ELMIRA, NY (WETM) – The pause on federal student loan repayments is set to expire May 1. With rising inflation and gasoline prices reaching all-time highs, some are worried as that deadline approaches. However, experts say there is good news.
Matthew Burr, a human resources consultant and associate professor of business administration at Elmira College, says the government cannot continue to “kiss” the road.
“I don’t see why we need a break when we have 12 million job openings,” Burr said. “There are opportunities for people to make money and pay their bills. I understand inflation and gas and everything eats away at people’s bottom line. But at the same time you have to make a decision about what to what it will look like in the long run.
According to Bureau of Labor Statistics, the unemployment rate was 3.8% in February 2022. This is the lowest figure since the start of the COVID-19 pandemic. During this time, the US inflation rate grew by 7.9% in 2021, a 40-year high.
Mark Abdalla, assistant professor of finance at Elmira College, gave a little more optimism as students and alumni prepare to open their wallets again.
“One thing I will mention is that salaries have also increased a lot over the past year,” Abdalla said. “We are seeing a stronger economy. As a borrower, as someone with a lot of student debt, [high inflation] this is a good thing. The real value of your debt has decreased due to a higher rate of inflation.
Another concern that students face when choosing a college is rising tuition fees. According to National Center for Education Statistics, from 2010 to 2020, the average cost of a 4-year public institution has increased by approximately 13%. Burr said there’s a reason those costs often go up.
“[Tuition costs] usually do [rise] because they increase the amount you can borrow each year,” Burr said. “So the cost of this degree goes up a bit every year depending on how much you can borrow.”
March 15, Cornell University announced that their tuition fees would increase between “3.6% and 3.9%”. However, their financial aid in the form of grants will also increase by 8.4%. The university says this $322 million investment will ensure Cornell remains accessible to students of all backgrounds.
The university also wrote that about half of undergraduate students receive aid in the form of a Cornell scholarship, which also covers room, board and incidental expenses. The median Cornell grant in 2021 was $47,563.
With the student loan break set to expire soon, Abdalla recommends viewing college as a long-term investment.
“You can think of it in terms of higher future cash flows,” Abdalla said. “I saw a study that pointed out that if you have a college education, you are likely to earn $1.2 million more over your lifetime than if you don’t. So you could kind of consider it an investment in yourself.
According to Social Security Administration, men with bachelor’s degrees earn about $900,000 more in median lifetime income than high school graduates. Women with a bachelor’s degree earn $630,000 more.