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Expert: Your college loan is causing your tuition to rise — and all Americans are on the hook

(AP Photo)

Nationwide, over 44.1 million people are in student loan debt owing over $1.4 trillion.

Overall, the majority of loans granted to students are federal subsidized loans, which have left private lending companies unable to compete. In order to attain a subsidized loan, the undergraduate student must qualify by showing significant financial need. But with nearly 30 million students granted subsidized loans, the financial burden is causing every American to foot the bill.

“Limiting the amount of student federal loans out there is really important right now. As a student, you can get virtually an unlimited amount of money from the federal government.” Lindsey Burke, an education expert with the Heritage Foundation, told Red Alert Politics.

The federal government grants 93 percent of all student loans, which equates to more than $1 trillion. What many students and parents do not realize is that for every dollar increase in federally subsidized loans granted to students, universities increase tuition by 63 cents. This means that even if you are not taking out a subsidized loan, students are still paying more and then being hit with the subsidies again in taxes. Experts warn that this type of lending leaves no boundaries for tuition inflation.

“It’s mind boggling,” Burke said. “It is particularly problematic because the increase in tuition is passed on to all of the students in the university. It’s not just concentrated on the students who took out loans.”

And with private school tuition up 13 percent and public school up nine percent since 2012, studies have shown that nearly 15 percent of borrowers are defaulting on their loans within three years.

“It’s breathtaking that the federal government is involved in 93 percent of the student loans that are made today. That means clearly when there are defaults, or when student loan forgiveness occurs, which, of course, under the Obama administration, got more and more generous year after year that taxpayers pick up the tab for all of it,” Burke said.

Burke hopes that under the new administration, the government can reduce federal intervention in student lending and allow for more competitive private lending companies to come in. Once private lenders are able to compete again it will start to ease the cost for both students and taxpayers.


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