Seventh Time’s the Charm: Why Pausing Student Debt Won’t Fix the Problem

And the root cause of the crisis
Tim Gouw, Unsplash
SHARE:

No matter how many times we try it, hitting pause can’t make 1.7 trillion dollars of student debt just disappear. Eventually, students will have to pay off their loans, and no number of evasions by Congress will shrink that number.

The pause that began in March 2020 is currently set to expire at the end of August, compelling over 40 million Americans to return to making monthly payments on their student debt. On July 28, over 100 Democratic senators and U.S. representatives sent a letter to Education Secretary Miguel Cardona and President Biden to extend the pandemic pause on federal student loan payments for the seventh time. 

But extending the pause will only provide short-term relief to a long-term problem. You can’t fix a broken arm by taking painkillers for the rest of your life — you set the bone as soon as you can before it worsens. In much the same way, our lawmakers have been delaying the pain of loan payment rather than addressing what’s broken — the education system itself. 

Our lawmakers need to address the university leaders who are allowed to obscure the astronomical costs of tuition and conceal however it is they spend that money. We need policies that require universities to be more transparent about their operations and college prices. We need our lawmakers to hold these institutions accountable.

Student loan debt is directly proportional to the ballooning costs of college. It used to be that college tuition was a fraction of the median income. A 1960 TIME study done with 50 colleges showed that the average yearly cost was $2,000 when the median family income was $5,600. Now, tuition alone surpasses what most middle-class families make in a year. While the Consumer Price Index (CPI), a common inflationary measure, has seen an eight-fold increase between 1960 and 2020, college tuition has risen 14-fold.

Clearly the root problem of the Student Debt Crisis is the actual cost of college itself, but fixing this is easier said than done — nobody seems to know where tuition money goes.  While there are many theories as to how campuses distribute these excessive funds, no expert can truly answer why the costs of postsecondary education have blown up this way, and colleges aren’t currently required to disclose that information.  

In answer to these problems, the Biden administration recently hinted at a policy that would cancel student debt as a way to solve this crisis. But this won’t stop universities from overcharging for tuition any more than pausing payments will. Rather it will perpetuate a vicious cycle. If more financial aid is offered (and promptly canceled), colleges will only be incentivized to raise prices. Not because they’ll need to — because they can.

Student education is one of the only markets that favors producers over consumers. Even though it is scarcely regulated by the government, high barriers of entry have created a rare case study. By bringing accountability about true costs, we can change market dynamics. 

While experts have drawn comparisons between this debt problem and the mortgage crisis of 2008, education is a trickier market. When buying a house, you’re immediately aware you’re receiving a piece of property. But a degree is an intangible good; it’s impossible to know if it will ever give you the return you seek. 

It is hard to invest in your education when you don’t know what you’re truly paying for. Because of this, some people elect not to go to college at all. Others still owe upwards of $20,000 twenty years after entering school. This shouldn’t have to be the case. With greater transparency, we can find the root of the problem to fix it for good. 

It’s time our lawmakers stopped taking figurative painkillers. Let’s set the bone and avoid major reconstructive surgery down the road. 

Only through policies that advocate for institutional transparency can we begin to find a permanent solution for the Student Debt Crisis. 

Flavia Nunez
Flavia Nunez is a college student and a Morehead-Cain Scholar at the University of North Carolina at Chapel Hill. She is a contributor at Young Voices.