My niece is a smart, hardworking gal who recently received her master's in architecture and is having a hard time finding a job, like many Millennials. To make matters worse, she's facing more than $93,000 in student debt. And this isn't from her bachelor's degree, but her master's degree -- despite the fact that she received it from a state university and half of the two year program was free.
It gets worse. My best friend's daughter, who is pursuing a doctorate in psychology, would be on the hook for $250,000 in student loans for the degree if it weren't for her grandparents, who helped her meet most of the expenses. And this is just for the doctorate -- it doesn't count her obligations for her undergraduate degree. Given that her goal is to work with veterans with post-traumatic stress disorder, she shouldn't owe anything.
There's been a lot of buzz over Starbucks' recent announcement that it would pay the full cost of tuition at Arizona State University's online program for its employees' junior and senior years. It's clear that this nation faces a student debt crisis. Student loans not only reduce recent graduates' spending power but often make them ineligible for a mortgage, resulting in the lowest level of homeownership on record for those under age 35. Collectively, we hold more than $1 trillion in student loan debt. President Obama recently signed an executive order to allow millions of student-loan borrowers to cap payments at 10 percent of their monthly income.
While I applaud Starbucks' efforts, I and others are baffled that the program is limited to one institution. For one thing, Arizona State is incredibly expensive for an online program -- about $15,000 a year. As Rachel Fishman, an education policy analyst at the New American Foundation recently observed, the price is more than four times that of an average community college: $3,264, and a little less than double the average in-state tuition rate for state schools of around $8,900.
What's more, Arizona State's price tag isn't that much lower than the cost of attending a public four-year college in Maryland -- and that includes room and board! As the Washington Post reported, the cost of a degree for in-state students was only $18,094 in the 2012-2013 school year, according to the National Center for Education Statistics. A big part of Maryland's success comes from a four-year tuition freeze, which Gov. Martin O'Malley was able to accomplish through a combination of tax hikes and budget cuts.
While online degrees may be appropriate for some people, I think the vast majority of college-age students benefit from living on campus. I'm eternally grateful that one of my professors at Syracuse convinced me to ditch my psychology major for one in journalism, a career I pursued for more than two decades. My daughter was even more fortunate; working at a research lab at BU which morphed into a full-time research job that played a huge role in being accepted into a Ph.D. program that pays for itself. Let's face it, it's very likely that most of Starbucks' part-time employees who are currently full-time students at nearby universities would much rather have Starbucks pick up the tab for finishing their degree at their current college than having to "transfer" to an online alternative.
We've got to simultaneously help more kids benefit from an on-campus degree -- Pell Grants used to cover most of the cost of college until Reagan slashed the budget -- while keeping the costs under control. What's outrageous is that some of the bucks we fork over for our kids' degrees wind up "over-compensating" the presidents of these institutions. A recent report titled "The One Percent at State U" -- found that "average student debt of graduates in the top 25 public universities with the highest executive pay increased 13 percent faster than the national average from 2006 to 2012."
We need to lower the cost of college. As I pointed out in a previous post, the liberal think tank Demos has proposed a Contract for College which would ensure that grants cover 75 percent of costs for those with household income below $25,000 and 40 percent for those with incomes ranging from $75,000 to $99,000.
How would we pay for these increased subsidies? Raise the top tax rate to 50 percent, as was the case in 1986. At the same time, we should consider limiting Pell Grants to students whose majors are likely to give them "the skills to pay the bills" -- plentiful and decent paying jobs such as engineering or nursing, versus anthropology or sociology.
If you're a parent of a college-bound kid, help him or her choose a major that is more likely to result in a job. Check out these links on Kiplinger's and Forbes' websites.
At the same time, encourage your kid to attend a college that will give you a bang for your buck. "The Best Value Colleges 2014 Edition" details 150 public and private and schools that offer high-quality education AND generous grants.