Between 1980 and 1990 I attended a private high school, where I was a boarding student, a private urban university where I obtained a BS degree and a law school where I obtained my JD. The total cost over 10 years was about 90k. While not insignificant then, that same path today would cost, I estimate, 500k.
4
College is now a scam and if you get sucked in then shame on you! Go to a Community College if you can't afford to pay or learn a trade. How many articles like this do you need to read in order to "get it?"
4
The law that regulates student debt should be amended to make public universities retain 10% of each student's debt incurred to pay undergraduate tuition, 20% for private colleges and universities, and 30% at for profit schools granting a BA or BS and 40% at for profit trade schools. With sufficient exposure to bad debt, the educators in the system will reform themselves. The current incentives are responsible for the perverse outcome this article discusses.
2
I am 55 years old. 55. I graduated college with my BS in 1985 and MS in 1987. I continued for a PhD for another 5 years, but that didn't go through. I ONLY finished paying my student loans THIS YEAR!
3
I'm sure someone's already mentioned this but just in case: much of the student debt has ballooned because of Title IV. It has been a way for low-ranked non-profit and particularly for-profit colleges to build sausage factories—rope in unqualified students with sugar plum visions of high paying jobs that supposedly come with college degrees. Suck them in, collect the fees and disavow outcomes.
It's not too different from banks roping in unqualified home buyers with government sponsored mortgage programs.
Donald Trump U or Jack Welch MBA online ($43K a year)—really? There is no way out of this mess and someone (taxpayers) will have to foot the bill.
Wish there were claw backs.
1
Higher education is like health care in this country. It’s an out of control monopoly. Universities are competing for students who want every luxury given to them now. That includes state-of-the-art facilities as well as luxury student housing. The costs add up and have to be passed along. The big problem I see is with the entitlement attitude. When I went to school, I lived in concrete dormitories with shared bathroom facilities. Today? It’s private apartments with rooftop terraces and swimming pools. And all the universities are competing on that standard. Used to be you went to school in order to get a job that would let you live that way. Today? The students want it handed to them on a silver platter. Costs and debt be damned. Both the universities and the students are to blame.
4
A bit of irony...the graph essentially pointed to a "Lending Tree" ad on this web page.
1
I'm genuinely baffled. Once upon a time, the writing in NYT was smart. Really smart. You had RW Apple, you had John Noble, you had all these smart people who could write complex sentences and form complex ideas. And the paper was sort of center-left. Then it started chasing WSJ territory, and it had these stumpy headlines for people who couldn't read so good, but still, on the whole, pretty smart.
I've been away a while, but came back a day or two ago, and it's like someone razed a neighborhood and built a strip mall. Is the new house style really Philadelphia Inquirer now? The target reader is a college graduate (from 1965) who struggles with this reading and thinking business past, oh, airport self-improvement books?
The student-loan picture is so much more complex than anything this semiliterate propagandist is generating here that it's not even worth starting. Yes, student loans are an enormous problem. Any earnest effort at solving the problem would likely mean that the readers of this newspaper would have to pay considerably more in taxes for K-12 as well as higher ed than they've been used to doing in quite some time.
3
This is what happens when government starts backing student loans...
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In all of history, no government became more honest, less corrupt, or respected its citizens' rights more as it grew in size. E.L. 2016
3
College is supposed to be for the intelligent.
So how can this cohort of the population be so ignorant as to be unable to apply 3rd grade arithmetic to these costs and realize that the purchase is idiotic?
If you cannot see this you are way too stupid to go to college.
Yes the whole student loan system to enrich universities is a scam, but is is patently obvious.
College is now a luxury good for the rich, and worse than that, useless for most. Not all but most.
4
Typical liberal government program. You start with the false premise that 'everyone needs to go to college' and then come up with a government program to make it "more affordable".
Result: People who don't really qualify for college take out loans for programs they don't need and end up with degrees that are not useful. And colleges seeing all the 'free' government money hike tuition making higher education less affordable.
More money needed for tuition.
More kids in debt.
So what do liberals do when a government program causes more problems than it solves? What do you think. They propose MORE spending on that very same program.
Liberals are the smartest people in the universe but can't see the most obvious things in life.
5
Obviously, an enormous swindle.
Something that’s equally obvious: government is both enabling and cooperating with the swindlers.
2
This is just a catastrophe festering before our eyes. All the politicking in D.C. is not helping! Huge numbers of young people are entering their careers awash in debt -- not just those with student loan debt they can't manage, but credit card debt. car debt, etc. Many cannot afford to buy homes when they marry and want to start families. They can't contribute to our country's economy in a meaningful way if they have to shell out so much of their incomes to pay off loans and interest.
1
Wow, what a head scratcher!! The government guarantees loans to students with no regard to the quality of the schools, the degrees being sought, the amount of the loans (other than outrageously high annual "limits,") makes no attempt to control how "students" spend the loan proceeds, etc. Oh, and any Econ 101 student could tell you what happens to price when trillions of dollars flood the college education market - escalating tuition.
This is yet another example of a well intended program executed and perpetuated by dimwits.
P.S. Lots of students must borrow because their irresponsible parents did not save for their children's' educations.
3
"Forcing these students to borrow...into a debt trap"
Wait a minute. Who "forced" students to borrow money? Personal responsibility is conspicuously absent from this story. If college-age students are old enough to vote, they're old enough to take the hit for their poor choices. Call it a valuable life lesson. The alternative? Teach them that bad decisions don't matter, that somebody, somewhere will bail them out, that there's no such thing as a moral hazard.
5
Why are we lending money to people for foolishness????
If you are academically or athletically gifted enough for a scholarship - use that. If you aren't, go to your local community college where the tuition is so inexpensive (and already well subsidized by taxpayers) that you shouldn't need much financial aid. If neither of the above appeal.....serve your country in the military and use veterans benefits to pay for your education.
There is a never ending supply of charlatans wanting to take your money. To prevent being victimized by private for-profit, private non-profit or public schools the only thing you need to do is say "No" and choose one of the many other options.
5
My Freshman level English class has a theme: education. I am looking forward to using this article in discussion and analysis work.
Still hunting for the comment by Jean Louis, who appears to think we professors are overpaid...um. No.
1
What about those of us who were too poor to get loans, but not poor enough to get assistance? Will you reimburse me for all the tuition that I worked for and paid for myself?
2
The knowledge I gained in college was extraordinary and invaluable, and everyone with average intellectual ability and above should be required to earn at least a basic college degree without cost to them, for the betterment of society.
I needed student loans to go to both undergrad and grad school. Unfortunately the jobs I was able to get after grad school were a drop in the bucket-- try surviving as an adjunct professor earning less than $20,000 a year while owing over $150,000 in loans (with up to 7.9% interest rates!!).
Sadly the literary and visual arts are so undervalued in our society that those of us who excel in that arena are unable to survive using our finely honed skills. And so it is up to the wealthiest to be the speakers and creators of intellectual creative culture, in a country that severely undervalues creative culture.
CEOs, CFOs, Presidents and other "leaders" of student loan companies are getting outrageously, unnecessarily wealthy off of the rest of us going broke. It seems criminal. Last year the CEO of Navient made 6.5 million dollars off of students going into debt. The CFOs and other Presidents all earned over 1 million. College Deans, Officers and Presidents are also earning far more than they deserve.
Anyone wondering why socialism is making a comeback? Doesn't take long to figure it out. Maybe it's time for us regular people to set up our own colleges, we don't need the rich and greedy running the show.
7
The more money the Federal Government has made available to make college "more affordable" the more college tuition has increased, to the point where its now largely unafordable for all but the wealthiest. Good intentions have created bad unintended consequences. And the money has gone for things like fancy housing, fancy gyms, upscale dining. All things unnecessary for a quality education.
4
I graduated in 2014 with about $21,000.00 in debt. But unlike other students, I returned to school in midlife and the degree was a post graduate degree. The remainder of the cost, from a private university which is well endowed, was covered by scholarship funds. I returned to school after my husband died and thus, am not wealthy. My repayments on my Stafford loan are low, as is the interest rate, which is fixed. The government, or banks, should not be making money off the back of students, especially given the fact that wages have not substantially increased. The financial pressure caused by loans is causing young people to delay moving from their parent's homes and purchasing a home of their own, in addition to purchasing all of the items needed for that home. And they are delaying marriage. As our economy is based upon consumption, massive loan debt on young people will damage our economic growth for years to come. Once again, the US is putting short term greed (in the form of interest rates for banks, money for colleges, and especially, money for "for profit" universities) ahead of long term growth. Perhaps changing the laws will force some universities and "for profit" colleges to close but that is not a bad thing. It will force remaining universities to be more creative and perhaps, slow their own costs. But sadly, our nation has a history of putting such short term profit ahead of long term growth, very much to our detriment.
2
I am a 66 year old parent of two college seniors. Over the past 20 years, I barely saved enough to be able to pay for their tuition and living expenses. But I did! Paying these costs has significantly impacted my financial ability to retire. Did I do the right thing? Most parents don't even have the ability to save the way I have for my children. So, I suppose my kids are lucky. But did I really make the right choice? I could have kept my money, doubled my retirement fund, and had my children load up on student debt. Someday, delinquent student loans could be forgiven. That's what everyone wants, right? If that happens, I wonder if they would please add-in another small provision to help boost the retirement incomes of all those parents who scrimped and saved during their working years so they could pay for their children's college costs? Wouldn't that be fair?
5
This is not much different than the GI Bill for all except that at least half of the cost is paid back and the government is on the hook for the rest, eventually.
1
College costs at public institutions have been shifted nationally from public /state funding to funding by the student. Costs have not risen dramatically or even that much. The burden has shifted.
When primary affluent families sent children to college, the states paid a solid majority of the costs. As college became more broadly accessible to the middle class, the states now provide a small percentage of operating costs.
At private institutions, costs have indeed gone up a lot as have endowments. There is no shortage of wealthy families bidding to get their children into these colleges. This is a reflection of the vast wealth accumulated by top earners. This is a consequence of U.S. capitalism.
These two different situations are often conflated and used to attack higher education.
2
What is truly terrifying is that if we extrapolate those curves in the graphs some of them will be pushing 30% default either this year in the next year or two. What about five years from now--10 years? We just surpassed 1.5 Trillion in student loan debt.
Welcome to the next financial crisis. Something really similar happened in 2008 with mortgages I think.
1
Education should be free for all students. All prior debt related to education should be forgiven. It is the only way forward.
Long gone are the days a student can work a job and pay for their own college sans loans. It seemed to end in the 80s and has continually gotten worse. I left school back in the 70s with zero debt just by periodically being an intern—but a year's worth of living including college expenses was about $3000. (at a state school.) The genie is loose forever.
This mountain of student debt is another example of how short-term thinking on the part of legislators and many people duped by dishonest institutions will cause bigger problems downstream. Debt is accumulating across the entire economy with education cost just being ignored. Current trends of employers paying lower salaries with non-compete clauses will limit the next generation’s ability to actually buy houses and cars and durable goods. Since student loans cannot be just written off with bankruptcy. The ability of the next generations to pay off debt and keep the economy viable is an equation that the government is not even addressing.
2
The student loan program has not benefitted students in the least, but has allowed colleges to raise their tuitions sky high and distribute the found money to faculty and administrators.
3
Has anyone ever wondered why there's no cap on interest? Interest compounds and exist for the life of the loan, meaning that most end up paying far than the original principal in just interest alone. The federal government could provide relief to students by limiting interest payments to no more than the original principal of the loan. Interest rate percentages are deceptive. 6% of $100,000 is $6,000. If the bulk of your payment is going to interest first, that principle balance will never go down significantly. Without a really good paying job and extreme frugality, the average person will never earn enough money over the course of their lifetime to pay off that debt in full. One could easily end up shelling out $ 60 to 70 thousand dollars in interest payments for over a decade and still have a balance hovering close to $100k.
Another aspect is the fact that the students graduating with high rates of student loan debt are the ones who are least likely to get the really top paying jobs. When I was in college 10 years ago, the most coveted positions in many fields went to the kids from wealthy families anyway. A degree was mandatory, but secondary to family business and social connections. Unpaid internships at big companies were only for the kids without student debt and parents who could support them financially.
5
Agreed. It's nuts! Congress sets the interest rate for student loans and it varies by year depending on what they decide. Mine were set at 7.9%, which is utterly outrageous for an education loan. We need a congress that represents us.
3
There is the AmeriCorps or National Civilian Community Corps Program: https://en.wikipedia.org/wiki/National_Civilian_Community_Corps that could be used to help pay $11,460 in student debt if two terms successfully completed. This includes an automatic student loan forbearance during while actively participating in this program.
I find these statistics on student debt hilarious. Imagine only having $22,000 in debt! My husband and I have 3 master's degrees between us, earn a combined income over $200k, and have approximately (at time of last count, which I do as little as possible due to its depressing nature) $210k in debt. We owe almost as much in student loans as we do on our home. Many individuals now are graduating with at least $100k if not more after attending 4 year colleges in the northeast. Even with the excellent incomes we have achieved given our level of education, it is not enough. This debt is crippling. I am frankly astonished it has not reached crisis level sooner. President Obama was not able to do much, but at least he had an ear to the problem. Trump, on the other hand...it is only going to get worse. I genuinely contemplate where we can relocate to in the world where our children will be able to obtain our level of education without the crippling debt. Working more-than-full time hours to barely pay the bills seems to the be the new American way - at this point this is the status of myself, my spouse and more than a fair share of our friends.
3
Agreed. I have over $150,000 in student loans to pay off for two degrees, at 7.9% interest rate (set by congress). Barely scraping by and can't even afford to pay the interest. It's time for change.
2
The only major country on earth where college education is not affordable to all. I do not believe in free education but I think it should be affordable to all (~ total costs per year of 5000-7000 in state or out of state $ seems reasonable). Three additional factors (which colleges can control) has exacerbated this:
1/ Federal/state funded universities are increasingly admitting out of state versus in state because of the four times higher tuition bill. E.g. If you are from Indiana it may be easier to go to Ohio State than Purdue with the latter often needing exceptional grades
2/ Bloated administration: A lot of this is necessary. It helps with the planning, and overall running of the university and takes a lot of burden of the professors to teach. One suggestion here is to perhaps cut the permanent staff and instead employ temporary undergrad/grad students to fill in at 10-20 hours per week?
3/ I wish all the donors money was DIRECTLY used to fund undergraduate education for the most deserving and vulnerable rather than revamp infrastructure.
Deferments are little help. While the payments stop, the interest continues to accrue. When payments resume, the borrower owes more than he did when sought relief. At the very least, when a deferment is granted, the interest should stop, too.
1
This is a classic case of the law of unintentional consequences. The government flooded the market with school loans which has unintentionally increased the cost of college, not decreased it.
6
It its obvious that student are not getting an education needed to be hired by an employer. The fault is with all involved but especially the college and university. Our elected officials bear an the most responsibility since they passed the legislation that allows students to be faced with high interest rates and the inability to use the bankruptcy laws to mitigated their financial circumstances.
I went back to school as an adult and completed half of my required courses at the local community college, paying for school as I went and completing my AA just after giving birth to my daughter. Because I was a single parent and child care costs for an infant were exorbitant, I took the maximum amount offered in financial aid and lived off of that (and the child support that came only sporadically). I finished a BA and an MLIS by the time my daughter was five years old, but because my starting income as a librarian was low I couldn't even afford the minimum payments and had to request forbearance for the first five years. With interest, I now owe well over $100K.
I've been paying on my loans for three years now on an income-based repayment plan but my balance keeps growing; my payments go entirely towards interest. I don't blame anyone else for my student loan debt, and I don't regret the choices I made to get my education, but I'm one of the fortunate ones. I have a job in my field of choice and my job pays fairly well. But should good fortune dictate whether we can repay loans we took out to get the education we needed? Shouldn't we all be in a position to repay our debt?
My daughter is now 15 and in a few short years she'll be headed to college. By the time she graduates, my loans will be paid, but I'm afraid we'll just start the process all over with her tuition. The way tuition continues to increase, I dread the thought of what her costs will be.
3
People who live off loans or use easy credit to buy things they really can’t afford are bound to run into trouble sooner or later. Also, in any market, easy credit causes prices to rise.
