A no brainer, right?
Demos, a public advocacy organization, reports that the median student loan debt for students graduating from four-year public colleges and universities increased by an incredible 78 percent between 1993 and 2004. In 1993, less than half of college graduates left school in debt; in 2004, that percentage amounted to more than 58 percent. Demos reports that student debt has a long-term effect on household savings and wealth, with students who leave college in debt demonstrating median financial assets that are 28 percent lower than for students who did not graduate with debt. These disturbing numbers don't even tell the whole story--students are increasingly using their credit cards to finance their higher education, relying on their plastic to pay for not only living expenses and books, but also tuition.
The need for greater federal assistance in financing higher education could not be more clear and the government's failure to significantly invest in this area seems to be a symptom of our nation's broader lack of both a real economic competitiveness strategy and a plan to create middle-class financial stability. While higher education is being made increasingly inexpensive and accessible in many parts of the world, we are making it harder and more complicated for students to get a college degree. This one seems like a no-brainer. Why aren't we doing the right thing?
It would be interesting to know how much debt related to education expenses their parents are holding over the same period. I suspect that that has grown similarly.
Our government has lost it's vision with regards to the future and remaining competitive in the global marketplace. We will be at a disadvantage without a well educated work force.
May 17, 2008 2:16 AM | Reply | Permalink
Why aren't we doing the right thing?
I think this is one of the areas where the YOYO approach has run its course and we desperately need to get onboard with the notion that, when it comes to higher education ... WITT.
http://www.tompaine.com/articles/2006/05/30/rejecting_the_yoyos.php
You're On Your Own vs We're In This Together.
My folks raised us to be ready to make it on our own after high school. I think if they'd been able to see further into the future, they'd have realized how that just wasn't going to cut it as a general rule for a country that had become much less elastic than the one they were remembering.
May 17, 2008 6:16 AM | Reply | Permalink
While I believe profoundly in Higher Education, and the principle that it should be very broadly available, I do not favor a response to this problem of throwing more Federal Resources into the mix, at least not until we do a decent analysis (audit) of what essentially has gone wrong.
The increase in costs to students/parents over the inflation rate in Higher Ed. is as high or higher than famously Health Care Inflation over the past several decades. At the same time, Colleges and Universities have significantly turned to very low cost non-tenured labor forces to serve Undergraduate students. This process really began with the introduction of loan and grant programs during the Great Society era -- and has created a Higher Ed. Culture where the student is treated as a customer with an unlimited credit card.
At the same time, selective colleges and universities have raised and grown endowments that are not spent on Undergraduate Ed., or on increasing the diversity in economic terms of the undergraduate student mix. Not only Private but State Universities are sitting on endowments in the Billions raised and increased tax free -- with no obligation to use the resource for the benefit of economically challenged, but talented undergraduates.
The cost of student loans has been a political football in Congress for years. Financial Institutions received 100% guarentees for their loans, with little regulation of the rate of interest they could charge, and with law that makes it near impossible to discount a student loan in bankruptcy, even though many of the loans were offered for courses of study that were never reviewed for quality. The Accreditation system is quite broken in many ways, allowing poor programs to recruit students that are frequently quite unqualified for them. At the same time there are a significant number of PAC's that provide campaign contributions to Congresspersons given their willingness to support the interests of Financial Institutions in this process.
Financial Institutions have bribed Colleges and Universities. They provide free luxury cars, international travel, invites to resort conferences and the like to College and University Administrators in exchange for exclusive access to a College or University's students needing financial aid. And yes, there is even cash under the table to the lowly financal aid counselors in some places. The better deal in Financial Aid is the Direct Student Loan -- but Colleges have to sign up to offer it, and the bribes are about keeping the Direct Loan program OUT of institutions.
State Legislatures have reduced the State Subsidy to State Colleges and Universities from about 45% of the Tuition and Fees cost of undergraduate ed. down to about 23% over the past several decades. This has resulted in many Public Universities now charging rates not that distinct from Private Universities. In the past, when the difference was distinct, the Public Universities offered attractive competition that kept costs lower across the board.
