Recently, there has been much discussion in the Daily about issues related to higher education, particularly student loans and government funding of higher education. Recent editorials have outlined Senator and presidential candidate Elizabeth Warren’s proposed student loan forgiveness plan and have urged the Iowa legislature to approve the full amount of funding requested by the board of regents, in both cases urging students to make these educational issues one of their voting priorities.

However, a more comprehensive outline of the flaws in our current higher education system and the government’s involvement is necessary to fully understand these issues.

Our current education system has become growingly dysfunctional over the past couple decades. Tuition rates have been rising far more rapidly than inflation, student loan debt has crippled the financial freedom of many Americans, and the value of a degree has been on a slow decline as more young people acquire bachelor’s degrees and unemployment tightens – an effect known as “degree inflation”. There is currently around $1.5 trillion in outstanding student loans in the U.S. Obviously, there needs to be significant changes to ensure our young people are entering their professional careers sufficiently educated and financially stable.

So, how did we get here? To understand this, we must explore a series of interrelated factors that have combined into a vicious cycle that has thrown higher education off kilter: student loans, government involvement in student debt, college spending and tuition.

In the 1960’s, the government first began involving itself in student loans.  Under normal conditions, when a loan is taken out by a borrower, the lender determines the amount the individual or business can borrow and the interest rate charged based on the probability that the borrower will be able to pay back the loan. The risk is for the lender is directly proportional to the reward, as is only fair. However, the government decided to intervene in the student loan market by guaranteeing all student loans, effectively allowing lenders to reap the profits without facing any risk. This removed the incentive for lenders to be cautious about how much they lend to individuals who are more likely to default on their loans. As a result, more students began taking out more loans. In the 2000’s, the government thought it prudent to begin not only guaranteeing student loans but to also become the actual lender in order to collect the profits instead of the former lenders. As a result, more loans became available to students. Students could essentially borrow as much as they wanted for their college education, and the rate of growth in student loans steepened.

Since 1963, college tuition has risen at a rate approximately 2.5 times the rate of inflation. Why?  Several factors contribute to this. First, as mentioned previously, student loans have become increasingly available. There is now no incentive for loans to be discretionarily apportioned based on the quality of the education and value of the degree being received. Since students can take out loans to pay whatever tuition happens to be at their desired school, the schools can raise the price. A second factor is the excessive spending by universities. As college has been established as a social expectation and prerequisite to a successful professional career (a problem in itself), college attendance has steadily increased. Consequentially, competition for enrollment between schools has intensified. The methods undertaken have mostly not been centered on improving the quality of the education given, but have instead been focused on offering the best campus amenities. Schools have spent fortunes on improving dorms and dining halls, building better recreation centers and beautiful buildings, and delivering a better campus aesthetic than their competition. On top of this, university administrative staffs have grown rapidly and disproportionately to teaching staffs. This administrative bloating combined with gratuitous spending means universities have needed more money. Hence, tuition raises. This wouldn’t have been possible had students not had access to nearly unlimited borrowing.

The final factor in this self-perpetuating and accelerating process is government funding of higher education. Public universities receive funds from tuition, donors and the government. As college spending and tuition have increased, so has government funding of public higher educational institutions. Although it is clear that there are plenty of ways universities could cut their spending to reduce the burden on students and allow for taxpayer money to be spent on things other than cushier dorms, this has not happened, and universities continually request more and more money from the government.  If state governments dare push back against these requests, they get attacked (at times by the Daily) for not caring about education. Thus, universities continue to get all the funding they need while justifying continued tuition hikes.

What really needs to happen? I’ll give you a hint – it isn’t free college or complete forgiveness of student loans. 

First, student loans should be privatized. If banks become the lenders for student loans and bear the risk, they will have an incentive to ensure the students they loan to will only borrow as much as they will be realistically able to repay. This would funnel more students into majors that are in high demand.  It would also mean that lenders would consider the quality of the school students attend when deciding whether to lend to them. This would mean private schools like Harvard would have to focus on improving the product they provide and also decrease tuition to avoid massive enrollment decreases. Lenders would not provide three times the loans to students who prefer Harvard over Iowa State for the same major, so schools would have to compete on the basis of educational quality.

Second, governments should exercise stricter oversight of the budgets of the public universities they fund to ensure responsible spending. Superfluous construction projects and unnecessary administrative positions should be cut.

Lastly, we as a society need to rethink the way we view higher education.  While the bachelor’s degree is a useful instrument for many, there are huge populations of young people who only attend in an attempt to live up to what they feel is expected of them. Many of them would do better in trade schools, which offer high salary careers at a fraction of the cost. Apprenticeships should also be an avenue open to more young people who would rather start gaining real world experience than spend four more years in academia. The main purpose of a bachelor’s degree is accreditation, so more options for alternative accreditation should be available, such as online programs or experience-based certifications. For high agency creative young people, graduate programs should be open even without a bachelor’s degree, or at very least the opportunity to do research should be available. College is an incredible learning opportunity and should be cherished, but it should not be a societal expectation or requirement.

With tuition and student debt continuing to rise and our politicians proposing band-aid solutions rather than long-term structural fixes, it is imperative that we look beyond the surface of this issue. If the three proposals I suggested were implemented, tuition would likely begin decreasing and the quality of our educational institutions would improve. More of our kids would have options available to them that best suit them and prepare them to be valuable contributors to society. Student debt would no longer be the crippling and nearly unavoidable force it is. Education is doubtlessly valuable, but, if we don’t structure our system correctly, will never see many of its benefits materialize.

Editor’s Note: A previous version of this letter did not include the author’s graphs. The letter has been updated to include the entire submission.