Going to college is indeed a worthwhile investment, but it is a stressful experience when it comes to the financial aspect of it.

Going to college is indeed a worthwhile investment, but it is a stressful experience when it comes to the financial aspect of it.

Reply 1: O. Allred

Government Involvement in Higher Education

Going to college is indeed a worthwhile investment, but it is a stressful experience when it comes to the financial aspect of it. College loans have become the most significant expense that an individual will have in life along with the purchase of a house (Thelin, 2017). In 2017, the total student debt was $1.34 trillion – “more than the United States population’s credit card debt and lines of credit for home equity combined” ((Mitchell, Leachman & Masterson, 2017, p.2). No one doubts that financial aid and student loans increased access to education for all who wish to pursue it, but students have to pay more, and end up accumulating more and more debt. In 1965, when the Stafford loan program was created to accommodate the financial needs of students from low-income families, it was more advantageous over private market loans (Alexander, 2014). However, the whole financial aid system is very complex and complicated. Students need to understand what their loan options are and how to properly manage them for their own long-term financial wellness prior to diving into the college world. It is becoming far too common for students under higher financial stress to have less confidence in their ability to stay focused and complete their studies (Montalto, et al., 2018).

Since the Great Recession, state funding to higher education has declined significantly, which caused the tuition costs to rise. Being the major source of financial support, state funding cuts have had severe consequences on public institutions as the states provide 53% of the cost of teaching and instruction (Mitchell et al., 2017). “For the average student, increases in federal student aid and the availability of tax credits have not kept up, jeopardizing the ability of many to afford the college education that is key to their long-term financial success” (Mitchell et al., 2017). In spite of the increasing cost of tuition and decreased state support, enrollment had continued to rise since the Recession as students chose to attend community colleges rather than trying to find a job with poor employment prospective at that time. However, in the last few years, the enrollment numbers are declining as rapidly rising tuition prevents many students from attending (Mitchell et al., 2017, p.2).

Regarding funding sources for private institutions, they do not receive funding from the state. Private colleges and universities rely heavily on student tuition and are also funded by donations and endowments (Mitchell et al., 2017). Private institutions are more expensive than public ones. For a four-year degree, a private university can cost over $100,000 (Burrows, 2018). Each student must consider whether the prestige of a private institution is worth the financial burden they will have to pay for several decades after graduation.

Reply 2: Smith

An obvious problem with student loans is that many people have a difficult time repaying them. Perhaps they believe they will land a job paying enough to over loan payments and that doesn’t happen. Other times, one may struggle getting hired before the 6-month grace period ends. Another issue is related to the collection of loan payments. The federal government hires private debt collection companies who might misrepresent themselves as the government or fail to inform borrowers of their rights. These companies receive commission based upon collection, which can drive them to be aggressive in their tactics.

The cost of tuition is a primary factor when students begin the journey of deciding which college to attend. Both the federal and state governments contribute money to higher education. A major difference between the two is the amount of money each group controls and the fact that the state is largely dependent on the federal government. Obviously, the federal government has much more revenue than the states. In fact, the federal government is a state’s largest source of revenue comprising 1/3 of its’ total spending (Howard, 2014). This is necessary considering they must help finance education across the whole country. Another difference is the way money is used. The federal government’s money is primarily given for financial aid and research funding (Delaney, 2014). State funding is categorized in 3 separate ways; general appropriations, capital expenditures for institutions, and student financial aid (Delaney, 2014).

The central role of the federal government in relation to higher education is making college affordable. Generally speaking, colleges with lower tuition receive more applicants and ultimately higher enrollment. Although federal contributions are substantial, they have traditionally been secondary to that of the state (Longanecker). Recently, the federal government has increased its’ involvement and support of higher education, while the state has decreased theirs. The lack of college funding is the primary cause for an increase in student loan debt.

According to Delaney (2014), the state government’s central role regarding higher education is shaping public policy and subsequently, affordability. States offer grants, but tuition rises to counteract the burden. It is frequently mentioned that college places an undue hardship on many American families. It costs more than it did for previous generations and takes a larger percentage of American families’ income. This is proof that something in the higher education system must change, and soon.

Initially, I thought there is an obvious difference in funding for public and private institutions. Public institutions rely heavily on “public funding”, that is, from federal and state governments. Private institutions rely on grants and gifts. But, after researching, it seems more complicated than this. There is some overlapping between the two types. Some private institutions receive public support called “aid” and some public institutions receive private support from donors.

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