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Let's stop complaining about excessive student debt and do something about it Let's stop complaining about excessive student debt and do something about it
(6 months later)
There are things in life your young life you don't forget. Your first kiss, your family pet, and, for a lot of people, when the college acceptance letters arrive. Some folks even frame their letters. It's that time of year when American teenagers learn their university fate, but as thrilling as an acceptance is from a dream school, it often means little until families see the financial aid package.There are things in life your young life you don't forget. Your first kiss, your family pet, and, for a lot of people, when the college acceptance letters arrive. Some folks even frame their letters. It's that time of year when American teenagers learn their university fate, but as thrilling as an acceptance is from a dream school, it often means little until families see the financial aid package.
Almost daily, there's a news story about how unaffordable college is. How many more charts do we need stating the obvious? One of best is from Harvard University, showing how the university's total tuition has grown an average of 4.6% a year in the past 20 years . Compare that to median US family income, which has grown a mere 2.5% over the same period. In another telling chart last month, the Center on Budget and Policy Priorities laid out the sorry state of things at America's public universities. Long thought of as the affordable alternative, they are now hiking up tuition thanks largely to cuts in public funding. As CBPP shows, all but two states are spending less per student on higher education today than they did at the start of the recession. This "starve the beast" mentality is certainly not helping to keep costs down.Almost daily, there's a news story about how unaffordable college is. How many more charts do we need stating the obvious? One of best is from Harvard University, showing how the university's total tuition has grown an average of 4.6% a year in the past 20 years . Compare that to median US family income, which has grown a mere 2.5% over the same period. In another telling chart last month, the Center on Budget and Policy Priorities laid out the sorry state of things at America's public universities. Long thought of as the affordable alternative, they are now hiking up tuition thanks largely to cuts in public funding. As CBPP shows, all but two states are spending less per student on higher education today than they did at the start of the recession. This "starve the beast" mentality is certainly not helping to keep costs down.
Most of us have also seen this college cost tragedy play out personally. For several years, I ran SAT and college prep classes at an inner city school in Pennsylvania. One of the worst moments for me was when a young man who would be the first in his family to attend college was accepted to his dream school in California, along with several other very good schools, including Penn State University. He ended up going to the local community college because he couldn't afford anywhere else. That dream school in California expected his low-income family to pay at least $23,000 a year.Most of us have also seen this college cost tragedy play out personally. For several years, I ran SAT and college prep classes at an inner city school in Pennsylvania. One of the worst moments for me was when a young man who would be the first in his family to attend college was accepted to his dream school in California, along with several other very good schools, including Penn State University. He ended up going to the local community college because he couldn't afford anywhere else. That dream school in California expected his low-income family to pay at least $23,000 a year.
We don't need more charts and articles bemoaning this crisis. We need solutions. Of course, fixing this isn't easy. A record number of students are enrolled in US colleges, despite the hefty price tags, and a growing applicant pool of wealthy foreign students only exacerbates the problems. And that's to say nothing of the fact that European schools are increasingly following the US model as they raise tuition and shift more of the burden from the public sector to families.We don't need more charts and articles bemoaning this crisis. We need solutions. Of course, fixing this isn't easy. A record number of students are enrolled in US colleges, despite the hefty price tags, and a growing applicant pool of wealthy foreign students only exacerbates the problems. And that's to say nothing of the fact that European schools are increasingly following the US model as they raise tuition and shift more of the burden from the public sector to families.
Here are the two best ideas I've seen: first, we have to stop equating cost with quality. There is a belief in academia that the higher the price tag, the better the school.Here are the two best ideas I've seen: first, we have to stop equating cost with quality. There is a belief in academia that the higher the price tag, the better the school.
A decade ago, I served on my college's budget committee as a student representative. Part of the committee's job was to recommend tuition rates. I will never forget the meeting where we voted to increase tuition largely because we wanted to "keep up" with our group of peer schools. The problem is almost every school is doing this. Everyone aims to land somewhere in the middle of their peer group, but the net effect is that all the universities hike tuition year after year.A decade ago, I served on my college's budget committee as a student representative. Part of the committee's job was to recommend tuition rates. I will never forget the meeting where we voted to increase tuition largely because we wanted to "keep up" with our group of peer schools. The problem is almost every school is doing this. Everyone aims to land somewhere in the middle of their peer group, but the net effect is that all the universities hike tuition year after year.
