Democrats and Republicans agreed on a deal last week to raise the debt ceiling and avoid a default. The agreement comes with a condition that the student loan payment pause end after August 30, 2023. Around 45 million Americans will be making their first payment on their student loans in three years since the Covid pause. Student loans have grown tremendously and are not a small number anymore.
In 2022, the federal student loan portfolio totals more than $1.7 trillion. That’s more than GDP of Spain and half of the GDP of the United Kingdom.
During the past 20 years tuition has skyrocketed. The reason is simple, the federal government guarantees student loans. That means Universities can raise prices and students will automatically receive loans from the federal government to pay for those increased prices. It’s a subsidy without any type of price regulation.
The same thing is happening now in Florida. Governor DeSantis and the legislature passed a law allowing any student to attend a non-public school of their choice and the government will pay for tuition for the school. After the state the law was passed, private schools raised prices.
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