If you've been reading the papers and watching the news, you've surely heard about the recent student loan scandals. Unscrupulous private loan companies caught charging credit-card-level interest rates; a financial aid official at Columbia University and another at the federal Department of Education resigning in disgrace after the disclosure that they owned financial stakes in a private loan company they were promoting to students.
But the real education finance scandal is how we finance higher education in this country -- through debt. No other developed country does this the way we do it. And even we have never relied on debt financing like we do now.
Just a generation ago, a federal Pell Grant covered nearly three-quarters of tuition; today, a grant covers only one-third. With the cuts in student aid, private dollars now make up the majority of higher education funding for the first time in American history. In just the past decade, average debt loads have doubled. And almost no one is immune: nearly half of students from six-figure-earning families now go into debt just to go to college. Educational debt is now shaping graduates' career choices in disturbing ways.
And yet, this crisis has developed in an era in which we keep hearing how much more important a college degree is than it used to be. Other countries, hoping to capitalize on an educated workforce, have adapted to the new realities to make college more accessible, not less. Just a few years ago, Ireland made its higher education system tuition-free, funding it through tax dollars rather than tuition. The UK uses a voucher system and caps tuition at all its schools -- even top-ranked universities like Oxford and Cambridge -- at USD $6,000 a year. In Australia, students who take on college debt repay it through a flat percentage of their future income rather than a flat dollar amount, ensuring that student career choice will never be dictated by debt.
As health care has become less and less attainable to the middle-class, the debate has swung; change is in the air. But the education debate is just beginning. Various Democratic presidential candidates have proposed ways of bulking up the federal commitment to student aid. But this rear-guard action won't address the tuition spike that is driving the problem. For a baby born today, the estimated total undergraduate tuition is now $150,000 for a public college, $300,000 for a private one. Will parents really stand for this? Will students really go six-figures in the hole before they take their first full-time job?
Sooner or later, we're going to have to revamp this country's college finance system. And for the good of students, parents, and our economy, sooner would be better than later. Luckily, our fellow English-speakers in Australia, Ireland, and the UK have offered three viable alternatives. Let the debate begin.