We hear all the time about the U.S. student loan crisis, but have you ever wondered how other countries are faring with student loans? It turns out - much better than the U.S.
In fact, they’re not just ensuring that their graduates leave school with less debt, but they’re also making sure that college is more accessible and more young people are able to get a post-secondary education.
In the 1970s, the U.S. was the world leader in the number of 25-34 years old who had four year degrees. That rank has fallen dramatically – the U.S. now is 12th in the world for the most degrees in that age bracket.
So, what countries have overtaken us during that period? Countries like South Korea, Norway, Japan, China, Canada, Ireland, Australia, and the U.K. Still more countries ensure that their graduates have lower student loans than the average U.S. college student.
Perhaps by looking at how some countries finance student debt more effectively – we can figure out a way out of our own crises.
Student Debt in America
A post-secondary education in America is costly. According to College Board, tuition and room and board costs an average of $9,410 per year at a four year public college if you’re an in state student and $32,410 per year at a four year private college.
That’s a significant amount of money. It means that many students have to take on large student loans just to attend college. In fact, borrowers from the Class of 2015 left school with an average of $27,857 in debt.
That kind of debt cripples a borrower’s future and often means that they have to put off important life milestones like moving out of their parent’s home, buying a house, getting married, and having children.
It also means that many potential students are less likely to complete or pursue their degrees.
How Other Countries Do It
The U.S. isn’t the only country where students are struggling with student debt – but it is one of the places where the crisis of student debt is most acute.
Many other countries have strict policies in place to reduce student debt. For example, in some provinces in Canada, universities and colleges can only increase their tuition fees by the cost of living or a couple percentage points per year. This helps reduce the rapid inflation of college costs that sometimes occur in the U.S.
College costs are also much lower in Canada because most colleges and universities are public entities and charge tuition and fees that are lower than most state schools in the U.S. This is because Canadian provinces invest more generously in the post-secondary education of their students and Canadian universities work harder to keep costs down. Canada’s student debt is still a problem at around $26,819 CDN per borrower or about $20,000 USD, but it’s much lower than student debt in the U.S. and there are fewer borrowers who owe six figures or more in student loans.
Similarly, the UK limits the amount that all universities can charge – capping it at around $11,000 USD which helps reduce student loans.
Other countries offer free post-secondary education. For example, Germany publicly funds its education system and none of its students pay tuition fees. These fees were abolished in 1971 and came back between 2006-2014, but the $630 USD fees were so unpopular, they were discontinued.
Other countries that offer free post-secondary education include Denmark, Scotland, Finland, Sweden, and Turkey. While some students in these countries might have to borrow money in order to pay for room and board, and their books while going to school, the majority of the costs of their education are covered.
What We Can Learn
As lawmakers and borrowers grapple with the student loan crisis, it’s important to look at what other countries who have been able to avoid a similar crisis have done. Things like limiting tuition fees, limiting increases on tuition fees, and offering free tuition have been effective ways to keep borrowing costs down and encourage post-secondary education in a number of countries. These measures have ensured that more students have been able to access an education and that their lives haven’t been defined by their student debt. It also reduces the need to rely on other options such as private loans.
These options shouldn’t be taken off the table as we consider ways to fix our broken system. While it would be difficult or costly for us to implement some of them given where we currently find ourselves, it’s important that we explore these options in order to figure out how we can reduce the crushing debt of college graduates and improve our graduation rates.