The accumulated total of student loan debt in the United States has hit an approximate $1.3 trillion. Of that, $1.1 trillion is federal loan-student debt, and a further $200 billion is made up of private loans. It is a substantial sum, the greatest amount yet in U.S. history.
Student loan debt was the topic Wednesday at the Senate Health, Education, Labor and Pensions (HELP) Committee’s fourth hearing on the anticipated reauthorization of the Higher Education Act (HEA). More Americans have student loan debt than ever before. In 2014, 41 million Americans had some student loan debt, up from 28 million in 2007.
Despite the rising debt, Senator Lamar Alexander (R-Tenn.), chair of the HELP committee, said that college is more affordable than students believe, comparing the average debt a student takes on for four years of college to the price of a car. The average debt after four years of college is approximately $28,400, according to the Federal Reserve Bank of New York.
“We should take steps to make college more affordable, but I believe we should also cancel misleading rhetoric that causes so many students to believe that they can’t afford college,” Alexander said.
Nevertheless, as the cost of college rises over the years, so does the amount that students take out to fund their educations. Dr. Elizabeth Akers, a fellow at the Brookings Institution, showed in a prepared statement that households with debt have larger balances to pay back than in years past. In 1989/1992, 84 percent of households had a debt between $1,000 and $10,000, and less than 6 percent of households with debt had amounts that exceeded $20,000. In 2013, only 49 percent of households had loan debt of $1,000 to $10,000—the majority had more.
Increasing tuition costs are largely held to be at fault for rising levels of debt. However, the cause of rising tuition is subject to debate. Some believe that public subsidies have encouraged colleges to avail themselves of the “free money” and jack up tuition prices. Others say it is the competition among institutions to build the most expensive and cutting-edge amenities on campus. According to a recent report from Demos, a New York-based think tank, ultimately state divestment in funding to public institutions of higher education is to blame for the increase in tuition.
Whether state divestment in higher education is the root cause of spiraling tuitions, the majority of states are spending less on students now than they did prior to the recession, Alaska and North Dakota being the lone exceptions. Other states, such as Louisiana and Wisconsin have been making headlines for their proposed cuts to higher education.
