College Tuition & Debt Around the World
Finding Viable Solutions for U.S. Students
“By making college unaffordable and student loans unbearable, we risk deterring our best and brightest from pursuing higher education and securing a good-paying job.”
~ Mark Pocan
Methods of funding higher education vary widely throughout the world. Nearly two dozen countries offer free college education and many others have kept costs low through subsidies. In stark contrast, the United States has cut subsidies repeatedly over the past few decades. This has resulted in among the highest university tuition costs in the world, which creates barriers to college education.
While university students in most of the world are able to get their education and start on a career path before drowning in debt, American students often graduate deep in debt. In the United States, student debt represents the largest chunk of debt, second only to housing.
Covering the Cost of College
Although it is not always the case, a college degree can translate into higher earnings over the course of a lifetime. Higher earnings aren’t the only consideration when making decisions about higher education. For some professions, a degree is an essential step on the career path and attaining the required professional licenses and certifications are impossible without it.
Students in these countries pay no college tuition:
· Germany
· Sweden
· Norway
· Denmark
· Finland
· Brazil
· Argentina
· Uruguay
· Panama
· Malaysia
· Egypt
· Morocco
· Kenya
France has almost free college with tuition of €170 a year for undergraduate students. Some countries offer free tuition only to their citizens, while others extend free education to international students. One thing all these countries have in common is a government that heavily subsidizes higher education. By contrast, we have seen decades of reduced subsidies and rising costs in the United States.
People in the United States have an insane amount of student loan debt. The average college graduate of a public university in the United States leaves school with $25,921 in college loans. Those attending private universities or pursuing advanced degrees can have significantly more debt.
Student Debt in the US vs Other Countries
While many countries offer free tuition for higher education, this generally only covers tuition and fees. Even in places where tuition is free, some students take out loans to cover their living expenses. This leaves them with less debt than the average American graduate, but that isn’t the only difference. Broad differences exist in both the amount of debt students have and how countries handle student debt.
In the United States, the total amount of federal and private student loan debt is nearly $1.75 trillion. The average monthly payment for these loans is $460 per month for a bachelor’s degree and more than $1,000 for a master’s. Although many loans have a 10 year repayment term, many borrowers can take up to 20 years to repay their loans, and up to 67% of the money repaid is interest.
This is vastly different to the approach in other countries. Some countries cap payments based on income. In Australia, payments do not start until the borrower makes more than $39,000 and payments are capped at 4% of annual income. Canada has limits on the term of student loans. While some countries allow students to repay loans over 20 or 25 years to reduce payments, Canada forgives loans after 15 years.
Another difference is how loan payments are collected. In the United States, you just pay your loan every month and the payment is due regardless of circumstances. In Australia, loan repayment is automatically collected through the income tax system, which allows borrowers to avoid default when they are not working due to layoffs or illness.
Clearly, there are better ways to handle the cost of college and college loan debt than the current system in the United States. We can look to other countries to find ways to make college more affordable and avoid crushing graduates in high interest loans. Restoring subsidies can help reduce the amount of debt and capping payments based on income and collecting payments through the tax system, like social security payroll deductions, could make repaying loans easier and help people avoid default. This is not a partisan issue, since people of all parties and ideologies attend college. People of both parties need to pressure their representatives to start representing their interests and solve this problem.