2
I agree that this is a problem, but I don't really see how the federal government can fix it. Higher education is a business and tuition is based on what the market will bear. Universities offer a lot more now than they used to, and that drives price up. Many of the new offerings are not related to academics, but most students find them desirable so they continue to proliferate: (new dorms, massive rec centers, high cost intercollegiate sports, manicured campuses, etc.)
Reigning in the for profit schools that offer worthless degrees would be a good start, but the 40k a year degree from UCLA in English literature is part of the issue too. You don't hear about engineering, business, and healthcare majors who graduated from state schools drowning in student debt; it's the private school folks who are struggling.
2
Very much my experience and those of people I know. I managed to pay off my debts by working low-paying (but secure and available) jobs (requiring no college degree ironically), while many of those I know have not been so fortunate. If only colleges did not increase their costs so very much and they were upfront about the difficulty of competing in the working world- not every one gets a position that will repay such high debts.
3
A major problem at many institutions of higher education, that often goes unmentioned, is administrative bloat. At the school where I teach, over the last 30 years, the ratio of faculty to students has held steady, more or less, while the ratio of administrators to students has increased by a huge factor. Some of the increase is likely due to changes in regulations that require more accountability and more services, but I seriously doubt if that explains all of it.
The price of a college degree could be reduced, and the corresponding student debt as well, if the money spent on colleges didn't get siphoned off into self-serving administrative positions.
7
The primary reason that th repubs have for WANTING our kids to be saddled with so much debt is that such an albatross keeps them working long, hard hours day after day. With too much time and energy young people might start getting ideas. Young energy and ideas could turn into protest, causing problems for legislators and their financial benefactors.
4
As a parent, I saved a little more than half the cost of my daughters 4 years at a state college. My state New Hampshire, after over 2 decades of withdrawing support for in-state students, now provides the lowest state financial support in the nation. That said I do believe parents need to held more accountable. Even $40 a week for 18 tears would have yielded over $37,440. That doesn't include and compound interest either. That's was about half of the cost of her 4 years. The other half came from my daughter workings as Resident Assistant. A job she hated but did to earn her way through school.
The results was a 4 year degree with zero debt. Until your children are capable of self-financing then parents have a duty to help them get the right start in life. To leave them to the banking system wolves and staring life out as a debt slave is, in my opinion, a dereliction of duty. I'd like to see articles and stories of what parent did with the money they earned over 18 years and why a pittance worth of savings per week was simple to hard. Heck, they couldn't find $40 a week? I could have made that extra money mowing a couple of lawns a week.
7
Today's H.S graduates are all told they must buy a Ferrari to go places after graduation. They will likely not have enough money for fuel or insurance,
No consideration is given or taught concerning the affordability of the Vehicle.
If kids were told, that college is an investment, nothing less nothing more.
And that a return on that investment is essential to personal economic progress.
Obtaining a B.A at a cost of several hundred thousand dollars with the expectation of a 40 K -60 K job is just as irrational as buying that Ferrari.
9
I graduated from college in 1972. I was the youngest of four children, all college educated. My father died suddenly when I was 13, leaving only a small life insurance policy and no investments. My mother, who had been a housewife all her life, had to go to work for the first time. Because our financial situation had drastically changed, I qualified for low income grants for my college. (I went to a state university. Tuition at the time was less than a thousand dollars a semester.) I graduated with no debt. More low income students should be awarded grants today. I have gone on to be a contributor--paying taxes, buying a home, starting a business, employing others. The grant money I received was a good investment by the government in my future. More students should have the opportunity I did.
3
Thank you Mr Miller for bringing such an important subject to the public's attention.
Congress is dysfunctional -they can't agree on whether to have bathroom breaks during legislative sessions.
One of the largest problems facing our Country is the Student Loan Program. It should be abolished. Making loans to students who currently do not have the ability to repay the loan, and may not have the ability to repay the loan in the future is predatory.
The US Government has burdened millions of young people with debt they will never be able to repay - it's ruining their lives, hurting their credit histories, and preventing them from renting and/or buying a home.
The Government should have Education Grants - based on need/income - the grants are provided to students who can't afford college - and must maintain minimum GPA's to keep the grants for 4 years. The grants are not repaid.
Congress continues the Program even though it's failing - estimates between $500-$600 billion in defaulted student loans have recently been projected. It's a crisis.
However, our 535 members of Congress would rather call each other names and fight with each other, than help millions of young Americans. Inside the Beltway - it really is a Swamp.
6
It's quite disturbing that higher education institutions have had the unregulated privilege of committing what is, frankly, highway robbery on the American public two-fold.
To begin, higher education is becoming a requirement to live comfortably and to earn a degree one must traverse the difficult terrain that is paying for that degree.
One: By raising prices beyond what is affordable the institutions get free money upfront via the US Gov and students.
Two: By facing little to no penalties when their students cannot pay the Gov back, the school sits happily on its golden horde sweetly called its 'endowment' while the Gov and the student square up.
As many others have said, the cost of public education must be brought down as a percentage of incomes. It is IMPOSSIBLE, even at payment rates of more than three times the fed minimum wage, to earn even enough money for one semester of public college in the four-month summers during college, when just a few decades ago someone could comfortably finance their own degree debt free by working through their education.
5
Student debt is not worse than what we imagined. It's just what was predictable when Obama eliminated the market for student loans (in the name of progress, of course) and made government the monopoly source for the loans. Naturally, the interest rate was pegged at an unreasonably high and inflexible percentage, many times what it would be in a competitive system. Another case of the government coming to the rescue.
5
This is one of the worst aspects of our time. Young people graduate from college or graduate school. They are the promise of the next several decades, and they are crippled by debt. Wake up, Washington. This also cripples our nation!
1
When my husband and I were in school, your (middle class) parents just paid for it: you might go to a state school, you might work, you might scholarships and loans, but you didn't graduate with tens or hundreds of thousands of dollars' debt.
In touring schools with our own children, it has been infuriating to realize that what American parents are now going broke for, and American children are entering lives of debt servitude for, is criminal levels of overspending on coaches, athletic facilities, advertising and administrative overhead--or flat-out welfare to 'for-profit' scams. Forget it.
If the US will not invest in actual education, my children, at least, have choices: they're voting with their feet and going abroad to college. The Brain Drain has begun thanks to decades of looting by the academic industrial complex and Congress. The US is no longer the land of opportunity, and they've killed the goose that laid the golden egg: a vibrant middle class. Smart money is leaving for Canada, Israel, Germany, and Scandinavia.
Hope those $30M coaches' salaries were worth it. America is OVER.
6
Honestly, what do you expect? Student debt is a function of the exorbitant cost of higher education--which has increased at many times the rate of inflation.
This is no different that the debt our nation has accumulated--doubling under Barrack Obama--a shameful doubling of 10 to 20 trillon. It's no different than the debt of Puerto Rico, or Illinois, which has put them near bankruptcy. It's no different than the finances of our blighted inner cities--where crime, addiction and poor schools are the word of the day. It's no different than thousands of communities around the country--whose taxpayers are struggling to afford their school systemd--and the associated property taxes that fund them.
And the common denominator of all this debt and consternation????....it's liberalism. The Left controls our colleges and universities, our inner cities, and the blue states which have accumulated nearly insurmountable levels of debt. It's the belief that government control of everything is desirable--no matter the sky-high costs and the poor return.
3
$22,000 in loans with a good degree is in no way a problem. In constant dollars, that is slightly less than what I had almost 30yrs ago. As an engineer, I had that paid off in 4 years.
If there is a problem with student loan debt, it is that there is no accountability on the lenders for who they lend money to. Someone going to MIT to be an engineer is a good bet. Someone going to an expensive liberal arts school to major in women's studies or political science is throwing money away. A coffee server just can't pay back a $100,000 loan.
Then for the for-profit schools, those tend to sweep up the below average IQ people that should be only considering community college to trained for a specific skill. CCs may not be offering the right courses, but that is a different discussion.
Yes, we need reform:
1. Develop a metric between major and starting career salary. Prohibit loans to be made when four years worth of loans is greater than 33% of the 25%ile starting salary.
2. Come down hard on parents who refuse to pay their kid's school costs. I personally know a 2nd yr student who lives with her mother, but the mother refuses to fill out a FAFSA; she is literally on a cruise as tuition is due. The student will not be enrolling.
3. We as a society need to do a better job of communicating the value of community college, ROTC, and the GI Bill. The for-profit schools really shouldn't exist if CCs and enlistment were in the forefront of student decision making.
2
With such high default rates it would cost society no more, and likely less, to return to a tuition grant program. With strings of course - students must earn the grant in the first place and it’s continuing extension in subsequent years all based upon academic performance.
But there are deeper problems than students with little intellectual aptitude being encouraged to take degrees that they cannot complete; there is extensive peer pressure to live high on the hog; little or no understanding that “easy money” must be repaid with interest; colleges and polititions playing the number of student games rather than quality of education; societal pressure to get a degree that itself has resulted in the dumbing down of the degree itself - as shown by the current trend for a Masters rather than a Bachelors to be able to qualify for many jobs.
An overhaul of both the system and societies expectations is long overdue.
1
Post High School Education should be free. That would make the US more competitive. We also have much data proving that education at any level improves the lives of all relieving it. Education is a basic requirement so it should be a utility.
1
This is all sadly true, but in the tag line there was a suggestion that the new data also showed “how colleges are benefiting.” Where is that part of the story?
This is unfortunate because it sets up colleges as the problem. Let’s not forget that a major factor for rapid tuition rise has been the dramatic decline in public (read state) funding for higher ed, which has shifted much of the costs from the public - which benefits from the resulting innovative and productive workforce - to the students.
If we, the public, no longer value the societal benefits of higher education and continue to defund, then we should stay the course, but in my view, the bulk of the costs of higher ed should be borne by the public.
1
"In its most recent survey of college pricing, the College Board reports that a moderate college budget for an in-state public college for the 2017–2018 academic year averaged $25,290. A moderate budget at a private college averaged $50,900. But what goes into these costs?"
This is according to CollegeData.
Shoveling money at this problem has clearly not put out the fire.
1
College tuition rates have risen at DOUBLE the rate of inflation for going on 50 years. The student loan industry has abetted this mightily. Today's universities are basically investment banks with an education storefront. Everything a university offers, from making copies at the library to campus security, is a revenue center.
The idea of cutting off universities from student loan monies when default rates hit 30% is idiotic. Every university should have the interest rate on its students' loans determined by default rates of its own graduates. US DOE already has all the information they need to do this, but they're in bed with the lenders and for-profit scammers.
5
Yet another clever wealth transfer scheme the rich have cooked up. What was 'Trump University' other than a sad snake-oil scheme. This story is the same everywhere now as the corporate plutocracy strip-mines whatever remains of the available money. They have no word for enough and it will never end.
1
When I finished graduate school during the dot com dropout and then housing crisis, i almost lost everything. Over time my 6K loan went to 12K then all the way up to 24K and now, after years of garnishing my pitiful Social Security survivors benefits, it's down to about 12K. Seriously.
These loans are bought and sold all of the time, mine multiple times. And EVERY company adds on thousands of dollars in "processing fees" to your loan.
You have NO recourse. Pay or your credit is ruined and then you finally get old enough to garnish your social Security.
WHY is this legal?????
Why is this a non-negotiable debt???
How can you owe four times the amount you borrowed and not be a predatory loan????
Please, tell me....
5
Higher education should be free.
2
Higher education should be affordable. Students should have some liability in the mix...since nothing is ever "free" as someone has to pay the bills along the way.
Today I dropped my son off to begin his college studies... in Canada. His first year tuition will be 28k, easily half of many American universities. He will attend school at a major research institution with students from all walks of life because Canadian students do not need to be affluent, just serious and accomplished.
My fellow Americans! Look to the north for a wonderful alternative to our system run amok.
3
I was stunned by the staggeringly rotten numbers from private, for profit universities.
The numbers released here, which show that private for profit colleges have, by far, the largest rates of default should be widely disseminated so students will know what they are getting into when they go to a private for profit school
And shame on the those schools. They are luxuriating in billions thanks to the corporate welfare of the student loan program and they are giving their students an education which is most probably grossly deficient.
Back in the 1960s I had the G.I. Bill and student loans. I lived in NYC at the time. The interest rate was a simple 3% and 10 years to pay. I fully paid the loan on time. My daughter who attended a state college in Florida also had a student loan. I decided to pay off the remaining five year balance because of all the bad stories I have been reading about student loans.
There are some students, not all, that abuse the student loan. I remember reading about this student who owed about $80,000 because she wanted to go to Ireland as part of her studies. What is very surprising is that she went to a state college and was unable to repay the loan. She has been talking about getting help by crowfunding. This in my opinion was an abuse, now she is stuck with the loan. How sad!!!
Potential Students: DO NOT UNDER ANY CIRCUMSTANCES TAKE OUT A STUDENT LOAN. You most likely will never touch the principal, even while living in poverty. Some of the most successful people in the US were self-educated or savy at delegating authority. Grants, scholarships, family educational trusts that you don’t have to pay back are ok. But don’t borrow; you don’t want that cloud over your head most of your life. And there’s a good chance your degree won’t help you anyway.
2
I feel very badly for students who did not have a parent or some other adult who would have taken a calculator to the amount of the loan over the number of years to repay. I have two pieces of advice...do not even think of paying for an online degree...no not even think about attending a for-profit “university”!
My first grandchild just went off to college. She will graduate without debt. Her folks told her that they could pay for instate university...she found the program that she want at two private colleges...one offered her no money...the other brought her costs in line with the instate university.
The first was a little more prestigious but is that worth graduating with 120k in debt?
I know a lot of people aren’t able to contribute instate tuition to their kids... my daughter & her husband have been saving for 18 yrs. They will work longer & live more frugally while their kids are in college.
I notice that the statistics are presented through 2016...so let’s not blame this on Trump...blame it on school systems, parents, lenders & the students themselves.
All the stories of career switching...”I was a lawyer & wanted to be a teacher...I have a family to support”. Are you kidding me! Take some responsibility!
1
Student loans not only crush a person’s hard won efforts for a better life but also eat their parents’ retirement, poison one’s chance for a decent marriage, and thus end the dreams of perhaps a nice home and little family. They are predatory and pernicious. Those who perpetual this vicious cycle know exactly what they are doing to the lives of people caught in their web and do my care.
3
I cannot fathom why anyone would take on $100,000-200,000 in debt for anything other than a house mortgage. Have they not run the numbers? There are not a lot of law firms hiring out there, and those who do get hired are in the top 5 in their class - often just the top one or two. How on earth do they think they will pay back that amount of money?
If it's medical school, they would be well served to join the military and get it paid for entirely by the military in exchange for some active duty (being a doctor!). No debt and something on ones resume.
As for undergraduates - well, if they don't understand what the starting salary is in their chose field and can't figure out that there is no way to pay back $100,000 in student loans on a teacher's salary, then they were too dumb to go to college in the first place.
The most elite colleges are very generous with their student aid - all grants, no debt at all. And many offer a full ride (including room and board) for students whose families have an income of less than $60,000 a year. Of course, this means they must be smart and hard working, but if they're neither should they even be going to college?
My cleaning woman thinks she "went to college". It was a for-profit secretarial school and she never could get a job as a secretary. No surprise there - she's a lousy cleaning woman - it's a step above her "level of incompetence". I cannot imagine her working in an office. And yes, she defaulted on those loans.
6
A good start would be for the loan servicers to actually be honest, instead of being sleazy, deceitful and fraudulent.
For example, someone I know well, and witnessed first hand from start to finish, was contacted by a loan servicer who demanded he agree instantly to their terms, made ALL of the payments in full and on time via direct debiting from his bank account, and then shortly after fulfilling the terms of his contract, another student loan sevicer began contacting him all over again whereupon he discovered the first loan servicer never reported his payments, and instead absconded with all of his payments.
He reported everything to the Department of Education Ombudsman, and even went to his Congressperson’s local office with proof of payment and full documentation of everything, and yet, to this day, the money paid was never recovered.
So, he’s back in default - or rather, as far as the Department of Education is concerned, he never even attempted to have his loan restored despite having fulfilled the terms of his signed and countersigned contract exactly as was agreed upon (which he can prove with bank statements, monthly invoices received, and the contract itself).
