Gisdrunos: Paying off student debt will only reward the overpriced colleges and universities by shifting the demand curve, along with prices, up (with costs to consumers reduced by such pay offs, more will be able "to afford" college - and remembering that demand is not want or need, but want or need accompanied by the ability to pay). The explosion of college costs are result of government aid programs, and giving more aid will only push those costs higher without higher education having to reorder its house and become more efficient and funttional.
Richard Vedder, professor of economics emeritus at Ohio University did an interesting interview with Business Insider in which he observed...
"More student borrowers might partly explain why government financial-aid programs have grown enormously — but that's also causing tuition increases, according to Vedder.
In 1970, financial-aid programs "were almost nonexistent," he said. "Generally, middle-income people didn't get money from the federal government; the large majority of students did not."
In 1978, Congress passed a bill known as the Middle Income Student Assistance Act. This made all undergraduates regardless of income class eligible for subsidized loans and middle-income students eligible for Pell Grants, according to NASPA, Student Affairs Administrators in Higher Education. More and more students started applying for financial aid, Vedder said.
"Knowing that students will get this financial-aid money, the university raises fees and takes advantage to capture that themselves," Vedder explained, referring to an idea known as the Bennett hypothesis.
Named for a former education secretary who believed that more government aid for students led directly to college cost increases, the hypothesis is an ongoing topic of political debate. But it has some vertical support in Vedder's eyes. Citing a statistic from the Federal Reserve Bank of New York, Vedder said that for every new dollar of federal student aid, tuition is raised by 65 cents.
Though tuition rose in 1978, so did people's incomes, making the burden of college less than it was in the 1940s, Vedder explained. But between 1978 and 2015, the burden of college began to rise again as tuition fees doubled and economic growth slowed."
