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The Student Loan Crisis- A Result of Poor Policy Formulation

Although many people think the fault of student loan crisis lies on those who agreed to take out the loans, poor policy formulation that allowed institutions to take advantage of students caused this crisis.

America has a problem, a $1.6 trillion problem- the student loan crisis. As of 2019, a total of over 45 million Americans are struggling with repayment of their student loans. It is estimated that the average debt per student who takes out a loan to finance their education currently stands at over $29,800 (Johnson). It is expected that the total student debt in America will rise to a staggering $2 trillion by 2021 (Hoffower). The cause of the student loan crisis in America is increased cost of tertiary education. There has been significant increase in the overall individualistic cost of college education- tuition fees, accommodation and another transcending cost of tertiary education have skyrocketed over the past few decades. It is estimated that the average cost of tuition for private colleges has risen from $15,200 in 1987 to $34,700 in 2018.

Similarly, the average cost of tuition for public institutions, the rise is from $3200 in 1987 to over $10,000 in 2018. This increase represents an increase of 213% for public institutions and 129% for private institutions (Hoffower). According to college board the report show that tuition expenses vary depending on the state.

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Both government institutions and colleges defend the increase stating the increase in the cost of offering college education is responsible for the sharp increase. However, closer scrutiny of the student-debt situation reveals underlying failures of both the government and colleges alike, in terms of policy formulation and management that are responsible for the student debt crisis in the United States. (Hoffower)

(Add something to explain/analyze the quotation for the reader and then tie back to the thesis.)

Since the mid to late 1980s, a sharp increase in higher education has occurred. The number of enrollment in colleges across the US was 20.4 million by the end of 2017, an increase in over 5.1 million students in the fall of 2000. The cause of this significant increase in enrollment is the increased perception that a college degree is necessary for success and has a high return on investment is considered an investment. The overall argument by higher education experts is with increased college admissions means corresponding increase in the number of professors, learning materials, infrastructure and capacities of colleges. Therefore, for colleges to be able to produce graduates with relevant skills applicable in their professional environment, they need to invest in the areas mentioned above of administering college education, thus validating the increase (Popescu).

A close analysis of the cause and effect relationship of the increase reveals a discrepancy in this illusion. The cost of university education has risen by over 129% and 213% for both private and public universities. However, the wages remitted to professors and university staff have only risen 16% since the mid-1980s. Also, the increase in the number of professors and other college staff is less than 50% for the past three decades (Popescu). Although this increase in the number of academic staff in direct contact with students, college spending, on average on academic staff, has fallen from 40% in 1985 to an average of 30% as of 2018 (Hoffower). The average infrastructure investments in colleges have risen by only a third over the past five years. These discrepancies in the proportion of investments and actual cost of college education reveal the laws of demand and supply, in an area with limited government protection as the main causing agent of the student debt crisis. In essence, colleges responded to the increased demand for college education through corresponding increase in college fees in an unstructured and unrestricted manner.

In 1978, the US Congress passed the Middle Income Student Assistance Act, the premise of the student loan system in use today. The Act made it easy for almost all undergraduate students eligible for financial assistance from Pell Grants and other education-centric subsidized loans, more so for students that come from middle-income families. The overall effect of this Act was a surge in college enrollments, due to easier access to financial aid needed to finance a college education. The premise of this legislation was to lower the burden of college education so that more students may get access to career-shaping training (Popescu). On paper, this policy was made even more attractive by some of the proposed incentives for taking up student loans. Incentives like the Public Service Loan Forgiveness meant students were eligible for a reduction in a certain proportion of their outstanding loan balance if they worked in the public sector for e certain period (5 years).

These incentives resulted in an increased number of enrollments in colleges. However, these incentives and relative ease of accessing student loans led to the Bennett Effect(Pallardy). This is a hypothesis that offers a direct link between increased cost of college education (more so tuition fees) and student loans. The hypothesis actively states that if colleges are aware that students have easier access to student loans, there is an increased probability of colleges to raise tuition fees and other costs of college education in a manner that benefits their revenues (Pallardy). According to a study, for every dollar of government aid granted to students, tertiary institutions have increased tuition fees by 65 cents. This unregulated increase in government aid results in an unrestricted increase in tuition fees for college students, further exasperating the student debt crisis in the United States.

Stakeholders within the higher education sector have also credited the increased cost of college on increased number and types of student facilities. Counseling, healthcare, the internet, and sports have expanded with the increase in student populations. They argue that these increments also contribute to the increased cost of college education. It is estimated that around two-thirds of the average college budget goes into non-academic expenses (MARTIN).

However, most colleges have approved and implemented such non-academic infrastructural upgrades that amount to less than 34% of the initial cost of constructing the said colleges (Hoffower). The administrators of a college education are thought to be the ones benefitting from the increased payments received from increased revenue streams from increased student population and ease of access to student loans. It is estimated that the average salaries and benefits of college administrators have been on the rise, corresponding to the increase in college demand. The average college administrator makes a six-figure salary, a feat not achieved before the student loan crisis.


It is evident that the cause-and-effect relationship of the factors surrounding the student loan crisis is less economic responses to the changing trends in college education.Rather a collection of failures by colleges and the government to develop and implement policies surrounding financing college education in a manner.

  • Expand the introduction
  • Tie back to the thesis at the end of each paragraph
  • Be sure to follow up on quotations to make sense of them/analyze them for the reader
  • Expand on the conclusion—maybe a little more about the reasoning, and more to answer the “so what” question