The despicable fraud and theft CANNOT be overlooked as one of the big problems plauging this industry, too.
And yet, we now have an administration that wants to completely dismantle the CFPB, when even when it existed it was unable to prevent the outright fraud and theft he experienced.
A few years ago I was entering a guilty plea for a young woman in Memphis who was being required to make restitution. The judge asked her where she was getting the income since she was in school. Her answer was that her private,for profit school was loaning her $32,000 a year! This was for a "degree" that was all but worthless since the "college" is now bankrupt and out of business. Of course, the for profit college can go bankrupt, but she cannot bankrupt those loans. Don't you just love irony?
4
I attended the University of Notre Dame from 1977 to 1981. I finished my undergraduate degree with $3500 in student debt, which I was able to pay off within three years.
Fast-forward 27 years. I lost my job in the Great Recession. It took me almost 8 years to find a new job. In the meantime, my daughter went to college, and I had to take out PLUS loans to help her pay her tuition. I also returned to school myself. I attended a small Holy Cross school called King's College in Wilkes-Barre, Pennsylvania. It took me 3 years to get my certification as a high school English teacher. I was unable to find a teaching job, so I spent 3 more years pursuing a Masters degree in Education at King's.
Along the way, I racked up about $180K in student loans. Many people have criticized me, telling me it was foolish to take on so much debt. But what were my options? I had no job, the Great Recession killed the job market, and I had very little money. Going back to school and taking out student loans kept me alive for 6 years. The alternative was homelessness and starvation.
I now teach at a small Catholic high school. I have used up all my deferment and forbearance time. My lenders want me to pay $2200 a month. I don't even gross $2200 a month, let alone take home. How am I going to pay back my loans? I have no idea. I do know that I will be paying back those loans for the rest of my life. I will never be able to retire. That is my reality, and I know I am not alone.
4
The problem is not you Mr. Connolly the problem is that we have a system which you, and so many others, have so easily exploited.
This system is wrapped in politics and special interests and is completely separate from the goals of education.
Do a MOOC.
https://en.m.wikipedia.org/wiki/Massive_open_online_course
Buy used textbooks — often the differences between an older edition and the current is minimal (sometimes, even, the older editions are better.)
Study overseas.
1
Our new government had an election policy where they would offer the first year of varsity free for school leavers and Australians who qualify. It's a great vote catcher and the new government is great for our nation and it's citizens. Lots of those private teaching schools for foreign students are just being used as a stepping stone to citizenship and lots of the students never turned up at class and still passed even though they were out working and not attending the courses. Our government has nipped it in the bud as the private teaching schools were lowering our nations credibility for education standards. Lots of the Recruitment Agents in places like India and other Asian nations were in on the scams as well. Lots of the students couldn't even write English or speak English and were passing the courses with the help of the scam recruitment agents and disreputable private teaching schools.
The goal was to get citizenship and bring out all their extended families once they had citizenship as NZ is a Welfare State.
1
We need to return to Clinton-era interest rates for student loans.
1
We Americans have gotten used to eating our seed corn.
Our next harvest is going to be a grim one.
3
College in America is little but a Madoff type scam- whether the studen gets a proper education that will lead to a fruitful job is of almost no concern to all three parties involved: the college, the federal goverment that gives the loans and the companies built to collect those loans, leaving the student to hold the (debt ladden) bag regardless. Its immoral to make college a for-profit entity of any kind and should be FREE to all, even those rich kids who can afford to pay but especially those like me who could never afford a degree because our families came from nothing and have nothing. Why does America do everything backwards?
1
For profit educational institutions, just as for profit health insurance companies operate on the profit motive. Neither ought to exit
Both do, nevertheless.
That said, there are several ways to go to college without paying
Interested in becoming an MD ?
See the AAMC (American Association of Medical Colleges)
"Pay for Medical School Through Service"
https://students-residents.aamc.org/applying-medical-school/article/pay-...
Interested in STEM education ?
Check out the ROTC. Some of our countries most successful executives chose this way.
Check out the biography of Lowell McAdam, former Chairman and CEO of Verizon
Interested in becoming a lawyer ?
In many States in the US, California included, you do NOT have to go to law school to become a lawyer !
You do need to pass the Bar Exam. You can learn what is needed to do so by yourself.
I'm surprised that the Trump Organization isn't in the student loan business. Seems like a perfect fit!
1
Why did anyone ever think that extending nearly unlimited credit to teenagers was a good idea?
7
Judging by some adults I know the parents of those teens are just as irresponsible with money. They remortgage their homes and borrow against their retirement savings. I hope they don't expect their coddled offspring to care for them in old age.
If the government is on the hook for the loans, the unscrupulous will fly in like vultures and take advantage of the ignorant. This is the American Way.
Higher-ed needs to be given a serious haircut. Doubt this will happen as an inside job, because it's such a well-entrenched bureaucracy, feeding happily from a very deep trough -- supplied in excess by federal student loans. Nobody but truly poor students should receive public financial aid. Middle class and above, earn your own way. Watch the fat roll away from college facilities, administration and frills.
19
Most state funding shares of higher education budgets are half or less than they were in 1990. Seems to me that there’s not a lot of public hair left to cut.
JQ Public benefits from the human and economic development that comes from higher-ed, why should we not share in the costs?
1
We need to stop making student loans a profit center for the gov't as well. Why do student loans charge 8% interest when the gov't borrows at 2 to 3%? If we lower some of the costs to borrowers this will help greatly.
1
For the same reason junk bonds pay high interest rates: the risk. The government knows it's not getting a lot of the money back. The government gets to borrow at a favorable rate because we pretty much pay our loans back. Of course, Trump once mentioned that we could eliminate our debt by forcing creditors to take a loss on the money we borrow. Imagine the fun that would be! America the Deadbeat!
"worse than we imagined"
Actually, many people have been aware of this crisis in exploding student debt for a number of years.
Perhaps this article could have appeared, along with additional articles regarding problems affecting our lives that need to be addressed, in place of one of the many articles about email servers that filled the NY Times coverage of the 2015-2016 election.
Did either of the candidates have proposed solutions?
https://www.studentdebtrelief.us/student-loan-forgiveness/hillary-clinto...
Student loans are great for The 1%, because they give the illusion of equal opportunity and allow crony capitalists to profit from that illusion.
Eliminate student loans and The 99% might start to wonder why we can't have what kids in most of the developed world take for granted, free college tuition, which is what real equal opportunity requires.
3
I just graduated nursing school with a loan total of over $72,000. When my payments start they will be over $600 a month. How is one supposed to pay this amount as well as other monthly bills?! I went to school so I could help people and give back but now I don't know where this payment money will come from. I'm currently talking to the loan holder (our government) to see if they will lower the payment amount to something more manageable. At this time I'm having no luck. Now I'm questioning if going back to school was a good choice!!
2
This is the same thing that happened with home loans during the Bush administration. The Bush administration and the House Banking Committee, led by Chairman Barney Frank, made it extremely easy for people to get home loans -- especially the lowest income groups. The result was an explosion in mortgage debt, followed a few years later by a collapse.
1
Also important to note that while a loan is in deferment, if the monthly interest is not paid, IT COMPOUNDS, increasing the principal owed and the student winds up owing considerably more than she originally borrowed, including interest on the interest. A stunning game of thievery.
1
why is that thievery? That's how loans work.
I’m a recent graduate at 55 and I had very little student loan debt, because of the GI Bill and Scholarships. It seems to me that the strategy that is used is to corral students into low payments so they can pay forever. NELNET offers a low payment option.
The worst part is people are taking out student loans to live in luxury dorms. They need to get mom and dad to co-sign because what 18 year old can pass a credit check? But student loans can pay for it, and the the college takes a piece of and for food. Almost all the fast food places near colleges accept Campus Cash.
2
In many of these comments, it would be obvious on day one that the borrower would never be able to pay back the loan given their personal job prospects or the pay in the field itself. Schools should be required to explain that upfront.
But they don't. Whether for-profit or not, schools have a vested interest in getting as many students enrolled as possible.
Week after week, the NYT and others publish sad stories about people who ran up hundreds of thousands in student debt they cannot handle because their degree is in some field that cannot possibly pay them enough to do that and live. And they get married, have children and have personal debts on top of that and wonder why they are broke (and want the taxpayer to pay for their mistakes).
This issue is similar to the housing bubble where people without jobs or adequate income were given "liar loans" to buy a house they could not possibly afford. And debt relief, given the circumstances, creates a moral hazard. We need these terrible outcomes as a warning to others and to pressure schools to stop this practice.
AFAIK, no school explains to students that getting a BA or MA from them in, say, web design or anthropology or fine art and racking up a $100K in student debt won't lead to a job that will let them pay off the loan. It shouldn't take years of analysis to figure this out. This is knowable on the first day of class.
1
I'm finally close to paying off my student loan debts taken out 24 years ago. My family provided no financial assistance so I had to borrow for both undergrad and graduate school. Due to the oppressive debt load plus my age I have little in retirement savings. The state where I reside forced me to provide my professional services for free for nearly two cades, without any tax breaks or compensation. That money could have been used to pay down my student loans but instead was used by the state to give tax credits and breaks to multinational corporations to set up shop here.
“The state where I reside forced me to provide my professional services for free for nearly two cades, without any tax breaks or compensation.”
Out of curiosity how did they do this? I understand not all states provide tax breaks but how can the state force you to work without pay and for so long.
3
The interest rate charged depends on the risk of default. Currently interest rates on education loans are uniform, meaning the risk is calculated using the set of all students. This means effectively that students who take out loans at colleges where there are few defaults are subsidizing those who take out loans at colleges where defaults are higher. It might be worthwhile to make the calculations more granular, by college. So if you go to a college where there is a higher-risk of default, your interest rate is higher.
Fundamental problem with US higher ed: it is treated as a business rather than the response to a human need. Seemingly all we are entitled to is more debt. Quality assurance is a joke: it only says that accredited institutions are eligible to touch Federal student aid funds. Somehow the Institutional accreditors don’t dig into the hiring of graduates, who employs them for what purposes, and their career path. HE institutions have steadily hired more contract and adjunct faculty to hold down cost rather than improve teaching and learning. At day’s end we can only wonder if our newest batch of graduates can critically read, think, write, and lest we forget, add and subtract.
With best regards, T.R. Phillips
1
Brookings Institute noted that one thing that should survive the 2016 election was the student loan reform idea proposed by Jeb Bush. The idea was simple. If the earnings after graduation exceed a threshold the graduate would pay a fixed share of his income up to a maximum. If the earnings fell below the threshold the graduate would repay nothing. This scheme would enable social service, the arts and other graduates to receive an excellent education and provide the benefits of their education to society through their lower paid work without bankrupting them. Sanders sought a solution in increasing taxes on financial transactions unconnected with the benefits from education received by high earners. https://www.brookings.edu/research/jeb-bushs-student-loan-plan-should-ou...
1
Two things that do not get mentioned here. First, the evidence that guaranteed student loans encouraged schools to increase tuition. One article - https://www.forbes.com/sites/prestoncooper2/2017/02/22/how-unlimited-stu.... Second, that going to school can be free for a number of people who agree to work for the payor for a few years - a large corporation or the gov't (military). I know someone right now going for free from the company she works for. Does she want to continue working for the same company rather than maximize her income in the market immediately? No. But, she made a deal and it will pay off. You say something is a "right" rather than a privilege or opportunity, you get a lot of cheers, but, hard work and obligation are seemingly not at the top of the list for trying to figure the way out of the problem.
I don't have a fix for the problems, but these are areas worth looking into. Also, we will have to see the effects of the free schooling being offered in NYS and also the emphasis on "diversity" rather than education in NYC schools. This might take a while, but I have trouble believing either will improve, in the whole, the lives of those living here, regardless of their ethnicity. It might make it worse. I could be wrong and it will take time to see results, which will be murky as always, because the world will not remain static like a designed experiment might.
The pressure to attend college originates with employers who now require undergraduate degrees for jobs that in previous generations only required high school diplomas. Perhaps some effort can be made by state and local governments to encourage employers to lower their standards to once again make such jobs accessible to those who do not wish to or cannot afford college.
2
We simply need to stop federally guaranteed loans and instead put the money into community colleges and public universities. Cost of education will plummet.
2
College is not a right.
It is because people think it is a right to go even if you do not have the ability to do well.
It is my belief that a lot of these individuals are the ones who can not find work and are therefore unable to pay back the money they borrowed
If the people who need these loans are admitted based only by merit there will be fewer students needing loans and the students who do will be more likely to get the jobs that will give them the income needed to pay back those loans.
Higher education lost its way when schools started adopting a business model of operations. When they did that they lost sight of their mission, and got distracted by marketing.
Students are not customers, and those who have been cheated by these marketing schemes have every right to walk away from their debts.
This may mean living in the grey economy or emigrating, but they are under no obligation to spend their live in debt slavery.
1
I recall in 1972when my sister went off to college, a private liberal arts college, her tuition was about $4800 for the year. She made about $1000working as a Howard Johnson’s waitress the summer before, about 20% of the tuition. I also recall that my parents bought a station wagon for about $4800mthat year.
A waitress at a similar type restaurant in 2018 would not be able to make $12000 in a summer. And a similar type car costs about $25000 these days.
But I also see how the perks at these colleges have escalated. My sister did not have a phone in her room, everyone shared a phone in the lounge. Everyone had to shower in a common dorm shower in the hall, and use a common laundry room. This was still the case when I went to college 5yrs after my sister.
In the ‘70’s these colleges were more bare bones.
In 2010i visited my sister’s son at a similar college.He was living in a beautiful apartment with 3 roommates, all had individual rooms, nice kitchen, nice bathroom.
See part 2
3
I have been in higher education, first as a student at various levels, then as an adjunct professor, for 30 years now. When I stand in front of an amphitheatre full to the brim with 300 people, I can't help but think about where all the money they pay goes. My salary is equal to roughly what 3-4 full-time students pay, its rate of rise in the past 7 years has been about 1% per year, so it is clearly not us, the serfs. The big cheese surely get big bucks and big raises, but they are too few in number to matter in the equation.
Then I take a stroll on campus and see where the money goes. Into concrete, literally. My current university has built 10+ spanking new , 10+ million buildings just in the last seven years. Same everywhere else, I have been in campuses where the oldest building was 19 years old.
Tuition in the USA has risen at twice the rate of inflation in the past 40 years. Given how much it should cost to provide high quality education , this is unjustifiable. Universities are overspending grossly on physical spaces, it has become a nuclear arms race.
5
Following WW2 the GI Bill was used start an entire generation on the road to prosperity and grow a large stable, middle class.
Today we hobble the Millennial generation with extensive education debt and impede their ability to achieve their grandparents standard of living. By pricing education and training beyond the means of many, we are strangling our economic growth and standard of living.
1
Robert,
I don’t completely disagree with you, however, sometimes that debt is unnecessarily self-inflicted. I’ve watched kids get into great schools with offers of partial to full scholarships turn them down to go to a good school where a friend will be. Instead of the parents saying, no! They apply for financial aid, take out loans, and remortgage their homes. There is nothing else to call it but stupid. They saddle themselves and their children with unnecessary debt, and are unable to fund their own retirement.
Yes, higher education was less expensive when we went. There was also less tech. With high tech come greater expenditures. Now every student needs at least a laptop and cell phone to compete successfully.
Costs need to be contained but one must also take into account much has changed between then and now.
Very true... my boss's son only got into an expensive, private schools that wasn't academically all that great. His girlfriend got into a much better public school but opted to go to the private one where my boss's son was attending. Why her parents allowed this is beyond me!
The availability of Federal loan guarantees for student loans and the huge new pot of money then made available to colleges has increased the cost due to inflation. It's a classic inflation scenario. Without the loan program, colleges would have to be much cheaper. It's a well meaning idea gone bad. Congress has to come up with some better ideas. Maybe some alternate, much cheaper methods of getting a college education should be made available, perhaps using online tech.
1
It is no wonder the overall economy is "sluggish." With college gradates starting to work with $25,000.00 to $50,000.00 in debt how can they be expected t buy a new vs. used car, make a down payment on a house v. renting forever, etc. The student debt problem has longer tentacles than is readily apparent.
2
Globalization drives higher ed's inflation. U.S. top-tier universities are like England's Premiere League: what was once a national treasure became the world's most privileged institution. Money pours in from wealthy Asia, oil-rich kingdoms, plutocrats.
