A recent study by the Bookings Institution raised questions about the extent to which students who graduate from college are actually facing the kind of crushing debt that is typically presented with anecdotal evidence by the media and politicians. The report indicates that only 7 percent of young-adult households with education debt have $50,000 or more, while 58 percent have less than $10,000 in debt, and an additional 18 percent have debts between $10,000 and $20,000. Clearly, there are still a lot of people in debt, but we should be wary of those who make broad generalizations from anecdotal evidence.
Without question, the cost of some colleges is very high. My son attends a private university and the total annual package is around $60,000/year. That's a lot of money, but we chose to send him to that particular school and are prepared to pay for it. We could have easily chosen other schools: the total cost at the university where I teach (assuming my son were to live on campus rather than at home) would be less than half of the university he attends. In fact, there are a variety of levels of cost for college in the US, some of which are quite reasonable and some of which are incredibly expensive.
If you believe in a free market being applied to everything (I don't, by the way), then you are going to get some colleges that charge absurd tuitions and fees. Why can Stanford, Harvard, Yale, etc. charge so much? Because with acceptance rates around 6%, they can. People are willing to pay pretty much whatever these schools charge. In other words, if you believe in a free market economy, don't complain that universities charge too much. They are simply doing what conservatives have encouraged everyone to do for years--let the market control everything.
Interestingly, the 2016 GOP platform states that public policy should support affordability, innovation and transparency in technical institutions and online universities, but a "four-year degree from a brick-and-mortar institution is not the only path toward a prosperous and fulfilling career." I think this is right. Not everyone needs to attend college, nor is the traditional college experience right for everyone who pursues higher education.
However, the GOP's "solution" to the problem of high college costs and student debt is to eliminate college loans originated by the federal government in favor of only insuring private loans. In other words, the GOP wants private companies to profit from the educational needs of students while taxpayers eliminate any risk involved with providing loans.
This is not the solution to the problem. In fact, providing government originated or insured loans to pay tuition at for-profit institutions, at least, is only likely to increase costs as those institutions will be encouraged to gouge students with increased rates, since they know they will get paid regardless of how the amount of debt affects students.
Instead of the GOP's approach, which is really just intended to help banks make more money, we should change the way we deal with federal loans and also the way we fund higher education. If people want very low tuition for college, then they are going to have to pay for that through tax dollars that support public colleges and universities. With the exception of Wyoming and North Dakota, state governments have retreated dramatically from support of higher education since the 1970s. All other states have reduced their support to higher education by anywhere from 15 percent to 70 percent between fiscal 1980 and fiscal 2011. And some have argued that if trends since 1980 continue, the average public funding for higher education will be zero by 2060.
This defunding of public higher education is one of the main reasons tuitions at state colleges and universities have risen considerably in the past decades and, therefore, is one of the primary reasons for increasing debt among college graduates.
We need to support public institutions that can provide access to higher education to all who are qualified to attend. And public institutions need to be funded well through tax dollars in order to keep tuition costs down and to provide loans that will help students do well in school without a heavy financial burden after graduation. These loans should not be provided by private businesses profiting off of those who are less financially advantaged.
We don't need to eliminate federally originated loans, but enhance them as a way of making a college education available to anyone who is qualified. How?
- Federal loans should be interest-free for those students who graduate.
- Students who fail to graduate from college (perhaps within a specified period of time such as six years) should be required to pay back their loans with interest to the federal government. This would help to underwrite the administrative costs to the government associated with originating loans.
- To encourage high performance at public universities--all students who graduate with honors from a public college or university should have their loans forgiven. When tax dollars are used wisely, that use should be rewarded.
- Government originated loans should not be available to for-profit educational businesses, because their primary goal is making money, not educating the public. If students choose to attend a for-profit educational business, then their loans should come from banks, just as they would if they were buying a car.
Steps like these would promote high performance among students who receive loans from the federal government and improve access for lower income students who seek the learning, advancement, and opportunity available through a college education. When combined with solid state funding to public higher education (yes, tax dollars), it would make college an affordable option for lower and middle-income families and for the government.
The GOP's plan to use college loans as just another way for banks to profit off of people with limited means is not the solution to the problem.