In late April, Senator Elizabeth Warren beat out other 2020 presidential contenders to the college-aged voter pulpit by introducing a sweeping student loan forgiveness plan.
With the previous debate about the nation’s massive $1.57 trillion student loan debt focused on reducing the cost of attending a college or university and assisting with expenses like housing and food, Senator Warren proposed to go one step further.
The Student Loan Debt Relief Act (which she introduced with House Majority Whip James E. Clyburn) would cancel student loan debt for over 40 million Americans if passed.
Everyone’s favorite free-market critic Senator Bernie Sanders has introduced similar legislation, also proposing to forgive the $1.57 trillion in full.
While Democratic Presidential candidates try to one-up each and offer to put taxpayers on the hook for a trillion and a half dollars in student loan debt, the real issues with higher education are going unchecked.
Take California’s recent battles over slush funds, rising tuition, and gaming student enrollment at the state’s public colleges and universities.
Despite the University of California’s status among the country’s most prestigious higher education institutions, administrators have been caught red-handed hiding millions of dollars all while asking students and taxpayers to help cover budget deficits.
A 2017 audit of the University of California found $175 million hidden in reserves. That might not be a problem except the University of California was voting for tuition hikes on students, claiming a budget deficit. During the most recent recession, tuition increased 32 percent in a single year. Eight out of the ten University of California chancellors also got a pay increase that year.
The University of California was also found to be purposefully increasing enrollment of nonresident students who could pay more in tuition, even when they didn’t meet admissions standards in their master planning. The audit said the university had undermined its commitment to resident students. The California State Legislature got suspicious after nonresident enrollment in the University of California system grew from 5 to over 15 percent.
The Public Policy Institute of California found that California students took on $10 billion in federal student loan debt between 2014 and 2016. That’s no surprise since University of California and California State University tuition prices have tripled in the past two decades. Nationwide, tuition has increased 213 percent in three decades.
The California State University system is not immune to fuzzy math. A June 2019 audit found that while California State University tuition doubled over the last decade, an alleged $1.5 billion was kept in a rainy day fund.
California universities haven’t been alone in their thirst for nonresident enrollment. The number of international students almost doubled in the United States between 2005 and 2015. Combine that with nearly even spending on instruction and administration costs across the nation in higher education and it’s no wonder students nationwide are graduating with an average debt of more than $29,000.
The American Council of Trustees and Alumni reports that 25 percent of private colleges are running at a deficit and state-run schools have seen expenses climb by 4.8 percent and revenues slow to 2.9 percent.
PRI has talked about the bloat in colleges and universities before, with University of California, Berkeley, professors John Yoo and Steven Hayward. One issue they brought to mind is that universities and colleges are cutting back on administrative positions due to declining enrollment.
We know that some student loan companies are bad actors and oversight may be needed to protect students and their families. A college degree may also be reaching a point of inflation with a societal and generational failure to acknowledge the value of trade schools as an alternative to a 4-year degree or evaluating the price to attend college and earn a degree.
Ironically, the University of California has brought up the idea of free college before; in its original charter from 1868.
Forgiving student loan debt is a nice gesture, but it does nothing to curb the real issues around the out of control costs impacting higher education.
Evan Harris is the Pacific Research Institute’s Media Relations and Outreach Manager.