It's spawned a no-holds barred belief in massing endowments and building things. Colleges are as competitive as teams (their own, sometimes), fighting for reputation. Those that tread water will fall, or so they fear. If you get into the palace, everything must be gilded.
US News determines each years standings, with less transparency than college football's. It's kept because nothing can replace it. College rep is a self-fulfilling prophecy: it draws faculty & students in. But maybe the king is naked. Studies show graduates lack decent education. Who's minding the store?
It's time for a revolution. Online ed, combined with meetups and test centers, is the no-brainer future.
1
For A canadian, it Is difficult to understand why Americans don't push to have affordable education and health care. 2 basic things A goverment should provide with security, which is another topic.
3
As a former financial aid administrator in the California Community College system, we used very liberal " student expense budgets" which enabled students to qualify for student loans by demonstrating sufficient need. the highest line item in our budgets was the student's living expense. Our average independent student had a 9 month student expense budget in excess of $20,000. Most of this budget was due to the liberal allowance for living expenses.
Federal Student Loans, just like other assistance programs are funded by taxpayers. Is it right that taxpayers should be helping to pay for students' rent and food in addition to helping them to purchase cars and cover day-care expenses?
My solution to the huge student loan default problem is to reduce the living expense line item in the student expenes budgets. Most students who borrowed over $6,000 per year were also eligible for fee waivers, Pell Grants, California Grants, and Federal Supplemental Grants. Together, these grants were sufficient to cover basic living expenses. Financial Aid cannot exceed the cost of education. If colleges were to drastically reduce the allowance for living expenses, a vast number of students would no longer demonstrate sufficient need for Federal Student Loans. I am proposing that my solution could go a long way toward reducing the default rate in the future.
1
This isn't just a debt problem. The tuition and loan system as it exists enshrines a classist hierarchy. Indisputably:
A college education is necessary for almost all white collar work.
Reputable schools are too expensive for all but the wealthiest Americans to attend without accruing debt.
Once accrued, paying down the debt will stunt income, prevent savings and investment, hobble the debtor.
Most people with debt will pay back many many times what they borrowed over decades and decades. It's grotesque that higher education in the United States - a necessity for economic mobility and a public good in a healthy democracy - has become a ravenous for-profit industry that milks the poor and maintains an economic elite with no thought to merit.
No wonder at the graduate level in American research institutions there are so many excellent students and researchers recruited from abroad. In our own country, inherited wealth decides academic progress. This starts with private schools giving wealthy kids a leg up and, if defunded public schools don't prove a sufficient handicap for poor kids who might compete, insanely high tuition will keep them out, and if insanely high tuition doesn't stop them, because of loans, well don't worry, they'll be paying off the loans forever. Unable to take unpaid internships. Unable to take lower paying jobs. Unable to live in the city. Ultimately unable to pay their bills.
Writing about it like a debt problem misses the point.
3
I am a tax payer.
I don't want my taxes increased so people who you say should go but can't because they can't afford it so these people can go there for free.
Life is not fair.
There are public institutions for people who can not afford to go to a private college.
These colleges wouldn't be there if there weren't people paying to go there.
I believe wealthy people have that right
So I see no problem that only they can go.
1
So, because life is not fair, it's morally acceptable, as a society, that only the children of the rich should be able to attend the better schools and therefore, receive the better jobs? That this country become a caste system like other backwards countries? Perhaps you would also recommend that healthcare be rationed only to the wealthy or the well-to-do? Let the lower class survive on emergency room visits? What a ghastly world.
2
In 1955, my total three-quarter costs were $1,065. Per quarter: Tuition and fees were $75, dorm room and meals $175, books, maybe $30. One time: drawing instruments $30 (engineering). That's it.
At the large state University I attended, their above costs have risen at a compound rate of 6.2%, more than twice inflation over the past 63 years. That is the core of the problem. No cost control on any level that I can see.
1
When doing those calculations, consider what universities have to buy today in terms of tech because universities are supposed to subsidize corporate America with both R&D at the higher end and vocational training at the lower end.
And all the while, the state support that did so much to keep your tuition low has dried up.
1
Much of what we waste time on in college is better learned online.....for example languages. You just need to memorize every day. You don't need a fancy ivy covered building to learn. A lot of what we use education for is to limit the number of applicants for certain jobs or to screen for characteristics like showing up on time or literacy or to screen for social skills. And when Skull and Bones screens for social skills they are not focusing on people of color. Individual employers use the college degree as a substitute for evaluating the applicants for a job. If the government got out of the student loan business it would force the providers to lower their costs and prices. It would force employers to make their own decisions based on their appraisal of a candidate. It would be far more valuable for the government to put the student loan money into universal broadband high speed internet. If government incentives are needed online courses could be subsidized. Basic skills could be tested and testing centers could be used to ensure credentials were valid. Universities should be focused on the finer details of education to include graduate work, research, and courses that require professor interaction. Leave the remedial reading and math and basic language skills to the internet.
2
This is a problem with the government providing guaranteed payment to Universities who turn it around and spend it on unnecessary building upgrades and athletics facilities/scholarships. I'm all for the government providing money for college, but it shouldn't be handed out knowing how colleges are using it currently. Provide guaranteed $5000 for every American student to attend college, no payback, and watch the enrollment ratio of university to community colleges change within five years. Universities are gouging students exorbitant fees and tuition because demand is so high and they know they can.
2
One reason student loan lending is so popular is that the debt can almost never be discharged in bankruptcy. Most other kinds of unsecured debt, including bank debt, credit card debt, deficiency debt left over from mortgages, and the like. Student loan debt is treated almost the same as child support debt -- you have to pay it no matter what. Why?
2
Because student loans are subsidized by taxpayers, and because it's impossible to repossess an education?
3
Wrong. You gonna repo a hip replacement?
Government/taxpayers should get out of the business of subsidizing and guaranteeing student loans. That will put a quick end to these shenanigans. Watch tuition prices magically fall back to what students can actually afford.
5
At a time when salaries have not kept up with inflation college, at the undergraduate level, has not been the economic passport that it once was. Students who size up markets, job demand projections and their own skills often opt for several years of post-graduate and/or professional training. While they do earn more when they graduate as health care professionals, MBA's, accountants, IT professionals and scientists, they also owe more. With fewer foreign students willing to put up with the current administration's overt hostility and fewer Americans able or willing to take on graduate school debt that will last into their 40's (delaying having children and home-buying, among other economic stimulants), we are starting to see shortages in various professional fields that will last for decades. Are we great yet?
2
Yep. Letting the rubes pay and hoping one's billions are invested in the right things when the bubble bursts is so much easier than having a serious discussion about how to succeed as a society.
I graduated from Milwaukee Area Technical College in 1991. Some of the programs are for occupations for which there is demand, but sometimes the starting pay is modest. I'm thinking of hairdressers, barbers, nurse's aides, cooks, daycare teachers. Some of the students start there and they already have to support themselves, and may be supporting a family. Or they might be coming straight out of high school and from a family with little money.
When I was getting my degree, the tuition was lower. It was possible to do office work on day shift, take two evening classes a semester and one in the summer, and get out with no student debt. But tuition and books have gone up, while wages have stagnated. At the same time, students who in those days might have gotten grants are expected to take out loans. It isn't reasonable. Even a good school can wind up with bad statistics, especially if the economy takes a downturn.
1
Given that the cost of funds to the Federal government is $0 or very close to $0, why does Congress set the interest rate at 7.9%? Turning the servicing of Federal loans over to the private sector only served to enrich a few companies and raised the cost of a loan because the private sector insists on making good profits. Beyond that, the loan servicers aren't even required to offer their customers good advice.
2
It's a hidden secret that the best value for a college education is to first attend community college and then transfer for your Bachelors. It's actually easier to get into a good 4 year school by transferring with a solid performance at a community college. Why? Because four year schools have a dropout rate and want to refill their class with transfers, and if you've gotten good grades at a community college you have proven you belong. This is true for top schools as well.
3
California is winning in the bad advice column this time around. It's not a "hidden secret", and it's not good advice, either. CC is not university, universities are not trying to cram advanced-undergrad courses with AA holders, and too many kids show up at university with AAs and then get a bad surprise: they're not prepared for the advanced-undergrad classes and for the first time they've got rotten grades, which matters when they've got plans for grad and professional school.
1
Keep in mind that graduation rates at Universities average around 60%, maybe 70%. Many high school students aren't prepared for university either, and good students will learn in most environments.
2
Vote. Vote. Vote - for someone who promises to find a solution. We’re creating a mess of a generation with student debt. Today, a university education is effectively a subsidized commodity that few families can actually buy. The large majority of students are only able to afford it because the apparent immediate cost to them is zero. Parents who step in to say ‘no’ to the most expensive schools are smart consumers, but the government needs to take steps to protect students as young, and truly uneducated consumers. My gut says we need to cut average loan burdens for undergraduates by about 1/3 - that’s from today’s $40k average down to about $13k; a manageable amount that puts some burden on students and families, but still let’s them live their lives. Set a maximum lifetime ed loan amount; make a three year education the gold standard for undergraduates; tier tuition rates so upper classmen likely to graduate pay more; subsidize salaries and make professor's actual public servants? Expand grant and research programs into more areas so that the word “public research institution” really says it all for our flagship public schools - and the research work done at universities pays for younger students’ education? There are some smart people out there to find a way - and other countries to model after. Vote. Vote. Vote.
1
The research pays for graduate students' educations and, to some extent, building maintenance, not undergraduate education. If you want public college more affordable for undergraduates, it's going to mean paying the taxes again and tying the hands of good-ol-boy developer/banker/legislator circles who want to sell bonds to build fancy buildings. As to your other points: professors are already public servants, which is why they're answering student email at 2 am. Most categories of students already have federal-loan caps; the problem, especially for undergrads, is private loans. And if you want a 3-year engineering degree that gets people "good-paying jobs", particularly if you're not willing to fund K-12 properly, then don't complain when your bridges collapse.
Brainstorming here: Why don't we determine how many college students we can afford to send to college for free every year and then open up those seats to national competition. That way we only get the best and brightest and they all come out of college debt free. No matter how rich your family is, if you don't make the cut you don't get in.
Those who don't make the cut can go to trade school, community college or study and try again next year.
1
Agreed with schools that are run by the state.
I see no reason a private system can not co exist if this private system can function only with the money that the students pay to go there.
I believe a wealthy person has a right to provide for themselves without having
to provide that service to people who can not afford it.
No one has ever been able to explain to me why prior generations could afford college with little or no debt versus the current situation of massive debt. Oh, everything costs more? Why? if it costs more, why haven't wages kept up so that college is no more less affordable than it was a generation ago?
When the federal loan programs were passed by Congress, did anyone stop to consider that this would allow the flood gates to open in regard to tuition increases? Colleges were able to raise, raise and raise again without any lingering guilt that good students were being excluded by the costs. Let them take out a loan! (Let them eat cake.)
Student loans allowed colleges to plan their budgets without enough discipline to make certain tuition increases beyond the rate of inflation did not occur. When you have a 680 million budget and most of the parts are fixed and you want to do something more, like putting up new buildings, what do you do? You beg for money from donors and raise tuitions.
Meanwhile, course loads for professors have gone down, pay for administrators has gone up and America's colleges have been on a building boom to try to keep their ratings high to keep attracting more students capable of paying.
Keep this in mind, too: students after college (graduates or not) are being harmed not only by having to repay onerous loans, they are locked out of the credit market for years because of their defaults.
This is a terrible system that must be changed, now.
2
Reaganomics with its cut-my-taxes ethos and the Republican denigration of real education versus voc-ed has led to cutting the state subsidies for education. The end of the Cold War also didn't help because a lot of the federal funds that flowed to research universities went away. Beyond that, easy loans allowed schools to raise their tuition and fees.
7
When you buy something you can't afford, is it your problem or the government's problem?
So why is it the government's problem when someone borrows too much for college?
2
does this make any sense? - the law requires schools to keep their share of grads who default below 30% for 3 years, or below 40% for one year. If my calculations are correct, 40% is a higher rate than 30%, but yet you only need one year below that, or 3 years below 30%. If you had only 2 years below 30%, you would still have one year below 40%. Am I missing something?
As a person with enormous student loan debt, I am very aware of the many flaws of our federal loan system - including the complete disorganization of the repayment plans and generally uninformed reps who field incoming calls. (Not their fault.) We’ve saddled people with a crippling amount of debt for pursuing higher education, while simultaneously vastly under-paying the faculty who teach them. (I’m an adjunct.) We have to think about who is profiting from this broken system: schools (operating as businesses), the banks/organizations buying bad debt - and we have to examine how we can make changes. I’m looking to connect with organizations and individual activists working on the student debt crisis because we absolutely must address this, and I’m currently unaware of what resources are available to individual borrowers.
4
You guys need to organize and go on payment strike, then renegotiate your loans to something reasonable and manageable, with the rest forgiven and the loan-servicing cesspool replaced by a federal authority with shared oversight. I'm actually not joking. Individually you're not going to get anywhere.
1
Post-secondary degrees are like mis-priced stocks in an inefficient market: it's hard to know which students with which degrees will hit the home run, and which will strike out. But in this era of Big Data, surely we can calibrate this market by collecting income results over a long horizon over all degrees and universities in question. Then we can start to answer questions raised in this article.
Another problem here is that the classical idea of being enlightened is, at least after a first degree, wholly uncorrelated with income. You don't study Philosophy or Physics or Art History to win the income lotto; you study those topics because they are intellectually rewarding.
Lastly, I believe Community Colleges -- those I mean which award 2-year degrees rather than baccalaureate degrees -- truly have an outsized influence in improving the lot of young Americans from ordinary backgrounds. I'm not sure how to tie in student loan performance with Community Colleges -- but to the degree there's a solution out there that minimizes federal outlays and risk while concurrently strengthening our Community Colleges, then that's where my vote lies.
The community colleges to which my kids were exposed were remedial high schools with insufficient budgets to outfit labs and hire qualified instructors. They gained no benefit beyond paying for some credit hours without the benefit of learning much.
4
Thank you for this. I've been seeing "Community college! It's a goool mine!" in post after post, and it's it's terrible advice. Unfortunately, some kids take it.
Yes, Dave, same in Texas. For the most part, two years in a CC makes one ready for college ... as a first-year student, not a third-year student.
For far less than the cost of the GOP tax cut where 83%+ is going to the richest 1%, we could forgive all students loans and make college affordable without loans going forward.
4
I completely agree with the analysis I've read. However, it is not the whole story. One omitted part is the unpreparedness of many who enter college.
In Massachusetts, which overall has some of the best education in the country, public colleges and universities administer English and math placement tests to entering freshmen. An astounding 40% of of them fail one or both tests, signifying that they are not yet ready to do college-level work. They then have to take a remedial course, which is high-school level work. They have to pay for it. They do not get college credit for it, because it is not college-level work. In some cases, passing these remedial courses is a prerequisite for taking some college-level courses. Those who take remedial courses are at higher risk of dropping out. And, if they borrowed money to go to school, and then drop out, they lack the degree to help get the the better jobs which would pay more to help them pay back their loans.
There are ways around this cycle, including greater financial aid, greater support for entering freshmen, making the passage of remedial courses a corequisite instead of a prerequisite. But the best strategy is prevention, by making sure students are far better prepared in high school. For 40% to fail is obscene. High schools graduate underprepared kids to maintain their graduation rate; they would serve kids better by flunking them. And colleges are competing for tuition-paying students; better that they reject them.
3
As long as the course of study is relevant to a career, I fail to see where there is a problem. The problem is that so many courses of study are completely useless outside of university. Paying back a loan of $25,000 for a lifetime of higher earnings is nothing. The same people think nothing of signing on the bottom line to finance a new car that depreciates to a value of nothing by the time the loan is paid off.
Or waste $20,000 on the average cost wedding.
1
You're not understanding the problem. Yes, if you are making 25K a year and take out a loan of 25K and then you get a job making 50K, hey, great! If you have a job making 25K, and get a worthless degree so that you're still making 25K because you believed some scam-university, like say Trump University, that implied you would make 50K, then you're paying off a 25K loan at a high interest rate forever.
