In Our View: Higher Ed’s Cost Curbed

While debate continues over what Washington lawmakers did — and did not do — this year in support of K-12 education, they also made vast changes to higher education.

Led by Senate Republicans, the Legislature slashed tuition at the state’s colleges and universities for coming years. Tuition will be reduced by 15 percent to 20 percent over the next two years at four-year colleges, and by 5 percent next year at two-year schools. Lawmakers also increased funding for schools in order to pay for the tuition reductions.

In so doing, the Legislature took a measured approach to addressing the national issue of rising tuition costs, but the conundrum remains one that must be addressed at the congressional level. The simple explanation is that making federal money more readily available for students — through grants and easily procured loans — has driven up tuition costs. “There’s widespread concern among policymakers and college officials that it has become too easy for students to borrow large amounts of money without necessarily appreciating what they are getting into,” Terry Hartle of the American Council on Education explained to The Wall Street Journal.

According to a new study from the New York Federal Reserve, student-loan disbursements — which include some private loans but come mostly from the federal government — more than doubled from 2001 to 2012. During that time, the average loan per recipient rose 58 percent after being adjusted for inflation.

The most pertinent analogy to this cycle could be found in the housing crisis of the past decade, when loosened borrowing standards led to more money chasing available homes, which led to inflated prices — until the bubble burst. Tuition costs are a bit more complicated, particularly at public institutions where state governments set the price point, but simple economics suggest that more money in the hands of students will lead to higher costs.

In an increasingly sophisticated economy, a college education has become more valuable than ever before, but this calls for some management rather than simply having the federal government increase student loans and develop debt-forgiveness programs. In that regard, the Legislature has taken an intelligent approach to addressing the issue.