There's been some effort to recalibrate people's mindsets. A few college rankings, including the Princeton Review and Klippingers, have switched from "best" to some variation of "best bang for your buck". President Obama's recent college scorecard initiative also aims to put the spotlight on good value, although it doesn't go far enough to actually put pressure on schools by ranking them.There's been some effort to recalibrate people's mindsets. A few college rankings, including the Princeton Review and Klippingers, have switched from "best" to some variation of "best bang for your buck". President Obama's recent college scorecard initiative also aims to put the spotlight on good value, although it doesn't go far enough to actually put pressure on schools by ranking them.
The other necessary shift is for more colleges to voluntarily – or by government mandate – cap student debt.The other necessary shift is for more colleges to voluntarily – or by government mandate – cap student debt.
We've all seen the numbers. US student debt tops $1tn. That debt was accumulated by 37 million people, which works out to about $27,000 of debt per graduate. Imagine what a different discussion this would be if universities agreed to cap student debt at half that, or even at $18,000. Many students would still finish their undergraduate degree with some debt, but it wouldn't be such a crippling amount. It's not a magic solution, but it's a start.We've all seen the numbers. US student debt tops $1tn. That debt was accumulated by 37 million people, which works out to about $27,000 of debt per graduate. Imagine what a different discussion this would be if universities agreed to cap student debt at half that, or even at $18,000. Many students would still finish their undergraduate degree with some debt, but it wouldn't be such a crippling amount. It's not a magic solution, but it's a start.
At the moment, about 55 schools have policies where they pledge no debt or only debt up to a certain limit for their students. For example, my alma mater Wellesley College has been a leader in this area. Families with incomes under $60,000 have tuition and fees covered by grant aid – money that doesn't need to be paid back. Students from families above that threshold who qualify for financial aid graduate with $13,000 or less in debt.At the moment, about 55 schools have policies where they pledge no debt or only debt up to a certain limit for their students. For example, my alma mater Wellesley College has been a leader in this area. Families with incomes under $60,000 have tuition and fees covered by grant aid – money that doesn't need to be paid back. Students from families above that threshold who qualify for financial aid graduate with $13,000 or less in debt.
It's the most straightforward way to solve the student debt crisis. People understand limits. It's a lot like a credit card. You know going into it what your maximum is. I think about that low-income student I worked with who was trying to compare a bunch of financial aid packages. It would have been a lot easier if he'd known that at one school, students can't graduate with more than, say, $13,000 in debt, while at this other school, they cap it at $7,000 for families from his income bracket.It's the most straightforward way to solve the student debt crisis. People understand limits. It's a lot like a credit card. You know going into it what your maximum is. I think about that low-income student I worked with who was trying to compare a bunch of financial aid packages. It would have been a lot easier if he'd known that at one school, students can't graduate with more than, say, $13,000 in debt, while at this other school, they cap it at $7,000 for families from his income bracket.
Yes, there are ways to game even this system. Schools cap the loans, but they often require families to pay some sort of "family contribution" of a few thousand dollars, which they may not be able to pay. But you have to begin somewhere.Yes, there are ways to game even this system. Schools cap the loans, but they often require families to pay some sort of "family contribution" of a few thousand dollars, which they may not be able to pay. But you have to begin somewhere.
As Matthew Reed from the Project on Student Debt explains:As Matthew Reed from the Project on Student Debt explains:
"What is especially good about the debt limit pledges is the transparency. It gives students and families information well in advance of when they look at colleges.""What is especially good about the debt limit pledges is the transparency. It gives students and families information well in advance of when they look at colleges."
It's a policy that has worked at a private schools with large endowments (the Harvards of higher education) and state schools and lesser-known colleges. Even if a school doesn't have a ton of money, it's about putting limited resources where they will help the most. But the practice is not as widespread as it should be. As much as I hate to mandate more things in education, the tough talk of President Obama and many governors on making college affordable might have to be backed up with a requirement for schools to do something like this – or else risk losing government grants and funding.It's a policy that has worked at a private schools with large endowments (the Harvards of higher education) and state schools and lesser-known colleges. Even if a school doesn't have a ton of money, it's about putting limited resources where they will help the most. But the practice is not as widespread as it should be. As much as I hate to mandate more things in education, the tough talk of President Obama and many governors on making college affordable might have to be backed up with a requirement for schools to do something like this – or else risk losing government grants and funding.
The alternative is to keep running scary headlines and watching students, especially poor ones, give up on their dream schools. And, equally as bad, keep having the government buy more and more of this debt. We all know how well that worked out with home mortgages.The alternative is to keep running scary headlines and watching students, especially poor ones, give up on their dream schools. And, equally as bad, keep having the government buy more and more of this debt. We all know how well that worked out with home mortgages.
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