That's why Obama wanted loans tied to earnings. They want these bogus universities to have some skin in the game.
Trump University is a poor choice because only idiots would fall for that. But, there are plenty of for-profit colleges I see ads for that show people in law offices, medical offices, or servicing mechanical equipment if it's a trade school of some sort. These are legitimate jobs, but if there is no market for them because, say, these employers want real college graduates or the market is saturated, what then?
Unlike buying a car or paying too much for a wedding, these people actually believe they're going to benefit from the education they get. It's a scam.
1
Corporate run for-profit schools cheat their customers more than public and private nonprofit schools? How can that be? I thought the "free market" was better at everything?
2
Is $22K in debt a huge burden? What is the average salary a college grad can expect to make? $22K is the cost of a modest car. Spread out over X number of years, at a low interest rate, it hardly seems onerous. What am I missing?
You're missing the fact that kids are getting out of graduate school and fighting over jobs paying $26K. You're also missing the fact that for an enormous chunk of the population, wages have been essentially stagnant for decades. I just got a big fat raise and promotion, which should be very exciting except that it means I'm now a whole 15% of where I was, real dollars, in 1989. And I wasn't making a lot in 1989.
4
Please do an article explaining WHY college has become so expensive? How can it cost so much with they have underpaid adjuncts teaching most classes? Is it the fancy buildings, overcompensated deans, expensive sports programs or climbing walls? I don't get it.
5
Part of the story is that colleges and universities used to get more financial support from federal and state government. As those resources were cut, tuition was raised to fill the gap. Many colleges are top-heavy with highly paid, senior tenured faculty, who entered academia in the boom years of the 1960s and 1970s, when colleges were expanding, and who cannot be forced to retire now that the college-age population is shrinking. Meanwhile, student expectations of support services have skyrocketed, and colleges that need to fill seats will try to attract tuition-paying students with upgraded dorms, better food, recreational facilities, etc. With the dominance of US News rankings, colleges also overextend "merit aid" scholarships to students with high scores. This results in a "tuition discount" rate, meaning that while some students pay the full ticket price of their education, others pay a "discounted" tuition. The average tuition discount rate at undergraduate institutions is now well above 40%: https://www.insidehighered.com/news/2018/04/30/nacubo-report-finds-tuiti.... Full-pay students subsidize "merit aid" to other students, many of whom would not get purely "need-based" aid. These are only some of the reasons for why college costs so much more today. Then there are the high interest rates applied to student loans: just above 5% this year for federal loans to undergraduates. Private lenders' rates are higher.
3
Some good explanation, Dean. But let's not forget that at the same time the states are pulling money out, they're pushing both for increased rates of attendance and increased rates of graduation. Schools are penalized for not meeting those goals, Those schools that wish to try to meet student needs have added academic and counseling support expenses. (And, yes, the added deans and subdeans that cling to programs like barnacles.) All fo that means more reporting as well, and thus more staff to produce more numbers to send to more agencies.
It costs millions just to do accreditation, and there is no evidence that students benefit from the accreditation exercise.
Step one would be make all public colleges and universities tuition free. The next would be to ensure there would be grant and programs that would cover on campus housing and meals for low income students.
Can we afford that. Well, according to estimates by the Institute on Taxation and Economic Policy by 2025 the top 1% of income earners will have 2 trillion (that's two thousand times one billion) dollars in benefits from the recently passed Trump tax bill.
I believe the top 1% were doing quite will before the tax cuts and would continue to do quite well if those tax cuts were rescinded. And I doubt you can find an economist who will tell you with a straight face that the tax cuts to the 1% will do more to stimulate the economy and create jobs than eliminating the need for student debt - essentially giving those saving to wage earners who are much more likely to pump them back into the economy.
5
College is not part of compulsory education. It is an investment and comes with a risk. Hopefully, no part of the loans goes to buying term papers. The college degree is diluted in many ways.
1
People keep saying that universal college education improves our society. I'm not sure that degrees in graphic design or Eastern philosophy or Theater Arts or the history of Cuba really improve society. It's good to have curious, engaged citizens, but it's a bit narcissistic and untrue to suggest that ANY an EVERY college degree improves society. I think most medical education and most STEM education probably improves society (and I say this as a former Literature professor). Having a literate populace is amazing and desirable, but i don't think reading Judith Butler and Gilles Deleuze really makes one well-read or educated.
If out society to agree upon a canon that we felt was necessary knowledge, it'd be much easier to argue that universal college education is good for our culture and society. I'd probably support free universal education, if all college were along the lines of the St John's great books model or the (old) Columbia University core program. I think we need to divide higher ed into trade schools and Canon-oriented colleges. My sense is that most people think majors in college are sort of a joke, and that serious focus requires a Master's or a Doctorate. I'd suggest that we do away with college majors and just teach a combination of great books and STEM. I'd bet Sweden has had or would have a much easier time picking a list of great books than America would.
richguy:
All those business majors being trained to exploit their workers, cheat their customers, pollute our environment and cheat the taxpayers in order to "maximize shareholder value." Are they contributing to society or harming it?
5
Previous generations benefited from heavily subsidized public universities, then promptly voted to cut taxes and strip those institutions of their funding. Either tuition increases or enrollment decreases. The money has to come from somewhere.
The private for-profit "universities" need to go away. Nothing but a scam for the poorly-informed; people that are desperate to improve their lives but don't know the system.
4
I wonder if the figures here include parents of students who took out Plus Loans and are not able to repay them? If not, the situation is much worse than this article says.
3
Two absolutely crucial facts are ignored in this selective piece. First, nowhere does the article state that student loan debt is the only debt in the US that cannot be bankrupted. This is a creation of the financial industry and of Congress. Second, the article soft-pedals that much of the accumulated student loan debt in the last generation is in for-profit higher ed institutions (or, really, scams) that leave students holding the debt while the for-profit leaders and shareholders get away without penalty. Finally, here as in almost every recent description of the coming "student loan bubble" there is no mention of the radical defunding of higher ed across the country since the 1970s.
4
If each of my students contributed $375 dollars, that would make up my salary. How many additional services do we really need?
3
This article is deeply misleading. Since the first two years of the Obama Administration, after all, student borrowers have had the option of signing up for income-based repayment. As long as the loans were not private, acceptance is automatic and payments are normally capped at 10% of available income -- which is always much less than total income. Many borrowers end up with payments of zero, yet they still benefit from positive monthly credit reporting. Loans are then forgiven after a period of time between 10 and 20 years. In addition, students in default on government-backed loans (again, not on private loans) can automatically rehabilitate them by following simple Department of Education procedures. So the "crisis" in student loan debt is not about students; it's rather about the government's ability to afford all of this looming forgiven debt.
I think that people simply do not understand the laws of supply and demand - Stanford accepts close to 4% of its applicants and it costs something like $75K for tuition+room and board for those who can pay and it is tuition free for those who can't. 4% translates to 45,000+ applying - demand is HUGE irrespective of the costs. The same goes on in most top-50 Unis & Colleges. Moreover, it is the middle class who has to pay full college costs, not the poor who get the financial need-based aid.
6
It might be too late now given the already astronomical cost of tuition, but the Federal government should condition student loan eligibility to a limit on tuition increases. I understand that politically this has no chance of passing but something has to be done to limit tuition increases.
1
When I attended nursing school in the late 1970s my tuition was $250/ semester, lab fees varied. My textbooks per semester cost more than my tuition. I graduated debt-free and hit the job market during a recession for most but a boon for nursing grads. I made $8/hour at my first job. Due to the shortage of nurses hospitals were understaffed and offered many inducements to sign on — 12 sick days per year, 2 personal days, 4 week’s paid vacation after one year, accruable up to 6 weeks, full healthcare, pension plan, tuition reimbursement, and sign-on bonuses. I shared a large apartment, saved half my paycheck and still had money for socializing, clothes and other extras. I was also very frugal.
I wonder how the experiences of today’s nursing grads compares to mine.
I can’t even begin to imagine how recent grads and current students pay for college today and then afford to pay back not only their student loans but cover the basic necessities of housing, food, and clothing. Extra cash to socialize must be a luxury.
Now that Trump and Betsy DeVos are undoing the Obama era regulations meant to reduce predatory lending and overpriced subpar schools it will be even more difficult and expensive to navigate the education system.
2
Oh, 10 years later when I married and changed jobs due to a move out of state all those great benefits disappeared. By then hospitals decided Nurses were necessary but didn’t want to compensate commensurate with education and experience.
1
Society will be paying for years the costs of burdening our young with huge debts at the start of their lives. It is hard enough at the beginning of adult life to deal with starting a family and career without having to deal with huge student debt. The stress of paying it off, or the devastation of defaulting and what that does to your credit rating. Anyone who goes to the equivalent of a mid range state university should have their way paid. If they fail, that is their problem, but they still shouldn't be loaded with huge debt. That is what almost every other civilized country does. What are we doing to our kids?
4
Shocking how many people do not even know that the Income Based Repayment Program exists. Those admitted to the program pay what they can based on their incomes, and after 20 years, the remaining balance is cancelled (though you owe a large tax bill, since the cancelled debt counts as income). It would be a solution to default for so many people. It saved my husband's credit. It makes me wonder if part of the hard bargain for the creation of the program was that it could not be widely advertised.
3
5. Forgiveness under certain federal loan programs is excludable. That's what all of the excitement was about last month. If your student loan is forgiven as the result of a qualified program, that debt forgiveness isn't included in your income for tax purposes. Generally, to qualify, your loan must have been made by the federal government, a state or local government; certain tax-exempt public benefit corporations; or an educational institution. These loans are generally those that require you to get a job or serve in an area with unmet needs. Specifically, loans which are forgiven through Public Service Loan Forgiveness (PSLF) and Teacher Loan Forgiveness Program (TLFP) are not taxable.
https://www.forbes.com/sites/kellyphillipserb/2018/06/26/what-you-should...
If you're an American seeking a master's degree (and possibly an undergraduate) degree--go to Canada or some European country. It will be more affordable and you may be able to graduate without debt.
5
Couldn't agree more. But what about the fact that these schools are ALWAYS way out of whack with the inflation rate. The tuition increases are out of line. Further, many of these institutions are sitting on vast sums of money generating huge returns. Does a university need to be sitting on 25 billion dollars?
4
@JoseBob III
1. Credential inflation. Employers seek bachelor's and advanced degrees for many jobs that really do not require them. At the same time, there is a lot of career protectionism in licensed fields which has taken the form of higher educational requirements. In my own field, the basic education credential changed in the late '80s from a 5-year bachelor's degree to a 4-year bachelor's plus a 3-year master's. Both the direct and opportunity costs to young people are enormous. Not only did I have to finance those additional two years in school that was two years I wasn't earning a professional-level salary.
I am no longer amazed that teachers never mention how education classes and more education increases the proficiency of their students. colleges have become dumping grounds for barely literate students. the spiraling cost of education students is a disgrace which is compounded by the financial burdens placed on middle class students to pay for their education.
" Not only did I have to finance those additional two years in school that was two years I wasn't earning a professional-level salary. "
I have never heard of teachers taking time off to earn a master's degree. they usually seek their Masters on a p/t basis while continuing to receive their teacher's salary.
5
So federal money is available in the form of loans and the feeding frenzy begins. Schools jack up the fees to take advantage, and the debt is unretireable. If you default it goes on your credit report and you can't get a job...so they'll go after us, the parents, my house, my savings, all of it. Four years (1976-80) at NYU School of the Arts was $16,000 all in. I got work for 20k/yr right out of school. Lots of folk have stories like these. John Brademas comes in as NYU president and makes NYU a destination instead of a commuter school and the prices rose fast.
I work at a not-for-profit where my wages have been frozen for 10 years and each year it costs me more to work there. My daughter's art school in Baltimore is 200k all in. In NYC public schools they told us, "you can go from kindergarten to PhD. on a subway token." How'd we let this happen?
5
Ouch, paying for a MICA education? As a Baltimore resident i’m Appreciative you are subsidizing our city, but.....
"Forcing these students to borrow has turned one of America’s best investments in socioeconomic mobility — college — into a debt trap for far too many." This was an appropriate way to end the article--the real scandal is that education has been deliberately withheld from a large proportion of the population. America is paying a price for that. Just consider how many people are unable to recognize a con when they're the victims, whether in politics or in the social media. "Fool me once, shame on you; fool me twice, shame on me--or shame on the system that has kept me in a state of stupidity."
4
@norman
When you read this essay, you should realize who the Center for American Progress is. https://en.wikipedia.org/wiki/Center_for_American_Progress
They're not liberal or progressive, they're centerist Democrats from the Clinton and Obama administration, who want to turn government services over to free market entrepreneurs in "public-private partnerships." Clinton cut the poor off welfare with TANF.
obama was a Fabian Socialist. you allow for private enterprise but you control them and force them to accomplish your goals through diktats and directions from the government. the center for american progress sounds like an offspring of this movement.
2
Too many young people going to college who should be in trade schools or tradesmen apprentices. We as a nation can thrive without everyone a college grad. but try to cope without a plumber when your toilet overflows or a pipe breaks in your home.
10
Further, by becoming a plumber, etc, their pay will be good. I can assure you that many in the building professions make more money than architects.
1
I attended Central Connecticut State University in 1976. Tuition and fees were $600 a year. No one, I recall, complained about the cost of college. If what I paid was only allowed to rise with inflation, it would cost less than $3,000 annually to attend. Instead, tuition and fees today are just short of $10,000.
No wonder Millennials have an axe to grind with Baby Boomers. They are clearly getting a very unfair deal compared to the one my generation received.
11
States have dramatically cut back support for higher education, which means that the majority of the cost of public higher ed is borne by the students. And students now demand luxurious accommodations and amenities that are far more costly than a couple of decades ago. And for-profit colleges aggressively prey upon people who don't know enough to doubt their inflated promises. I'm not sure of the best way out of this situation, but it's clear that many factors have brought us here.
4
I would like to raise two corollary issues that I have not seen discussed much here.
1. Credential inflation. Employers seek bachelor's and advanced degrees for many jobs that really do not require them. At the same time, there is a lot of career protectionism in licensed fields which has taken the form of higher educational requirements. In my own field, the basic education credential changed in the late '80s from a 5-year bachelor's degree to a 4-year bachelor's plus a 3-year master's. Both the direct and opportunity costs to young people are enormous. Not only did I have to finance those additional two years in school that was two years I wasn't earning a professional-level salary.
2. Corporate outsourcing of education and training. Employers formerly assumed a great deal of responsibility educating and training their own hires. That responsibility has since been outsourced to the job seekers themselves. Employers expect people to show up 'ready to work' with every degree, credential, certificate, etc. needed to work already in hand. Instead of earning a wage while learning these skills job seekers are expected to acquire them on their own time and at their own expense. I compare this to my grandfather's career at GE from roughly 1950 to 1980. He had a high school diploma and GE turned him into a professional engineer. Every class and all his training was paid for by GE while he earned a salary at GE.
16
My father got his BA at the U of Wisconsin-Madison while on a scholarship. After serving in the US Army in World War II, he got his Master's and got all the way to ABD through his G.I. Bill benefits.
I don't think he ever paid any tuition for his college education. But his education made him a much better taxpayer. He was also able to put five children through college who collectively got two Ph.D.s, three Master's and five BAs. We all paid a lot more in taxes than if my father remained stuck on the desperately poor farm he grew up on in 1920s and 30s rural Wisconsin and raised a whole bunch of similarly poor kids.
We don't ask primary and secondary school students to pay tuition. Let's make it the the same for higher education. Investing in education is something from which everyone benefits.
5
This is just preposterous.
1
I got through undergraduate, two years of graduate, and law school without any debt, at public schools. That was from 1976 - 1987 with two years off. What they are doing to our young people is disgusting.
5
The traditional 4 years at brick and mortor college of university is not realistic for many people. Students need to think strategically about the financial realities of college.
Programs like CLEP- College Level Exam Program, allows students to test out of basic required classes, such as History 101 or Government 101, plus many more. With a little independent study, students can get credit for a 3-6 credit class for the cost of the test, $85. With a little effort, students can complete 30 credit hours for as little as $850. That’s 1 year of a 4 year degree for $850.
