For many students entering higher education, along with the excitement of entering a new stage of life comes a sobering reminder of reality: the process of applying for financial aid. Every year, 10 million students take out Stafford loans in order to fund their college education, and 800,000 parents take out PLUS loans. Considering the trend of rising college tuition rates, these numbers are only likely to increase with time.
Dartmouth is exemplary of this particular trend, where the combination of tuition, room and board add up to a whopping $41,355 per academic year. Of course, this sum does not include the costs of textbooks, which will total approximately $2,520, and the expenses associated with health insurance, a computer, fraternity or sorority dues, the occasional trip to EBAs and travel to Dartmouth, which can be an enormous expenditure on its own. All in all, attending Dartmouth is hugely expensive, and financial aid is a necessity, rather than simply an option, for over half of students here; 56.5 percent of the student body receives financial aid of some kind.
The budget reconciliation bill passed by Congress last week will only exacerbate the difficulty with which students fund their education after high school. The bill mandates cutbacks of $39.5 billion over a five-year period, almost a third of which are in the area of student loans. Starting on July 1 of this year, the interest rate on PLUS loans will increase to 8.5 percent from the current 6.1 percent; rates on Stafford loans will be pushed up to 6.8 percent from the current 5.3 percent. These increases are substantial. With higher interest rates and rising tuition costs, students and their families will be forced to use the last of their resources in order to simply have the opportunity to attend college.
Proponents argue that the bill would diminish the direct impact on students with other provisions. Most notably, the plan raises loan limits for freshmen and sophomores above their current levels, to $3,500 and $4,500, respectively -- that is an increase of nearly $1,000 per grade from current limits. Expensive education programs may look as though they will be in reach.
But while this may seem to be a blessing, it is one that is only temporary and that, when long-term consequences are considered, will ultimately leave students and their families in deeper holes of debt. A larger amount of loan money combined with higher interest rates generates more long-term debts, not less. Even if more low-income students are able to attend college with the increased loan limits -- an unlikely prospect to begin with, considering that the interest rates will likely deter applications -- the fact that interest rates are higher will make it much more difficult for them to survive in entry-level jobs after graduation. The bill essentially forces parents and students to pay for the government's budget cut, generating revenue while having their own services pushed further out of reach.
Even worse, the cuts do not even target the families who can afford to send their children to expensive colleges. The bill instead puts the burden on those who are already underprivileged, who already have difficulty making ends meet and financing their children's education. Those least able to pay back loans are about to become the most indebted.
Let's fast forward five or 10 years down the road. How would Dartmouth's student body be different if students who required financial aid were no longer able to obtain it? What would America's college and university system look like?
The meritocracy that we have today -- already fragile and turning into an inherited meritocracy -- would have little chance of surviving. Instead of being selected based on test scores and grades, low-income students applying to colleges would self-select on the basis of whether or not their families can afford the strain that paying a high-interest loan would incur. Money would be the main qualification for gaining admission to colleges, not academic or extracurricular excellence.
With the reality of social relations in the United States already becoming increasingly centered on money and class, it is distressing that the last hope for the maintenance of a merit-based system -- education -- one day may be only available to the rich.
The answers to the questions I posed earlier paint a bleak picture. Just as many of us here at Dartmouth forget about the importance of class background in our everyday lives, it seems that the federal government is also unaware of -- or simply unwilling to confront -- the ramifications of their student loan policy, and how it will affect those who are already disadvantaged.
