College costs and student debt
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Transcript of College costs and student debt
College Costs and Student
DebtCristy, Rachel,
Kenzie
Let’s talk about debt
The student loan debt in the United States lies between $902 Billion and $1 Trillion
with around $864 Billion in Federal Student Loan Debt.
That is$24,301
PER CAPITA!!!
Hey! Did you know it
takes an average of 21
years to pay off a bachelor’s degree?
WOW. I wonder what else people could do with all of that money!!
INVEST ITSAVE ITSPEND IT
GDP!
So how did this start, and what’s been done to
help?
History
First student loans issued
exclusively to students at
Harvard
GI Bill passes and covers the cost of nearly
half of the WWII veterans’ college
education
NASFAA is established to help students
with their financial aid
HEA amended- all undergrads eligible for Pell
Grants
Troubles with student loans
arise- $10 billion
Student loan debt skyrockets- avg. debt from
$9,00 to $15,000 to
$17,500
Student loan debt surpasses 1 trillion- 200%
increase
1840
1944
1956
1976
1986 2012
1990’s
Obama Student Loan Forgiveness ProgramThe William D. Ford Direct Loan PRogram became this when Obama
signed Health Care and Education Reconciliation Act of 2010.
The federal government will no
longer give subsidies to private lending institutions
for federally backed loans
Borrowers of new loans make
payments based on 10% of their
discretionary income.
New borrowers eligible for student loan
forgiveness after 20 years instead of 25.
Increase college funding & fund poor
and minority students
Current Political Standpoints
Clinton wants to lower student debt and make a new plan based on
income. Putting a cap of not paying more than 10% of
discretionary income.
Sanders wants to make tuition free for all state
colleges and universities by taxing
Wall Street.“Student loans are
probably one of the only things that the
government shouldn't make money from and
yet it does." -Trump
What factors are causing tuition to rise?
States are cutting
funding, and tuition is rising
inversely
Federal Funding
In 1985 Pell Grant covered 50% of tuition.
In 2015, Pell Grant covered only 35%.
1975 2015Tuition $7,833* $19,548
Minimum Wage
$9.25* $8.50
Hours per Week
17 43
*Adjusted for inflation
Tuition in Work Hours
Where do institutions get their money?
Where does that money go?
Colleges are spending the majority of their money on teachers...
..but for the wrong reasons
The average is about 1
non-academic
staff member for every 10
students
Colleges are using low faculty to
student ratios to influence attendance..
..and paying them high salaries to keep the
turnover rate low
An average of 37% of
faculty members
stay for 20+ years, 30%
for 6+
Potentially lowering college faculty salaries & making them eligible for
more benefits to compensate may lower
college costs
Public vs. Private
$9,139$33,50
4
Private 4-year Institution
Public 4-year Institution
What if the federal government allotted more money for college funding?
PLe
Qe
PL1
Q1
AS
AD
AD1
College is more affordable
More people attend, AD rises
PL rises
How does Germany have free college?
For all students in 2013...FAFSA money
allotted for tuitionTotal cost of
undergraduate and graduate public
tuition$67.7 Billion
$61.8 Billion
Eliminating FAFSA funding for private schools would make public universities
Free college =
higher attendance rates
Higher attendance rates
= raise in operation costs
Taxes
The true cost of making public colleges freeNo more FAFSA money for students who decide to go to a private university. More competitive public colleges.Possible tax raise. Is it worth it?
Human Capital leads to Productivity
SRAS
SRAS1
AD
Price level
Which leads to....RGDP
A move in the Phillips Curve!LRPC
LRPC1
SRPC
SRPC1
unemployment
infla
tion
Education Human Capital Productivity Increase GDP Economic
Growth
LetterWe are writing our letter to John King, Jr.
The Secretary of the Department of Education.