If a student does finish school with excessive debt, there’s always student loan forgiveness through government or non-profit service. Ten years of public service cancels all debt, not as income, so no IRS issues. It’s called the Public Service Loan Forgiveness program (PSLF), and an income based (not amount of debt) payment program can be used to make the ten years of service.
I know one teacher, earning about $45,000, who has about a $198,000 student loan debt, and she is paying only $280 per month (not even covering the accruing interest). She will have that debt cancelled in about 3 more years. That’s right, in ten years she will have earned about $500,000 in salary, paid about $33,000 towards her debt, and have the balance of about $200,000 canceled. Her 10 years of teaching are worth $670,000.
Contact the US Dept. of Education for details of income based payment plans, and loan forgiveness plans.
3
This crisis is also affecting how younger kids are looking at going to college--they are scared of being in debt and as a result are less motivated to work to get to college (why should they work hard for something that may not be worth the effort?) and may end up being less educated and have less ability to contribute to society. This college debt is a catastrophe for young kids AND the young people in debt AND for older people who would like to live in a successful productive society.
1
I went to college from 1971-75. My tuition and costs were paid by my middle class parents with help from an inheritance from my grandfather. Five years later I went to graduate school and paid for it myself using savings and a loan I repaid in five years. It was then, in 1982, that my wife (married in 1980) and I began saving for our children's educations. They were born in 1993 and 2000. Both of them will have as much education as they want at any institution they choose and will graduate with no debt.
When did it stop being the parents' responsibility to set aside money to educate their children beginning even before they were born? It's said that Einstein declared compound interest to be the 8th wonder of the world. "He who understands it, earns it. He who doesn't, pays it."
The student debt crisis represents the failure of the last two generations to plan and act on behalf of the people they love the most: their children.
2
You're missing the point. Few people these days can cover a one thousand dollar unexpected expense. People can't save any money because they don't make enough money. I'd give you a few links, but you seem to be well educated and you can look this stuff up yourself.
Combine decades-long wage suppression with the skyrocketed costs of higher education compared to the days you and I were in college (I'm older than you) and maybe you'll understand the problem a little better.
College educated people like you and me were in demand in the work force back then and we easily made a living wage. Cost of living was not so high--I could afford an apartment by myself for one quarter of my salary. Within three years, I could afford to buy a house because housing in the seventies was cheap. You and I could save plenty of money. The financial picture for the generations following ours is just not the same.
I've been hearing lately that baby boomers don't understand the financial straits of our young workforce. That we got ours and don't care about rest of society. You know, after your comment, I think they may have a point.
9
Good points! Do you have a plan to provide for your (hopefully) grand-childrens' education?
I have a 529 plan for my grandson, I have extreme hope that he will find a way to prosper in the 2030's.
As maturing Americans we should take the long-term view that perhaps our under-educated parents could not.
Love the Einstein reference, without validation.
Here is a reference:
https://einvestingforbeginners.com/compounding-interest/
It's nice that you could do that. I wish I could have. With an uncooperative spouse and a teacher's income, well, it wasn't possible. So mu kids shouldn't be educated? Some would think that. I beg to differ.
Student loans should be affordable and payback-able. Today, they are neither.
1
If the Federal Government wants to stay involved, and I don’t think they should, they should loan the money to the universities, who can then loan it to the students.
The colleges would then have some skin in the game.
1
For the love of Money, things have gone from bad to ridiculous in America.
Too many involved in the Pursuit of Rapaciousness make it impossible for most to Pursue Happiness as the nation becomes The Land of the Fee and Home to only the Brave who think they can afford one.
What is it all meant to be For? For better then worse? For till death do your part for others to do theirs to part you from your money?
For Profit.
Today for the love of money, For Profit has become the reason and the need, the product and the benefit. Sooner than we know it , faster they will sow it with the only real outcome the bitter harvest they reaped from the fields of our American Dreams.
In Sickness and in Health (Insurance), the money paid decides the aid, minus costs but only if a Profit made.
As for gaining Wisdom for the Interest it attracts, it's not for learning, but for profits made from lifetime loans because of paltry Earnings.
For Profit is for making money on the service or product you Received,
The Quality or Promise worth less from gains by how well they did Deceive.
For Profit Prison is not free (like the Prisoner), For Profit Parole, you Pay or your Role is back to Jail (but not if you pay upfront,the For Profit Bail)
Always pay the For Profit Fine or you won't Be,
As if can't pay, are given a can't pay Fine Fee!
Payday Loans with no Interest Shown,
Debt Trapped the name they give to the "Gamed of Thrown",
To the wolves as For Profit why they take you for all you Own.
1
Where I live in Oregon the U of O, beginning last year, raised the rates for our residents but lowered the rates for non-residents and foreign students. I also note that the percentage of the local students entering the U of O from the surrounding areas of the rural Lane County and it's community college, Lane Community College, continues to decrease.
So, to me, one thing that may help the current pathetic and growing student debt crisis in the US is to stop jacking up the tuition rates for resident students of State supported colleges, simply in an attempt to lure the well-to-do foreign students from the well off and free spending families of China and India (for example).
I also think if publicly supported colleges and universities (which, to some extent, is 100% of them) also would better focus programs on the practical needs of the communities and the K-12 schools who host them, many young people in these myriad communities could get the skills they needed to succeed in life, without first having to go into 10's of thousands of dollars in debt simply in order gain a certificate of higher learning.
1
When you read this essay, you should realize who the Center for American Progress is. https://en.wikipedia.org/wiki/Center_for_American_Progress
They're not liberal or progressive, they're centerist Democrats from the Clinton and Obama administration, who want to turn government services over to free market entrepreneurs in "public-private partnerships." Clinton cut the poor off welfare with TANF. Obamacare rejected government health care in favor of the insurance companies. Hillary Clinton didn't even support free state university education until Bernie Sanders made that a condition of his supporting her.
They're the ones who got us into this mess. If the solution requires cutting handouts to their campaign contributors (like the banks who give student loans), they won't do it.
2
I agree that we've been sold out by Democrats. But if voting for a corporate Democrat is like drinking spoiled milk, voting for a plutocrat Republican is like drinking strychnine.
5
Check your facts. Joe Lieberman torpedoed all hope of a 'medicare for all' type health system, not Obama. He was the bought and paid for Democrat. Or, was he an Independent then. Who cares. Obama just wanted to get health care for people. He would have loved Medicare for All. There was no way, with the political realities in 2008, that he would ever get that.
Because people like you so conveniently rewrite history, I wish he hadn't bothered.
Yes, the Democrats gradually got pushed to the right and became 'Republican LIte.' For that reason, I voted for Sanders in the primaries, then like a rational person ought to have, I voted for Clinton. Nothing is worth the mess we're in now with Trump. If you think the Republicans will ever help anybody but rich people, you are mistaken. You can blame them for this mess. The cleverest aspect of the Republican Party is that they can somehow get Democrats to rip each other to shreds.
3
I just recently graduated for Columbia University's undergraduate program with a concentration in architecture. Unfortunately for me the program was architecture theory, no hard skills learned, and now I am stuck with $155,000 in debt and unable to get a good paying job/career that is enough money to live and pay back the money. I thought before I entered the program that Columbia on my resume would help tremendously with employment opportunities. It hasn't. Now I've recently defaulted and my credit shot down from a 780 to a 520 and dropping. I am ineligible for anything that requires credit - mortgage, cell phone, car lease, credit card, even renting an apartment. I can't even go to grad school to get an architecture license and learn the hard skills I need in order to work at an architecture firm because my cosigner's credit is also shot and therefore have no one to cosign new loans for me. Going to Columbia University was the biggest mistake I have ever made. And of course no one cares. When I tell the story, people's general reaction is: "no one told you to go to college." Well excuse me for trying to get myself out of poverty. I am in a much worse situation now than I was before going to school. What a waste!
71
Inform yourself about the Public Service Loan Forgiveness program, and the Income Based Repayment programs offered through the US Dept. of Education. Payments are made based on size of income, not size of debt. Work for 10 years at a non-profit or for a government (local, state or federal) all student loans are forgiven, and it’s not considered income, so no IRS issues.
I’m having a hard time believing this. I am also a graduate of Columbia, and I knew in school and in my years in the workforce many Columbia graduates who got jobs in finance, consulting and media with totally unrelated majors. We’re at 4% unemployment. Have you applied to anything beyond a narrow set of competitive architecture jobs?
2
So you had fun for 4 years in Columbia while learning nothing worthwhile and now want people who worked hard during these 4 years to pay for your "mistakes"?
4
I think student loans should be interest free. It's our investment in our future. But students who cannot excell in a professional field such as law should not be admitted to law schools.
The schools have some responsibility for selling their expensive educations to people who obviously are not going to be successful in that profession.
I also think parents and students are almost incredibly naive about attending business and law schools. They think that if they just get a degree, then they will be successful. That is simply not true. Success depends upon many things such as family connections, your nursery school education, your personality, your looks (sorry but looks count), what your extra-curricular activities are, whether or not you are good at marketing and publicizing your abilities, etc., etc. We need good jobs for the full economic and educational spectrum. Having everyone compete in a field where only a few people can succeed is going to lead to disappointment and failed loan repayments. Students should not be allowed to make loans which they will be unable to repay. Every one needs to be more honest about their own abilities. And if you don't know what your abilities are, then you don't have them.
I think the schools need to buy that defaulted paper, or do some sort of loss share. Until they have more of an incentive to improve their students' prospects of success, default rates will continue to be unacceptably high.
3
It's the same story each time. When the government subsidizes something, whether it be housing, education, or health care, costs skyrocket and accountability drops like a rock. Get rid of government guarantees of student loans and remove the inability to discharge student loans in bankruptcy. That'll force lenders to be more prudent, and the lack of easy money will force universities to rein in their costs.
6
Pres. Obama sought to limit the ability of for-profit private school to "assist" students in borrowing to attend. Under Pres. Trump, Education Secretary DeVos is working diligently to curtail those efforts. Until lobbying dollars are limited, the interests of big- business (and make no mistake about it, universities of all stripes are big-business) will prevail over students... and common sense.
The most impactful k-16 innovation in the past 20 years is Early College High School, through which average high school students can earn credit from college and high school through the same course. Jobs for the Future virtually invented the tactic nearly 20 years ago, and it's now operating in over 280 sites across the country. When average high school students can save two to three years of ritualized coursework and over $150,000 in tuition/room/board, this particularly innovation is critical to the survival of colleges of all kinds.
2
A primary purpose of college is producing earnings in the job market. Higher education is an investment. The secret to getting a return on your investment is entering a program you can complete that will more than pay for itself in increased earning power over your life.
If an education does not fully pay for itself, how does it benefit society?
College has always been warranted for fields like medicine, science, engineering, law and some others. I question whether college is needed for many fields that traditionally had required it.
2
If your grades and test scores are not sufficient to get financial aid from a highly rated law school, go into another field. Law is a very competitive field. If you don't have special talent for it which would be reflected in your test scores, you are never going to be among the highest paid attorneys.
Use some common sense. Just because a field sounds good and is supposed to pay well doesn't mean that if you manage to get a degree in that field, you will be among the highest paid. The United States already has more lawyers per capita than any other nation on earth! We are a sue-happy blame other people culture. Talk to some lawyers you know - and if you don't know any, that's another danger sign - to see if how they live is attractive to you. I know many people with law degrees from elite universities who chose not to work as attorneys because they find it boring and too time consuming.
So use some common sense - what are you really good at? What are you personal preferences with respect to time management? And if you don't know what time management is, that's another red flag for any professional career. A professional career is managing your own time and knowledge and skill to work quickly enough to earn a good living.
4
hidden in these numbers are:
1) a "4-year degree" on average takes nearly six years;
2) borrowing accelerates with each year in school. The last year sees the most borrowed, followed by the next to the last year.
Why doe graduation take so long? Because class size is swelling, fewer professors teaching with cheaper TAs taking the load and many colleges require courses that are offered only once per year - like a ring on a merry-go-round, miss it once requires waiting till it comes around next rotation.
Students are treated like cattle being processed at a rendering plant. And this is often for degrees that don't match up with waiting jobs for many majors.
Colleges are now corporations where most six-figure jobs aren't paid to teachers, but those who know how to keep the money flowing. This is a ticking time bomb for more than the students.
No other nation in history has seen students as a group to harvest for profit and sell into indentured economic servitude of unpayable debt instead of realizing the education they need is for the benefit of the future for all of US!
2
re: attacks on salaries of college football coaches.
if the revenue from college football programs exceed the associated expenses of running them then there is no reason to complain. my recollection is that under federal law football programs subsidize female athletic programs, which result in net negative cost for universities.
2
I doubt that even half of the college football programs break even, much less subsidize other activities. This is simple logic, take the number of Div 1 schools that consistently win more games than they lose. You will be at 40 teams. Next look at the number of schools whose stadia can accommodate enough paying seats to make the revenue you describe. Finally, do some research to find out which schools get what kind of cut from the NCAA TV rights.
2
Higher education economics and healthcare economics in this country are so out of whack it would take a revolution to make any real difference. And revolutions tend to have unintended consequences without the desired reforms lasting very long. So we're back to working in our representative democracy, applying pressure on elected officials to make incremental changes that their corporate donors won't punish them for. Or, we could vote for every brazen, scary "democratic socialist" we get a chance to vote for. They may not have the clout in state and federal legislatures to get things done immediately but they can put the fear of god in the Republicans who only listen to chambers of commerce and do the will of big money interests.
A system in which many young people graduate college with uncertain or downright poor career prospects and a huge pile of debt is a recipe for criminality. The benefit to society of sending more people to college could easily be negated if even a small percentage of graduates or near-graduates are pushed towards crime by a desperate financial situation.
Lower tuition, especially at public schools that are responsible to all of the taxpayers of a state, and promoting associates degree programs as a starting point or alternative to four years of college might keep a lot of students out of such debt traps while retaining most of the benefits of increased college enrollment.
And Ms. Secretary of Education, who has no college degree in Education, is not doing one solitary thing to help out. AKA Betsy DeVos, Trump appointee.
She is absolutely useless - in fact worse. Her policies make things worse for kids: giving breaks to for-profits, encouraging vouchers for private, parochial schools, defunding public education, promoting federal funding of guns for teachers to use in schools!
Go home to Michigan and sell your Amway, Betsy, instead of ruining our kids’ futures.
6
Our government, our political parties, our corporations, our religions, and our universities have failed us. They have all become corrupt to one degree or another. They no longer serve society's needs, rather they have become a burden on society.
1
Whichever midterm candidates come up with at least a viable proposal for lowering the burden of student debt will probably win a lot of votes from the 25-30 year old demographic. Come on, at least a proposal! At least lower the interest rates -- that's a no-brainer.
3
And your Democratic state is doing what? Your Cali Gov Brown (Cali Gov since 2011) has done what on this issue?
I will tell you what Gov Brown has done - he signed a bill (in Oct 2017) to provide one year of tuition at the State community colleges. Is it enough?
Assembly Bill 19 waives the first year of fees for any first-time student who enrolls full-time at one of 114 community colleges in the state.
1
An amazing and timely article and very enlightening comments;
The low hanging fruit is that private for profit schools really shouldn't be involved with educational loan programs. The larger reality is that people are simply being turned to/offloaded on for lots of money in many arenas such as health care and education which were once far more affordable. In order to get back to a better place with less financial stress, I suggest three things:
1. Ensure drug pricing in America is similar to the rest of the world. The 200 billion dollar per year question and solution all in one. We could do much with the sudden lifting of this burden, including paying off ALL student debt easily.
2. Educate high school students on the various pathways to career and economic success early on - lets face it, plumbers are far better off than a typical liberal arts major graduating from a 4 year accredited University program. Let the students have eyes wide open -- college or bust isn't a very realistic mantra and obviously a very expensive one for some.
3. Mid-career education is valuable for many -- make sure you can afford it later on in your plans as an option, or have a strategy to get there.
4. Eliminate the trade deficit - although complicated, more money out than in every year has a very bad ending once the money printing press tactic no longer works as the world unhinges itself from the dollar as the world reserve currency.
I wish us luck.
