On 1 July 2022, the U.S. Department of Education announced that its federal student loan program had exceeded $1.7 trillion in outstanding loans, a debt largely accrued in tandem with dramatic tuition increases across American colleges. According to the College Board, public four-year university costs have more than doubled in the last two decades, with average tuition and fees reaching $10,740 for the 2021-2022 academic year. This rise in tuition costs directly correlates with the availability of federal student loans, a relationship documented in numerous studies, including the 2017 report from the National Bureau of Economic Research.

The Beneficiaries of High Tuition

One major beneficiary of this phenomenon is the higher education sector itself, which includes not only universities but also student housing developers and textbook publishers. In 2019, according to the National Association of College and University Business Officers, the total assets of U.S. colleges reached around $600 billion, indicating a significant accumulation driven by high tuition fees. This growth has directly benefitted executives like Michael Crow—President of Arizona State University—who received $531,000 in total compensation in 2020.

A stark example of the revolving door can be examined in the case of the University of Maryland. On 1 January 2021, former Maryland State Senator Barbara Mikulski transitioned from government service to the university as an advisor, following two decades of advocating for federal funding for education. Subsequent to her appointment, the University of Maryland secured grants exceeding $100 million in federal support, many of which relied on federal student loan programs.

This pattern is seen repeatedly among educational reform advocates whose roles often come with substantial compensation for directing policy favorable towards higher tuition. For instance, the Lumina Foundation, which supports initiatives that promote higher education accessibility, has funded various lobbyists who advocate for continuing tuition hikes that position schools as the largest beneficiaries of federal aid.

Funding Networks Behind Tuition Support

The role of financing networks should not be overlooked. The United States Student Association, which pushes for increased federal student aid, reported $3 million in contributions from private donors including the Charles Koch Foundation and the Bill & Melinda Gates Foundation in 2020, organizations that have historically backed initiatives supporting higher education while benefiting from increased tuition rates. These organizations often fund think tanks like the Brookings Institution that promote policies which keep higher education expensive, ensuring continued reliance on federal loans.

The historical roots of this issue trace back to the expansion of the federal student loan program established under the Higher Education Act of 1965. This foundational change reshaped the landscape of financing higher education while situating institutions in a corner where they could continually raise tuition with little resistance since students could access loans for ever-increasing costs.

Notably, this is not a new trend, as similar practices were reminiscent of the Cold War-era G.I. Bill, which incentivized veterans via government loans to attend college, thus benefitting institutions financially. This is the third time since 2001 that a significant federal policy shift has led to an increase in tuition fees rather than stabilizing costs.

In conclusion, the increase in educational costs directly benefits a network of academic institutions and affiliated industries, maintained by political figures extending the reach of federal aid. With these entities profiting billions, systematic issues in the education system continue to perpetuate student debt.

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