What Congress needs to do is commission a major study of Higher Education Finance, and then follow through with major reforms that will run in many directions. Only then should they put targeted Federal assets in play.
May 17, 2008 8:50 AM | Reply | Permalink
While I believe profoundly in Higher Education, and the principle that it should be very broadly available, I do not favor a response to this problem of throwing more Federal Resources into the mix, at least not until we do a decent analysis (audit) of what essentially has gone wrong.
The increase in costs to students/parents over the inflation rate in Higher Ed. is as high or higher than famously Health Care Inflation over the past several decades. At the same time, Colleges and Universities have significantly turned to very low cost non-tenured labor forces to serve Undergraduate students. This process really began with the introduction of loan and grant programs during the Great Society era -- and has created a Higher Ed. Culture where the student is treated as a customer with an unlimited credit card.
At the same time, selective colleges and universities have raised and grown endowments that are not spent on Undergraduate Ed., or on increasing the diversity in economic terms of the undergraduate student mix. Not only Private but State Universities are sitting on endowments in the Billions raised and increased tax free -- with no obligation to use the resource for the benefit of economically challenged, but talented undergraduates.
The cost of student loans has been a political football in Congress for years. Financial Institutions received 100% guarentees for their loans, with little regulation of the rate of interest they could charge, and with law that makes it near impossible to discount a student loan in bankruptcy, even though many of the loans were offered for courses of study that were never reviewed for quality. The Accreditation system is quite broken in many ways, allowing poor programs to recruit students that are frequently quite unqualified for them. At the same time there are a significant number of PAC's that provide campaign contributions to Congresspersons given their willingness to support the interests of Financial Institutions in this process.
Financial Institutions have bribed Colleges and Universities. They provide free luxury cars, international travel, invites to resort conferences and the like to College and University Administrators in exchange for exclusive access to a College or University's students needing financial aid. And yes, there is even cash under the table to the lowly financal aid counselors in some places. The better deal in Financial Aid is the Direct Student Loan -- but Colleges have to sign up to offer it, and the bribes are about keeping the Direct Loan program OUT of institutions.
State Legislatures have reduced the State Subsidy to State Colleges and Universities from about 45% of the Tuition and Fees cost of undergraduate ed. down to about 23% over the past several decades. This has resulted in many Public Universities now charging rates not that distinct from Private Universities. In the past, when the difference was distinct, the Public Universities offered attractive competition that kept costs lower across the board.
What Congress needs to do is commission a major study of Higher Education Finance, and then follow through with major reforms that will run in many directions. Only then should they put targeted Federal assets in play.
May 17, 2008 8:53 AM | Reply | Permalink
Quibble:
"...than for students who did not graduate with debt...."
or
"...than for students who graduated with no debt...."
Sorry. Couldn't help myself. There is a difference. Language matters.
May 18, 2008 2:23 AM | Reply | Permalink
You shouldn't have to go to college to afford your own apartment. I think college is well past the point of diminishing returns, and we should focus on providing jobs, health care and dignity for the large majority of Americans who couldn't graduate from college even if it were free.
May 20, 2008 11:56 AM | Reply | Permalink
One solution to this problem is that parents need to plan ahead and start saving for college when their children are born. Also, grandparents can leave an inheritance to cover college as well. We need to start planning for things in life like they used to do 50 years ago. Our mentality of spending everything we make makes these problems worse.
Jim Anderson
http://www.thetruthaboutcredit.com
May 20, 2008 6:23 PM | Reply | Permalink
One of the reasons debt is up, is because the cost of tuition has been on a health care like cost rise over the last couple of decades. Look at the number of universities that have upgraded recreational facilities in the last decade as opposed to libraries?! Look at the number of state supported schools that subidize athletic programs. Sure the states have shifted burdens to the schools but the schools themselves have done little to "manage" the issue other than raise tuition.
More dollars and more loans subsidized by the Federal Government are not going to solve the problem. Parents and students need to smarter about how their higher education dollars are spent whether they have the money or borrow it.
May 27, 2008 2:04 PM | Reply | Permalink