Apparently, there
will not be an early bipartisan solution to the ongoing student loan crisis in
America, despite the broad impact of the problem and the potential danger to
the overall economy if the problem is not soon resolved. The outstanding
student loan debt in America has reached $1.6 trillion and affects over 44 million
individuals, primarily students, but also parents.
Student loan debt
exceeds both credit card debt and auto loan debt. Only home mortgage debt is
higher.
How did we get to the
point where protecting broad access to postsecondary education is not
recognized as societal obligation, critical to our economic and political
well-being.?
When I graduated from
Wofford College in 1959 I owed about $1,000 to the Darlington (SC) Kiwanis Club
college loan fund. I had dropped out for the last semester of what was to be my
junior year in order to go to work and pay off an earlier loan from the
Kiwanis, but I had to borrow more so I could complete my degree.
Borrowing money for
part of the cost of my education was an inconvenience, but not stressful. I paid
off my loan within three years, and never questioned the value of my investment.
The world of higher
education in America is a little different today.
First of all it is
clearly more expensive. Today, the annual costs at a private liberal arts
college like Wofford can range from $50,000 to $75,000.
Even public
institutions today carry a hefty price tag.
In South Carolina the yearly cost among public campuses ranges from
approximately $20,000 to nearly $30,000 for in-state students. Out-of-state
students can pay as much as $20,000 more.
North Carolina’s public institutions are only slightly cheaper.
With today’s costs
it’s obvious few service clubs or fraternal organizations can offer the kind of
financial assistance the Darlington Kiwanis Club provided me. A couple thousand
dollars in the 1950s was generous and covered about half the cost of my college
education. Managing loans that could easily exceed $100,000 would not be
feasible for most volunteer organizations today even if they could raise the
necessary endowment.
To help offset at
least part of the cost of attendance today, some institutions attempt to use
their own resources, private endowments, and access to various federal grant
and loan programs. But keep in mind, the median annual family income in America
today is $61,000. Half the families in America have no greater income. What is
the likely reaction among students from such families to the stories about the
current student debt crisis?
This crisis did not
developed in some mysterious manner. It
came about because politicians over the past three or four decades have viewed
education as a benefit for the individual rather than as a public good broadly
of value to our entire society. This has led states to reduce funding for
traditional colleges and universities and forced the institutions to raise
tuition and fees imposed on students.
The change in
attitude as to the purpose of education has led to a plethora of for-profit
colleges that advertise easy access to lucrative jobs. According to The Economist, between 2000 and 2010
enrollments in for-profit college chains more than quadrupled. Nearly a quarter
of their revenue went to marketing, “more than on educating students.”
Fewer than a quarter
of students at for-profit institutions complete their program, but virtually
all wind up with debt. For-profit college borrowers have a default rate of 48% within
12 years, compared to 12% default rate for public college borrowers, and 14% of
private college borrowers.
Billionaire Robert
Smith’s recent promise to repay the student loan debt of the 396 men in the
2019 graduating class at Morehouse College was a generous gesture. Unlike
nearly two-thirds of their fellow college graduates this year, Morehouse men
will not have the burden of approximately $30,000 to shoulder as they embark
upon their careers.
There is, however,
little evidence that other wealthy individuals are similarly motivated. Also, Smith’s commitment does nothing for students
who have not graduated or who have transferred to other institutions.
A proposal to provide
tax credits to graduates and their employers for repayment of student loans
suffers from the same flaw.
Since 2004, student
loan debt has more than quadrupled which indicates the problem is of recent
origin. Continuation of this burden will have a long lasting effect. At least
three generations of Americans already face serious restrictions on their
participation in our economy. Buying a house, marrying and raising a family, or
entering critically important professions, like K-12 education, healthcare or
social work, all are impacted.
Surely, if we can
find the means to give a 40% tax break to corporations, we can find a way to
eliminate the current student loan debt and to create a more rational system
for funding colleges and universities. Until recently, American postsecondary
education has been the envy of the rest of the world. It is not too late to restore that acclaim.
