There’s a crisis in our higher education system today. College tuition has skyrocketed to record highs, leaving many students unable to afford college without taking out thousands of dollars in student loans from the government.
College tuition started rising steeply several decades ago when the federal government began directly issuing loans to help students pay for higher education. Because the government was committing itself to loaning out the full price of tuition for students, colleges realized they could charge whatever they wanted, and the taxpayer would foot the bill. One study showed that for every dollar of subsidized loans disbursed, college tuition jumped by 58 cents.
As a result, student loan debt in America now totals over $1.5 trillion and affects more than 44 million people, outweighing all other types of debt.
Large numbers of these indebted students are struggling to enter the job market because many degrees being offered at universities don’t provide students with marketable skills. As a result, according to one study, over a third of college graduates are underemployed, with many more struggling to find good jobs with the degrees they earned.
Because many students have massive debts while also struggling to find employment, the number of people defaulting on student loan payments is climbing, meaning financial health, and even the ability to get a license to work, are at risk for millions of Americans.
It’s not unlike the housing bubble that caused the Great Recession a decade ago, where government policies encouraging people to take out home loans regardless of their ability to pay led to widespread defaults and foreclosures. This student loan bubble isn’t sustainable, which means taxpayers may be on the hook even more if it bursts.
The solution to this problem is to increase competition from the private sector.
Time and time again, in every aspect of our economy, free-market competition produces better products at more affordable prices. The same is true in higher education. If we allow for true free-market competition, the price to get a degree and learn important skills will come down.
There’s already some competition in higher education that is helping to reduce costs, such as more affordable community colleges, private schools, and online programs. However, further solutions are needed to make college truly affordable for everyone.
The technology sector offers a strong example of what free-market solutions to our struggling higher education system would look like.
For students who want to learn how to code — which is an increasingly useful skill in the modern economy — there are a lot of options besides earning a traditional degree. Students can attend coding bootcamps, which are short-term courses designed to teach students how to code without getting a traditional degree.
There are coding bootcamps all across America, including devCodeCamp in Milwaukee and Full Stack Academy based in New York, as well as many other bootcamps online. No matter what your ZIP code is, if you’re ready to work hard and learn a skill, the private sector can give you the chance.
That’s just one example of how education can and will succeed if the government gets out of the way of private sector innovation and competition. The free market is always better at providing quality services at lower costs than the government, which is why we should work to expand alternative private education into more sectors. That was my aim when I founded the Ron Paul curriculum several years ago.
Education is no different from anything else in our society: More private-sector innovation and competition will inevitably yield better results at lower costs to consumers.
Ron Paul is a former Republican congressman from Texas.
