The economic problem of college

College tuition has steadily been increasing at an even faster rate than inflation.

That's no surprise. What is surprising, though, is that the rate of students taking out loans from the federal government has increased 511 percent since 1999.

While the federal government has given more and more money to students attending college, those very same colleges have been continuously increasing their tuition rates, effectively negating cost efficiency.

Why would these benevolent institutions raise costs?

The reasoning is simple: The more money the federal government gives students to pay for college, the higher that colleges can raise their tuition because their students now have more money to pay for that very same education. An even simpler translation: more money for the institution.

It's a vicious, never-ending economic disaster waiting to happen, and when it does, the burden will be placed directly on the American taxpayer. Sound familiar?

There is even more going on here then a mere revenue vacuum, and it frightens me. This isn't just about the universities, but about the future of graduating participants.

Students are obtaining federal loans, graduating in their respective fields, and then: nothing. Our economy, as you know, is abysmal. Underemployment is on the rise. Say hello to record high loan defaults, America.

Government-subsidized loans have injected money into higher education, as they did into housing, causing prices to balloon,” writes columnist Michael Barone. “But at some point people figure out they’re not getting their money’s worth, and the bubble bursts.”

What is worse, is that many politicians — namely Democrats — continue to demonize anyone who stands up against higher education funding.

It baffles me that education funding — be it higher education or at the lower level — is somehow exempt from common sense economic principles, and other federal expenditures simply are not. This is fallacious and simply inconceivable.

Who do you think pays for these student loans?

The money doesn't grow on some eco-protected government trees in the Federal Reserve's backyard. Our government is broke, and its current revenue stream is unsustainable when compared with its expenditures. That should be immensely clear to anyone with even a slight awareness of American politics.

Many Americans might not understand this, but our government has no money. None. In fact, we're in debt.

We have no money to pay for entitlements, student loans, death stars, rovers on Mars and anything else you'd like to insert here. No money whatsoever.

On top of this, we have recently passed a "fiscal cliff" compromise that will shake us and turn us upside down, not to mention the forthcoming Obamacare tax increases that have yet to hit the taxpayer.

Inflation combined with severe national unemployment and an ever-rising national debt are far greater threats to the liberty and prosperity of this nation then a slight federal decrease in student loan money. As demonstrated above, this won't make college more affordable for the masses in the long run.

Voters have once again been bamboozled into electing politicians who promise them an easier path to higher education, and thus they unknowingly contribute to the universal cost increase that has constructed the higher education bubble here in America.

And it keeps growing.


Reach this columnist at and follow him on twitter at @sean_mccauley


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