Weekly Trend: Will Student Debt Costs Force a Higher Education Tipping Point?
Student debt from higher education costs is a hot topic today as Senate Democrats strive to pass legislation that would help reduce this type of debt. Republican senators blocked such a bill introduced by Senator Elizabeth Warren earlier this year. This bill would have enabled about 25 million people to refinance their student debt in order to pay the current, lower interest rates by increasing taxes on the wealthy.
Despite their initial failure to pass the bill, Warren and other Democratic senators are determined to make a much-needed change in policies as they strive to work with Republican senators to reauthorize the Higher Education Act. This act outlines student loan policy in the U.S., and its reauthorization would make changes to current regulations related to student debt, loan limits, accreditation and more.
Why is student debt specifically at the forefront of political debates right now? Research from The Brookings Institution illustrates how the average, per-year borrowing between lower- and upper-income families streamlined between 1990 and 2012. In 2012, both the poorest and richest families borrowed $2,600 per year for schooling on average.
However, it is important to note that borrowing increased drastically for people of higher socio-economic levels. These wealthier families went from borrowing an average of $500 to $2,600, whereas poorer families had a smaller increase, $1,000 to $2,600, during this 12-year timespan. Similarly, debt levels increased more for the top two income groups between 1992 and 2010. Consequently, affluent students may be fueling and intensifying the student loan debate.
This indicates that students of diverse backgrounds are taking out loans in order to pay for a traditional degree because they believe that borrowing money is their only option.
Why could this be? Americans are firm believers in the idea that having a college degree guarantees a better life. Yet, in his recent book College (Un)bound, author Jeff Selingo argues that something needs to change as student debt and unemployment consistently rise. Selingo notes that as the cost of college continues to increase, students are more focused on future employment rather than on obtaining a broad, liberal-arts education. With the average student-loan debt around $33,000 it is no surprise that students are so concentrated on the monetary return on their degree.
No longer an issue solely for low- and middle-income students, student debt is a problem that politicians are facing head-on as they feel pressure from constituents of all socio-economic backgrounds. Senators from across the political spectrum agree that they need to help degree-seeking students by reducing the requisite loans for those who need financial assistance. Democratic Senator Tom Harkin of Iowa and Republican Senator Lamar Alexander of Tennessee both agree that states must do more when it comes to reducing the debt that students accumulate during higher education. Noting that state investment in public education decreased during the recent recession, Harkin suggests that such divestment shows a lack of responsibility.
High tuition costs leading to higher student debt poses a great problem for the young, educated graduates as they strive to make a living while paying off student loans. Harkin believes that creating incentives for states to increase their involvement in higher education while simultaneously continuing to scrutinize for-profit institutions is key to solving this issue.
Yet, even as policy makers strive to reduce student debt and improve students’ financial situations by updating old laws and introducing new legislation, their efforts alone won’t be enough. Higher education institutions will need to change and adapt as well.
Now public universities, such as the University of Minnesota, are agreeing to meet certain standards by freezing tuition and cutting administrative costs in order to control college costs for students. Other universities are focusing on encouraging students to graduate on time, in order to curb these costs and reduce the number of loans required to obtain degrees.
These measures indicate a positive shift toward reforms in higher education; however, Americans need to change their mindsets, not just policies, in order for such changes to be successfully implemented.
Recent graduates are expected to leave college with concrete skills that will enable them to obtain better jobs and outperform others. Yet, the reality is that many majors, especially in the liberal arts, do not provide students with any kind of vocational training. Selingo discusses how the “one-size-fits-all,” four-year college degree does not adequately serve the diverse population enrolling in college today. Clearly a change in higher education is necessary in order to better prepare students to enter the workforce in the midst of student debt, unemployment and an unfavorable economy.
Could this change signal—finally—a shift away from the traditional four-year degree? Startups motivate students to think outside the box and provide different avenues to obtain knowledge and skills. Educating yourself is becoming more popular and doable as startups create revolutionary classrooms online and in physical spaces as well. For example, 1776 partner General Assembly offers a wide range of classes, from one-time intensive training sessions to 12-week courses. Furthermore, with MOOC’s and other online courses allowing anyone to learn how to code and gain new skill sets, education is no longer bound to a conventional classroom.
Higher education institutions and politicians are working hard to reduce student debt and make positive reforms to the education system. Whether these policies and reforms catch on is up to students, colleges and policy makers as they work together in order to create a better, more cost efficient way for the population to obtain a meaningful and useful education.