NCPA - National Center for Policy Analysis


April 5, 2006

Despite rising tuition fees, American college students have remained relatively quiet, but that may change now that Congress has slashed their subsidized loans by $12.7 billion, says the Economist.

According to Republicans, the bill generously provides $3.75 billion in new grants for disadvantaged students studying mathematics, science and foreign languages; however, $15 billion of the gross savings come from higher fixed income rates and fees for borrowers, says the Economist.

Yet, for the vast majority of Americans, the benefits outweigh the costs, even though legitimate concerns exist:

  • Tuition fees are now four times higher than they were in 1975; and if you add in necessities, like books and room and board, private college students pay $29,026 a year, while public college students pay $12,127.
  • Many states have cut the money they give public universities, pushing more of the costs on to the students; and since more Americans want to go to college, schools have been able to hike prices.
  • Costs put off 48 percent of qualified high-school graduates from attending a four-year institution and 22 percent from attending any college at all.
  • The level of Pell grants -- the main program for low-income students -- has been frozen at a maximum of $4,050 for the past four years; and in 2004, its eligibility guidelines were changed with the effect of excluding 81,000 young people and reducing grant money for another 1.9 million.

Furthermore, students who go on to low-paid professional work in the public sector face a mounting challenge. Many of these careers involve several levels of tertiary education, but the typical salary for graduates entering such public interest professions is just $36,000, which is not enough to pay off their loans, says the Economist.

Source: Editorial, "Out of the mouths of babes," Economist, December 24, 2005.

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