Rick Haglund: Student loan forgiveness will aid millions, but college affordability problems remain

September 7, 2022 3:21 am

Northern Michigan University on Dec. 10, 2021 | Allison R. Donahue

President Joe Biden’s plan to cancel as much as $20,000 per borrower in college federal student loan debt will help millions burdened by skyrocketing costs of higher education over the past several decades.

In Michigan, 1.4 million residents will benefit from the loan forgiveness program, Gov. Gretchen Whitmer said. As many as half could see their student loan debt halved or eliminated.

But the loan relief plan does little to tackle the complex problem of college affordability.

The average price of tuition, fees, and room and board jumped 169% between 1980 and 2020, according to a Georgetown University study, although price increases have slowed recently.

Critics have cited a number of reasons for skyrocketing college costs including bloated administrative costs and profligate spending on amenities such as lazy rivers.

This is not a new debate. In 1875, the New York Times warned of a “dangerous tendency toward an increase of college expenses. Gentlemen have to pay for their sons in one year more than they spent for themselves in the whole four years of their course.”

Parents with college degrees who are sending their children off to campus this fall can no doubt relate.

But the root problem is the way universities are funded. Decades ago, the costs of higher education were primarily borne by state and federal governments. States supported the operational costs of colleges and universities, while they and the federal government provided need-based scholarships to students.

State investment for universities was seen as a public good that benefited the economy by producing highly educated workers. But that view has diminished as college costs have skyrocketed.

Western Michigan University | Susan J. Demas

A 2019 study by the Pew Research Center found a growing belief by Americans that colleges have a negative effect on society because of rising costs, concerns about free speech on campuses and a view that universities are full of lefty professors.

The shift away from the view that colleges have a positive effect on society is mainly among Republicans and those leaning Republican, Pew found.

It’s therefore not surprising that financial support for universities has plunged in Michigan and other states where Republicans have long controlled legislatures.

Certainly, universities’ operational expenses have risen over the decades, most of it going to pay the cost of teaching, academic support, student services and day-to-day operations.

Academic support costs have climbed in part because there are so many more “nontraditional” students, including parents and working adults, than in decades past, said Ryan Fewins-Bliss, executive director of the Michigan College Access Network.

Many colleges and universities also have added additional support services for minority and low-income students, many of whom are first-generation college students.

“What was nontraditional has now become traditional,” Fewins-Bliss told me. “The reality is that it takes a lot of money to get people across that graduation stage.”

But while costs have ballooned at universities, government support for higher education has fallen precipitously, leaving students and their families to foot much more of the bill. 

And a big portion of the tab — currently a record $1.75 trillion — has been paid to community colleges and universities through student loans.

The root problem is the way universities are funded. Decades ago, the costs of higher education were primarily borne by state and federal governments. States supported the operational costs of colleges and universities, while they and the federal government provided need-based scholarships to students.

Seen through that lens, Biden’s student loan forgiveness plan partially makes up for the decades-long decline of government support for getting a college degree.

Most states trimmed higher education appropriations during the Great Recession from 2007 to 2009 to balance their budgets. But Michigan cut earlier and deeper than most.

Annual state appropriations to the state’s 15 public universities fell from $1.91 billion in fiscal 2001 to $1.36 billion in fiscal 2012, a $550 million cut. Appropriations have risen slowly since then. Universities are receiving a total $2.02 billion in the current fiscal year, little more than they got from the state 20 years ago. 

Universities have suffered a $1 billion inflation-adjusted disinvestment during that time, according to the Michigan Association of State Universities.

Student aid also has fallen. The Michigan Promise, a merit-based scholarship program that awarded 96,000 students up to $4,000 in college scholarships, was terminated in 2009 during a state budget crisis.

A 2020 study by the Michigan League for Public Policy found that Michigan provided the least amount of college financial aid per student among Midwest states. Michigan ranked 48th nationally.

Michigan Capitol | Susan J. Demas

And Federal Pell grant funding for students from low-income families has fallen 63% since 2010, from $42.3 billion to $26 billion in 2021.

But there has been some recent good news in Michigan about higher education funding. Michigan’s Fiscal Year 2023 budget provides an additional $56 million for university operations, the biggest increase in years.

And it allocates $250 million for an upcoming scholarship program that could give students thousands of dollars each in college financial aid.

This investment comes as the state recently updated its “Hot 50” jobs through 2030. Thirty-seven of those high-wage, high-demand jobs require a bachelor’s degree or above.

Continued efforts to make college more affordable are an imperative.


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Rick Haglund
Rick Haglund

Rick Haglund writes the "Micheconomy" column for the Michigan Advance. He's a former reporter and business columnist for Booth Newspapers, now the MLive Media Group, with extensive experience covering Michigan’s economy and the auto industry. He now works as a freelance writer based in Southeast Michigan.