Student loans have probably never been less popular than they are now. They’re a burden on young adults and a drain on the economy. So why not just scrap the whole enterprise?
That’s what Ohio University Professor Richard Vedder is suggesting this week on Bloomberg View. He advocates getting Washington out of the student lending game entirely by nixing the Department of Education’s direct loan program without reviving the old system of subsidizing private bank loans. In the meantime, he’d spend some of the savings on additional grants for “low” or “fairly low-income” students.
Sound reasonable? It’s not.
Meet Ben. He’s a high school senior from a middle class family in Massachusettes who is choosing where to attend college next year. He’s down to two schools: prestigious Boston College, or the University of Massachusetts at Amherst, his state’s top public campus. Even with the generous financial aid package from BC, he would still graduate with a big mound of loans. UMass, meanwhile, would be more than $15,000 a year cheaper.
Which should Ben pick? Prestige or price?
With the cost of higher education climbing every year, and student debt surpassing $1 trillion, more and more young people will have to decide whether to make that trade-off. It begs the question: Does it really pay to go to an elite university, financially speaking? Researchers have been investigating this issue since at least the 1980s. And their findings tend to show that when it comes to future earnings, where you go to college counts.