- Liam Strand ’20
Currently, there is $1.56 trillion in U.S. student loan debt spread across 45 million Americans who, on average, each pay $393 towards their loans every month (The Federal Reserve). This hardship makes it extremely difficult for students, fresh out of college, to begin their lives in the ‘real world.’ This affects financially disadvantaged graduates especially, as they need to take out the largest loans and don’t have a monetary safety net provided by their parents.
These students are inexperienced, unprotected, and are often the first in their family to graduate from college. Upon exiting college, they are clapped with an average of $29,800 in debt (The Federal Reserve). It is extremely difficult for these students to pay off their financial obligation, and they often enter a cycle of debt: taking out loans to cover the interest on other loans. This debt makes a college degree a burden, rather than a gift, to many graduates.
In addition to alleviating the financial concerns of millions of Americans, eliminating college debt would also have substantial positive economic repercussions. If students leaving college don’t carry debt, they are able to save money more quickly, land jobs with better long-term prospects, and pay more in taxes back to the government. Additionally, material production would increase because college educated employees are able to have a broader impact instead of being relegated to menial, monotonous jobs that are already in danger of automation.
It has been estimated that a nationwide policy, with the responsibility of supporting students split between the state and federal governments, would cost about $74.5 billion. That sounds like a lot of money, and it is. But, if you take into account the return on that investment in the form of more tax revenue and lower social service costs, the federal government nets about $82 billion. That is a return on your investment of about 10%! How do the states fair in this? Over an average lifetime, state income taxes would increase by approximately $52,500 per four-year-equivalent (FYE) degree, meaning that for every FYE degree that the government funds, the government will receive about $52,500 in tax revenue (New England Public Policy Center).
But why is paying more in taxes good? That’s an excellent and important question. The fact of the matter is that new tax revenue does not come from people who are already planning on going to college. Given SHP’s 100% college matriculation rate, this means that none of this money will come from you. The tax revenue comes from people who wouldn’t be able to afford college without assistance from the government. Furthermore, these people won’t be paying a higher tax rate than their unassisted counterparts, they will just have more income to tax! The majority of this higher income will go directly into the pocket of the college graduate, giving them long-term financial stability and flexibility.
One could argue that debt-free college is a welfare handout that unnecessarily burdens taxpayers, but this is extremely misguided. First, the program pays for itself, meaning that there will be no new taxes to encumber everyone else. Second, whether or not it is a welfare handout is irrelevant because there is a huge demand in the United States for college-educated workers. Filling this need would give a boost to the economy that would be good for people of all income brackets. Finally, the program is morally good. It would give financial security to tens of thousands of people across the country.
It is shortsighted to disregard the massive socioeconomic benefits of debt-free college, it is self-defeating to disregard the fact that “public financial support of college education pays for itself many times over” (New England Public Policy Center), and it is unwise not to consider publically-funded, debt-free college as a legislative possibility.
Photo from The Nation