Is Excessive Student Lending Fueling The Need For Help With Student Loans?
October 25, 2012

Former Secretary of Education William Bennett kicked off the debate in the 1980s. Bennett hypothesized: “…increases in financial aid in recent years have enabled colleges and universities blithely to raise their tuitions, confident that Federal loan subsidies would help cushion the increase.” Since that time, quite a bit of research has been performed to investigate the possibility. What conclusion have the experts reached? Well, it depends on whom you ask.

Bennett Hypothesis Proved False

Earlier this year, David L. Warren, president of the National Association of Independent Colleges and Universities, wrote an article outlining how the many ways in which the Bennett Hypothesis had been empirically disproved over the past fifteen years. Warren’s piece concludes with a fierce defense of the need for continued federal support of higher education in the form of financial aid: “Without the continued federal investment in student aid, a college degree will be a lost dream for millions of low- and middle-income Americans. It is too important to the nation and these students to abandon them now.”

The Rebuttal

A rebuttal piece was soon to follow, published by The Cato Institute, stating that Bennett had misrepresented the findings of the three research studies cited in his article. The rebuttal piece concludes: “It is also the case, as most studies point out, that it is very difficult to definitively isolate the effects of aid when so many factors — from school type to student characteristics – are in play. That’s when basic logic also has to come in…One thing that cannot be supported is insisting, as Mr. Warren does, that we know for certain there is no connection between student aid and rising prices.”

Where Do Students Fit In?

What is certain is that students are caught in the middle. They are faced with the onus to pay those high tuition costs, hopefully without turning into another horror story that riddles the news. So what can you do to help yourself? Weather or not student loans are fueling tuition costs, it will behoove you to practice responsible borrowing. One of the biggest complaints about financial aid for higher education is that students are uninformed about what they are getting themselves into. Change is on the way, and steps are being taken to help college entrants become more aware of personal finance options and responsibilities before they become hopelessly indebted.

Right now, though, a lot of that burden falls on students themselves to become as informed as possible about the impact of their student loans and the ways to manage and pay off debt in the years following college. Fortunately there are many ways in which to optimize accrued student debt and there is help available. There are student aid organizations whose goal is to assist borrowers in their efforts to manage student debt.