colleges concentrate on science and engineering, while others focus on the liberal arts? Should universities be asked to educate more students in exchange for