A very good friend of mine - a first generation college student, single parent - borrowed $30K to finance her bachelors and masters degrees. A career civil servant (she works for the state of PA), she had to take repeated deferments of loan repayment, trying to keep herself and her child above water. I'll admit that she's made some unwise financial decisions over the years, but I was still absolutely floored to find that the recapitalization of interest has made her debt balloon to over $100K. She's on an income-based repayment program, so if she gets a second job to support her daily expenses, her loan payment will only go up. She's stuck and she'll never be able to repay the debt. Ever. She told her loan servicing rep that she'll be retired in 14 years. He told her not to worry, they'll be able to take the payments out of her social security.
1
My daughter has lived in Seattle for 8 years and is going to Univ. of Washington after two years at the community college. In the eyes of the University she is considered a non resident because I support her while she's getting her degree. She worked for many years there but that doesn't matter. Right now she must make 51% of her expenses to qualify as a resident. Now that she has been paying out of state costs (which are included in calculating her costs), there's no way she can afford tuition. It's a catch 22. It isn't fair.
1
Lois - I agree, non-resident fees do not seem fair. Your location seems to be Hawaii, hope you fared well through Lane.
Your state gov't may have failed you and your daughter. If there was a tuition reciprocity agreement between the Hawaii and Washington States, perhaps she would be able to be eligible for in-state tuition.
When I went to the University of North Dakota, although it did not apply to me, there was a reciprocity agreement between ND and Minn states, I'm sure that several people I knew were from Minn. since Grand Forks is a border town.
1
That makes very little sense to me. They consider her a non-resident because you support her? If she's lived a certain amount of time she should be a resident. I would check UW's legal department and the DOL.
1
Will Smith - It really does make very poignant sense - Hawaii became a state in what 1959? If the State had negotiated reciprocity agreements with the coastal states Ms Crozer and her daughter would be in better economic circumstances.
Ms Crozer seems to imply that she is providing over 50% of her daughters' support.
Naturally, neoliberal from the Center for American progress will “sound progressive” by highlighting that the US higher education finance system disproportionately affects low-income people and that it should be more “affordable”.
Here’s a radical ideal... let’s completely forgive this entire generation’s student debt, and make public colleges and Universities tuition free. Some of the things that modern, mixed market welfare states do... make perfect sense. Developed countries that have free daycare, has increased workforce participation by making it possible for mothers to seek employment, free education produces a highly competent populace, and free healthcare extends human life and increases functional ability. No wonder the Nordic countries surpass the US in workforce participation, health outcomes, higher degrees of entrepreneurship, and a superior ability to save money over Americans (DESPITE the higher tax rates!). The social security of those countries generates a higher degree of security, it’s true freedom to develop yourself and to invest in your children without worry.
To the author, if we can dream up tax breaks for the very wealthy in the country, while simultaneously increasing our defense budget by $200bn, then modern monetary theory seems to suggest we can credit education for the populace. All we lack is political will, because there is no morally justifiable reason to keep financial barriers to education in place. None.
1
What you write is true.
The problem is that those who rule, seek no moral justification. None
What's causing the high price of education? If college loans couldn't be defaulted on, who would pay them back? Were for-profit non-accredited schools included in this survey?
How can voting help, when neither party has a clear agenda and provides no answers? Concentrating only on defaults and coming up with reasons for them is only looking at the tip of the iceberg.
"...when neither party has a clear agenda and provides no answers?"
You, carolz, are beginning to see the darkness.
Heckler, I see the darkness, but by definition, we are all blind.
From the very moment the education became a profitable business, the student debt was doomed to skyrocket.
Of course, every business depends on the best advertisement campaigns.
Since the college sport dominates the TV and cable programming, our universities started paying the athletic coaches much more than the best scientists and researchers.
Every business puts the profitability far above knowledge and intellect…
Somebody has to pay for all of the above. Usually the bill is sent to the weakest and least influential subjects.
In this specific case those are the students. What if they don’t have the money? Just lend it to them so both the universities and the banks make extra profits…
I am a psychology professor. Approximately 10% of students on my campus either major or minor in psychology. There are two career paths in psychology. One can become either a clinical psychologist or an academic psychologist who teaches and does research at a college or university. Both career paths require doctoral training. Doctoral programs admit only a small fraction of applicants, most of which are in the top 5% of newly minted BAs and BSs. Approximately 90% of our graduates have earning potentials that are only marginally better than someone with only a high-school diploma. These students don't have any real academic interests. They chose their majors without any consideration for how much they can expect to earn. They are simply afraid of not having a college degree.
I was lucky that I found an area of psychology that excited me. I was lucky that I had outstanding mentors. And I was lucky that effort or intelligence put me in the top 10% of graduating seniors. Had I not been lucky, my student loans would be in default.
4
The Bureau of Labor Stats lists ten psychology-related fields with decent salaries and only one (physician) requires a PhD or professional degree. In my experience, many students study psychology because it fascinates them; if you, as their professor, could help them understand how an undergrad degree in psych relates to non-medical careers, you would be doing them a great service.
But you'll need to brush up on your facts, first.
https://www.bls.gov/ooh/life-physical-and-social-science/psychologists.h...
Accrued interest should not be allowed to be capitalized on student loans except in rare instances. Capitalized interest increases the amount of the principal balance, which is then used as the new base upon which interest is charged.
Maybe "college debt" is a feature - not a problem.
In the old days, there was a phrase "barefoot & pregnant." The meaning was: You have little or no money and you are totally occupied with domestic issues. Ergo, you have no resources or time to pay attention anything occurring outside of your own tiny world.
Fat cats LOVE that. They can treat you like dirt ... and you'll never rise up to confront them.
2
I have two sons who both have attained Masters Degrees.
They both also have significant student debt.
They are both teaching.
One is a teacher on Long Island and is paying over $600 per month in loan repayments on a $60,000 debt. He earns a decent living but the payments hurt.
The other son is living in a major city in Europe teaching English as a second language. He is in forbearance because he earns just enough to get by and put a few dollars away each month. Meanwhile, the interest keeps piling up on the $40,000 plus that he owes.
It is time we found another way to insure that we produce a society of educated well rounded individuals without drowning them in debt, which effects their productivity and is a drag on economic growth. Money that goes to repay student loans would either go into savings accounts or pumped back into the economy via purchasing power.
Teachers are giving back to society and that needs to be taken into consideration. (yes it is true my son in Europe is not contributing at home, but he will eventually). For every year of teaching, there should be a reduction in debt.
Other graduates could engage in some kind of public service that would give them credits towards debt.
We need to do something and soon.
1
Debt is an instrument of enslavement, obviously
3
@CT expat
"Note to Jean Louis Lonne: I've made my living as a community college instructor for 36 years. 11,000+ students later I can certify that I am not overpaid; nor are my colleagues."
is this proof of your assertion that professors at the college level are not overpaid?
instead of enlightening readers with facts and statistics you provide a statement of personal certification.
1
No, Charles, the problem is not professor’s salaries. For that matter most are not even salaried, they work on temp contracts as adjuncts. The only salaried people, at for profits especially, are the marketing and sales people.
1
"Nationally, those are crisis-level results, and they reveal how colleges are benefiting from billions in financial aid while students are left with debt they cannot repay."
Surely colleges are not the only entity that is benefiting from these circumstances. I realize this is an opinion piece, but I would be interested in reading articles that reported on who might be profiting from the circumstances outlined here. Follow the money and all that.
Somehow, "college," became the only socially acceptable way for graduating high school students to enter adulthood. Now, every under-prepared, and, frankly, under-intellectually-capable 18-year-old is taking out loans for courses in "Remedial Algebra" in "college," for a degree they'll never earn, but debt they will carry forever. Meanwhile, tuition at all institutions has skyrocketed, while state support has dropped, so both drop-outs and graduates are punished by paying exorbitant prices for education of dubious value in the marketplace and of dubious value intellectually.
But, I'm not just here to complain. First, bring back the honor and dignity of the non-college high school track, with affordable post-high school vocational programs that are largely state-funded. Second, bring back admissions standards for higher education, so that the students who are admitted, at least, have the potential for university-level studies and for graduation. Third, make private student loans discharge-able in bankruptcy: this will make predatory private lenders think twice about to whom they are lending. This will have have the secondary effect of halting the tuition increases as ready, high-interest money is not as available for universities from students who lenders believe will not have a good chance or repaying the loans.
5
I agree with you. I was teaching at a state University for Freshman classes. Here is what floored me:
1. Many students had no idea how much in debt they would be. They signed the papers and although it was written throughout, it wasnt real to them.
2. More than a few had no idea what their post collegiate jobs would be. A lot were incredibly unrealistic (high fashion photographer! Magazine editor)
3. Many treated university as a way to not have to think about the future - high school part 2. They would cut class all the time. More that one was under the assumption that if they didn’t graduate they didn’t pay (???).
4. Many were poorly educated. They couldn’t write simple papers.
It got to the point that the first exam I would give was a take home exam with the following:
1. How much does tuition cost here for one year if you take 12 credit hours?
2. Assuming you get a loan for this amount,, how much will you owe in 4 years?
3. Assuming no interest rate (ha!) how long would it take you to pay off if you paid $500 a month?
4. Print and attach a job being offered in your field. What are the requirements? How much does it pay a year?
The results were sobering to see he students. They had no idea at all.
The reality is we make choices as a nation on what we spend tax dollars.
We, through the actions of elected representatives, choose to spend nearly $2 billion a day on defense.
If we want a better-educated populace with the capacity to be innovators, leaders, a productive citizens, then we should decide whether it is worth channeling 10 or 20 days of defense spending toward mitigating tuition or paying for it in whole and electing those representatives who would make that change.
5
Now we know who really is the "Enemy of the People". Our government and the corporations that call the shots.
Emigrate.
1
I offer my kudos to you. what percentage of college student know the difference between emigrate and immigrate?
1
I’ve been in banking as a Credit Officer my entire adult career and this is shameful. College Professors and administrators have never faced the cutbacks the rest of the society has experrienced. They still enjoy pensions, benefits and sabbaticals galore. Politicians are too gutless to tax appropriately to fund educations. Citizens foolishly embrace a no tax philosophy. And private “for profit” colleges charge outlandish sums for skills that can be learned at slightly above minimum wage.
The whole thing is appalling, along with wealthy billionaires (looking at you Betsy D) who have massive hundred-million-dollar portfolios of these garbage loans, fully guaranteed by the US Government. Obama had brought that industry to heel, but Betsy, Trump and the Republicans all have dismantled those controls. Liberal college professors also benefit greatly from this abomination.
People have no clue how this is holding back home buying, family formation, and is destroying a generation or more of young people. Even divorce rates are up among indebted former students because of this. This is simply intolerable and outrageous. Shame on all involved.
2
Like many others, you're confusing the elite for the average. Elite professors at flagship campuses may have all that you say, but plenty of college instructors are adjuncts, and make less than minimum wage. Others at community colleges or lesser, nonunionized state universities, or liberal arts colleges in financial distress, or religious universities, make less than a suburban high school teacher. Know the industry. Don't imply the atypical is the reality for most people in the field.
7
Student debt is a problem. The problem lies with parents who agree to these loans, because they failed to plan for this education of their offspring.
There are also those who think it is not their responsibility.
You can get an education without borrowing and collateralizing your future.
If you have student debt, pay it off, that is the right thing to do.
4
In today's dollars, for my kids to attend the same university at which my husband and I met, the cost is $900k, or $300k per kid. For those who are not born into wealth and who will not inherit any wealth, that's a lot of cash to have saved in 18 years, above and beyond what one has saved for retirement, all the while paying the costs attendant to parenthood.
I am a parent who is planning and saving, having opened 529s upon each child's birth. And, if my husband and I both stay on track with our careers, we should be able to pay for it, though, not easily, and not without significant sacrifice. But those are big "ifs." There's no such thing as a job for life anymore (unless you work for the government, in which case, you probably qualify for financial aid anyway), and we're all just one doctor's appointment away from disability.
My point is that I am doing everything "right," and I'm still getting killed. Because college is overpriced. And, only the truly wealthy come out of it without life-long financial detriment to the graduates' families and the students' futures. It's the already-wealthy who do not have to start life under the financial yoke of student loans. The ultra-high costs of perpetuate and augment social inequality.
I don't believe college should be free. I think it's appropriate to pay and to borrow for something of value. And, I think students should have some skin in the game. But, the run-away inflation of tuition is a social ill.
6
I am one of those who abandoned a graduate program in the sciences, solely because I realized it would cause me to drown in student loan debt. I still wonder what I might have accomplished if I'd completed the degree, but I have never been sorry for the decision I made to rescue myself financially.
Even so, it took more than 13 years to pay off what seemed a massive debt at ridiculous (8.25%) interest. To manage this, I had to increase my loan payments with every raise, while living like a church mouse, "only" having to pay about 2x what I'd originally borrowed, with $26k morphing into nearly $50k.
A reentry student in the 1990s, I didn't qualify for financial assistance other than student loans and work study, because my FAFSA included my near-poverty level wages (assumed that I would earn that income while also attending school full-time). By necessity, that proved to be true. I only took enough loans to cover actual school expenses (tuition, books, travel, other actual school expenses) and did the work study plan too, at minimum wage.
Somehow I managed to graduate with high honors, while also working 3/4-time at a demanding job 40 miles from the school: not a task for faint-hearted.
As a new graduate student and new to Excel, one evening I sat down for a reality check on my loan situation. My school charged more for grad school than for undergrad, and once I did the math, I nearly had a heart attack. Within a week I had dropped out. My loss, but society's loss too.
8
Any degree program is meaningless unless it represents some level of proficiency in a subject. If our expectation is that these loans should be paid back, then the borrower will have had to have gained some skills which enhance her employability and earning power. Which skills make a student employable and enhance their earning power? What are default rates as a function of skills acquired? My guess is that students who borrow money to acquire math, science, computer science, engineering and other sought-after skills are much less likely to default that students who borrow money to study subjects that may not enhance their employability or earning power. However, that is pure conjecture on my part. This can and should be determined by research. After gathering this information, we should have an exchange of ideas to see what we as a society want to do with this information: Reduce student loan interest rates?, Charge students a percentage of their actual income? Forgive student loans for certain socially valuable professions?, Reduce the costs of a college education? But first we need the facts.
Lets contextualize this conversation a little more.
During the financial crises.
AIG was given 180 billion government bailout
GM was given a 50 billion government bailout
Goldman Sachs was given a 15 billion government bailout.
Yet students who graduated into the worst economy since the great depression and couldn't find jobs were given nothing, and were charged interest rates well above the prime rate during school and during a fruitless job search. Among people I went to graduate school with, no one who is working today can even keep up with their interest payments with their professional salaries. This is a deep sense of personal embarrassment for many of my classmates, and the proverbial elephant in the room that is not discussed. Students should not be paying 7% interest on loans. Nor should they be paying interest while still in school or while they are not working. As a first step all of these interest payments should be recalculated. Profiting off students in this way is bad for the individuals and society.
9
Tuition free state universities would be one of the best investments America could make for its future. I believe student loans are one of the reasons colleges have become so expensive, just another way to make money, for the colleges and the banks, at the expense of the students, the future.
1
I believe that student loans are, to state it mildly, a brewing and concerning problem in our country. As many have noted, many Europeans, including those in smaller, struggling, poorer countries, pay nothing or virtually nothing for a college education. Please tell me why we do not adopt this kind of model (or elements of it) at the very least for our young people. I agree there is always the risk of becoming a more egalitarian, fair country but I think we can handle it if we really try :). College costs are way too high and have outpaced salary raises by high percentages. It's like we do not want our young people to go to college because we make it as financially difficult as possible. Thankfully though, there are some exceptions to this rule of high college costs. NY based CUNY (an institution that notably furthers social mobility) and SUNY colleges have recently become tuition free for families making under $100,000 a year. San Francisco city colleges are also virtually free-- as are community colleges in Tennessee. The Obama Administration (towards the end of the 2nd term) also spearheaded an initiative to make all community colleges free -- an initiative that should be seriously implemented. There are ways to curb this problem-- the trick is to start something. It is truly sad that our young people have to accrue debt so early in life, thereby preventing them from meaningfully starting their lives. Something has to change.
1
Our son busted out of medical school a few years ago. He will struggle for the rest of his life to only make interest payments on the staggering sum he owes the school (not
the government).
Why is this category of debt protected from discharge in bankruptcy?
1
There is a bill HR 2366 trying to do just that - reinstall bankruptcy protection. It's getting minimal interest from politicians - surprise surprise.
