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.