1
"Why is this category of debt protected from discharge in bankruptcy?"
...because lenders would have little expectation of getting their money back.
I have been of the opinion that one of the driving factors behind college tuition vastly outpacing inflation is BECAUSE of government backed student loans.
The colleges knew they could raise their prices with impunity since the students could always borrow more and the lender knew that we taxpayers wold be on the hook if the loan was not repaid.
There is no incentive to rein in out of control college costs.
5
The best solution to the mess of student debt (over one trillion dollars now nation wide) might be the simplest. People who owe money in regards to their education must be allowed to go bankrupt. If this option is given (not so today) it will in turn give needed leverage to the millions of people in debt - institutions and debt holders will be far more in interested in arranging negotiated settlements when faced with an imminent bankruptcy. A bankruptcy may destroy one's credit - but the time needed to restore credit is far shorter than the time now needed to pay these debts off.
1
We are committing national economic suicide by abandoning the ideal of affordable college education for any and all who have the desire and the mental acuity to pursue that goal. When I was a young man, my state university gave me a high quality liberal arts education that was within the reach of a working-class family. Now, the same institution would burden any aspiring working-class (or middle-class) student with a punishing debt upon graduation. Without a well-educated, flexible workforce, how is the U.S. to compete in a increasingly demanding world economy?
5
Wouldn't it be great if the government could forgive college loans based on GPA?
Imagine if you had a 4.0, your debt is completely forgiven. Then for each .1 of the GPA below that you get 10% less of the debt forgiven (so a 3.9 would be 90% forgiven, 3.4 would be 40% forgiven, etc.). Anything less than a 3.0 would require full repayment. You could also maybe earn some more forgiveness by doing community service, doing extra work outside of the class.
That would certainly give incentive to kids that truly want to be there to earn their degree.
While warm and fuzzy, your idea would severely penalize students in hard curricula such as Engineering of any sort; Hard Science (the kind with required labs and experimental results); and Comp Sci from a good school (where problem sets are time consuming).
It is exceedingly difficult to graduate in four years in Engineering because of the required course load, and the time required to complete problem sets for each course. The difference between an "A" and a "B" is an extra 20 hours per week in concentrated study per course - on top of the core 20. Multiply that by four courses. In the event you are math challenged, an "A" average requires 160 hours per week of concentrated study, out of a total possible 168 available hours in a week. As a consequence, the odds of completing an Engineering curriculum in four years are vanishingly small.
Don't take my word for it. Ask the school's Engineering Chair, eyeball to eyeball, how many of its engineers graduate in four years. Watch the beads of sweat and the stammering. This question is the acid test for truth.
There are no "gut" courses in Engineering. Therefore, IMO, it would be foolish to disincentivize the next generation of engineers, scientists and mathematicians by saddling them with a higher total loan burden (because of more courses), as well as a higher loan repayment ratio (because a consistent "B plus" range in Engineering from a top ten school is exceptional).
6
If we want young people to marry, own homes and raise children, and pay for childcare, we need to do something about student debt. Most first world countries don't have this problem. That means that their young people are ready to achieve their goals. What will happen to us if we don't do something to correct the problem? Only high earners and those who didn't go to college will have families? What?
America/Americans would be making a wise economic decision to fund college as long as the student pulled a B average. We should find our best and brightest and pay for them, not saddle them with debt. Watching public universities (somewhere I've worked for 30 years) turn into businesses worried about bringing money in rather than education and research, is troubling. The quality of research has gone downhill and is always about making money, not saving us from certain annihilation. Watching research organizations like Sea Grant (State and Federally funded ocean research) become more worried about aquaculture than about the plastics problem is a perfect example. Students are saddled with debt because our priorities are wrong. Too much focus on money and not enough of long term outcomes.
1
Our higher education system used to be the envy of the world. But over the last 30 years, money lust has infected virtually every institution in the country.
It parallels what happened to the American health care system, which also used to be one of the world's best.
As American democracy has slowly disintegrated, as Congress has been taken over by bilionaires and corporate lobbyists, our higher education and health care systems have devolved into a chaotic money-grubbing frenzy, treating students and patients as ATMs to be emptied.
The only people who survive these systems without scars are the wealthy. That's what has come of this once great country.
2
Consider, for a moment, if this was a different industry. Yes, it's an industry just like making automobiles, selling real estate, or crunching data, though its managers duck behind the veil of noble pursuits if such a thing is suggested.
Roughly one in six can no longer make the payments on the product they've purchased, and the industry itself is responding by adding capacity and manipulating the repayment methods to obscure the underlying problem. Does this sound familiar?
Have a look at the systemic inefficiencies: More buildings, ballooning management structures, spa-level gyms and various sorts of entertainment for students to project a country club of knowledge. Meanwhile the number of part time ("gypsy scholar") instructors is rising in order to cut costs. Classes of 600+ are being taught by instructors being paid $3000 for the semester.
All of this is funded by an opaque amalgum of student fees, outside contributions - often laundered through non-profit development organizations - and, decreasingly, state funding.
So, customers can't pay, the product is being watered down, nobody's telling the truth, and management is churning in circles simultaneously quenching fires and assuring the outside world that things are not only fine but completely bucolic.
Choose your simile: Enron, S&L Crisis, Great Depression, Great Recession, or the long, slow drain of an entire generation too debt-ridden to rise out of their parents basement.
This will be on the final.
4
Simile: Plato's Cave.
At 48 years old Is still owe over 50k in my own student loans, dating back 20 years. That's what happens when you have children to raise on one income, and the cost of paying the interest alone is over $300 / month.
In recent years FASPA concluded I have the means to help both of my own kids with their education; the first to the tune of over $2,200 / month, and then the second over $1,400 / month. Where this quasi-government agency gets their numbers, only God knows. It's fuzzy, indeed.
And so like many people in the great middle class, making too much income to qualify for significant government assistance with college, nor making enough to ease this burden, my situation gets increasingly dire as the years tick by, and the noose tightens.
For the love of God, if there ever is reform legislated and supported, please don't forget those of use a generation removed but still suffocating under the burden. The 8.25% loan rate is a good place to start.. why the cost of money must be so hire with these is a crime.
3
One place "reformers" could start is to provide a pool of $$$ to refinance all student loans @ 1% or less. Why on earth was there such a high interest rate initially? There's no "risk" to the bank, since the government guarantees the loans. The 8.25% is just usury. Since the pols seem unwilling to go with a full jubilee, they could start with making affordable refinancing available.
1
Here are three points what Mr. Miller's article DOESN'T make:
1 - Based on the recent history of the mortgage collapse, should the student loan debt be uncollectible the BANKS will not be vulnerable, TAXPAYERS will be!
2- We now have a Secretary of Education who wants to DEREGULATE the for-profit schools, making it possible for them expand their misleading advertising which will expand their student bodies and income without any oversight.
3 - When the student loan bubble inevitably bursts, the profiteers who underwrite these for-profit institutions will keep the money they've "earned".
I suggest the NYTimes redo their headline t read "Data Gathering on Student Loan Defaults Favors Bankers and Profiteers" so that readers who skim the newspaper get a quick understanding of what is really going on.
5
Student loan debt must become dischargeable in bankruptcy. Or at least modifiable to what the student might reasonably be able to pay. Certainly all penalties, default interest rates and similar charges should be forgiven. Interest rates should not exceed the 3 month treasury bill rate plus one or two percent. Someone is profiteering at the students’ expense.
1
My understanding of the non-dischargeability is that students have mortgaged their future earnings to get a hamburger today. Not trying to be flip, but it is what it is.
There ought to be penalties for those who do not repay, but there should be compassion for circumstances.
I totally agree that interest rates should be capped and based on something like a T-bill rate + something.
what interest rate would you charge to lend out a huge sum of money to a 20 year old without assets on an unsecured basis with the ability to declare bankruptcy the day after he graduates?
Liberty - good points! Perhaps that is why non-dischargeability is in place. Without any proof to offer you, I would state that any education enhances a persons' future earnings, and contributes to the future of the American destiny.
If I had the resources and could fund say 100 young ambitious people to an education, would I expect what 25% non-graduation as a failure? And if that failure was more? Would I consider that my program was a total failure? Or would those people have a better chance of getting work which would allow them to achieve American success?
Back in the good old days, usury was a crime punishable by death. The truth shall set you free, eh?
1
American made its choice in not educating beyond high school. Now you suffer your foolishness. You've created a giant mass of indentured servants who will rebel against their masters. There's another column in this "newspaper" today explaining why millennials support socialism. Joke's on you, upper 10%.
3
What's so bad about, "A giant mass of indentured servants..."
Rebellion is unlikely. They regard "socialism" as a sexually transmitted disease.
Without a large pool of suckers, the higher education cabal cannot keep their eternal annuity.
4
Fire Betsy DeVos. Fire Donald Trump.
Educate our students and do not make them run up debts they cannot pay. Why is the law on the side of the evil doers? This has got to stop,
1
Nowhere else in the civilized world are students so exploited.Education should be affordable for everyone
3
it is even worse in post grad studies even in state universities;you are at the mercy of administration!,with their mandatory inclusive ALA CARD menuea!
We are a nation of idiots. Deregulated and unregulated capitalism has tainted every sector, made most of us cogs to a machine that services the system and we will be drowned by it in the end. Other countries manage to provide higher education at a reasonable (or free) cost, provide healthcare for all, secure a safety net for citizens all while not murdering each other at astronomical rates. And we still think we are an exceptional nation. Idiots.
1
It seems anywhere there is federal money to be spent, be it in education or health care, the Capitalists manage to find a way to extract every dollar and then buy an ad campaign to raise the limits of federal spending. Add to that someone like DeVos who undoes every effort to reign in spending and student protection. Students are just another resource to be plundered to them, like anyone needing healthcare. However, Republicans are eager to protect those paths that enable the unscrupulous to extract money from those seeking to improve their lot without much in their pot. Trump is their pirate hero - 'take what you can and give nothing back.'
There are times like this when I wish Jefferson and John Adams had followed through to create a fourth branch of government to protect the country from monied interests. They knew full well how money will invest in trouble for profit to the detriment of a nation - and now we have trouble with a capital T.
Our Country has gone through several periods where Capitalists have plundered various segments of the population. When the oppressed population realizes that they cannot take any more, they will rise up and vote to change the status quo. Apparently the under-40 population cannot detach themselves from their phones, on-line games and on-line porn long enough to register and vote.
Thus they will stay oppressed.
2
We had a child who ticked all the boxes-Deans' List, Honor Society, Teacher's Pet. She got into every school applied for....but we sat her down, and explained that $250k for a BA was a bad idea. We could pay for a State School, debt free, and after pulling four years of a "double mortgage payment" and her keeping a partial merit scholarship for four years (B or better) she's out and beginning adult life, without a millstone around her neck. What amazes me are the many solicitations I get in the mail box to refinance her nonexistent student loans. They are all aimed at ME, and in very tiny print on the back, mention the word co-sign. Oh, and the state school was quality, she got a real job shortly after graduation, has a good social network, and I thank the financial aid officer at Tulane for NOT kicking in more money. College is a scam...what will you pay to keep YOUR kid in the top ten percent....it's no longer the cost of teachers, buildings, and maintenance. My parents paid a lot less for private college than we paid for state school....
92
Tulane is a private school, right
The shameful legacy we baby boomers have left our beloved children?? I, for one, am heartbroken about this.
1
This is part of economic elitism; prosperity is for rich people, others pay tribute.
If students cannot pay for an American education, they can get an education in Norway, Finland, Sweden, Germany, Slovenia, France, Mexico, or Brazil. Or maybe China at $3,000 per year.
More info:
https://www.investopedia.com/articles/personal-finance/080616/6-countrie...
The indulgence accorded to the Catholic Church for years can be attributed to blind faith, tradition and superstition.
On the other hand, why do Americans think it is so normal for institutions of higher earning to boost their tuition rates to stratospheric rates well beyond the inflation rate ? No one's salary nor anyone's other fixed expenses rise with such mysterious regularity. I cannot understand at all why Americans tolerate this form of ingrained social injustice. A university degree is a bare necessity today, not an option only expected of the monied classes. A disgrace.
1
Taxes are an investment in a healthy, robust society and education can come from our taxes as practiced in civilized countries around the world.
The U.S., as it is organized, is currently not a civilized nation as it run by grifters, con men and mafia types.
2
Trillions wasted on senseless wars and colossal debt for those who want to better themselves. What a travesty! And DeVoss wants more deregulation of for profit schools and of course money for guns in schools. Welcome to the Twilight Zone!
4
Oh my freaking Deity! Did this person actually advocate federal aid to be cut off to borrowers who don't pay, even if they don't default?
I hope I'm reading that wrong. Such a statement, and much of this article, is on a different planet than the real world student loan borrowers live in. The implicit notion there that they could pay if they wanted to flies in the face of reality. I'd say most cannot pay, to inject some ground truth here. Or -- which amounts to the same thing -- facing the need for medical insurance, diapers, food, rent ... paying the student loan takes a back seat.
So, if a person is benefiting from the ACA, he or she gets kicked off med insurance if they can't pay their student loan? If a person is on Social Security Disability, or Section 8 housing, they lose that if they can't pay their student loan? Our solution to debtors who are too poor to pay is, I guess, to make them even poorer.
Leaving aside the morality of it, how does that make any sense?
3
Fact: New Yorkers throughout the state pay income and local taxes that are not envied by others.
Fact: NY State SUNY Students pay about $6,800 per year plus variable fees (total about $8,000).
Fact: NY Students pay about $!12,000/yr in dorming should you choose that addition.
Fact: Total SUNY Ag/Tech, College, or University tuition costs nearly match the Stafford Loan amounts over 4 years (nearly).
Fact: Campuses are everywhere, as are Community Colleges that are even cheaper.
Result: NYS is ranked 14th in the nation for higher education and has the 3rd highest GDP in the country (even as per capita).
Question: What the heck is wrong with the rest of the country by not supplementing their higher educational endeavors via taxes?
You reap what you sow and this country has been sold a tax package of bologna!
For-profit colleges will be seen as a "sin" by our prodigy.
Education is too expensive, post-graduate job prospects are too poor, too many programs do not prepare the student for meaningful employment. Children are 17 when they first start borrowing, they want to go to college, their parents want them to go, they can't afford it so they borrow, it is all so easy, and they have no idea how they will handle the situation when they graduate. And many of them can't. And many of those who manage to avoid default suffer in deep debt, indentured for years.
The answer of course is that government should pay more of the cost of education. The experiment of less government contribution and more funding through student loans is another trick of financial engineering to reduce taxes that will end in disaster, many people will be hurt, the economy will suffer, lives will be diminished. Stupid.
1
Maybe would could use the money that we bomb middle-eastern countries on providing college educations.
2
The vast majority of for profit schools are nothing more than schemes to divest students of loan money leaving tax payers holding the bag.
1
America is a failed state, unable to educate its children or care for its sick without driving them to bankruptcy.
8
If "not repaying their loans" is different than defaulting, what is defaulting? This alarming article lacks a basic definition of the latter and its distinction to the former.
1
You really have no idea just what this problem has done to the millennial generation. It's far worse than this Op-Ed suggests. It's a political powderkeg waiting to explode.
5
You mean that I have to repay the loans that I took out? Now I question not going to community college. But I had a great time at Private College studying comic books while getting a tan in Mexico. I think that it is UNFAIR!
My cousin also wonders if he can get as refund for his poker losses at Las VEGAS? He did better playing 21 instead of attending gender studies classes, UNFAIR, UNFAIR,
5
I cannot understand why this entire system is not recognized as the national scandal that it is. In its own way, what we are doing to our young people is as shocking, and as harmful, as the child abuse currently in the headlines which was perpetrated by the Catholic Church. Saddling our youth with these debts when they are just starting out in life is SHAMEFUL. Our government, our universities, and the financial sector have collaborated to produce this obscenity. It is like a war crime in front of our eyes.
3
After graduation the question arises: Do you flip-off the government debt collectors and get on with a normal, typically married, life?
...or do you devote 15 or 20 years of your professional life to repaying the debt?
By the time I finished grad school, I owed $60,00+.
Is there a penalty for not repaying? ...you prolly can't borrow any more, get a car loan, or mortgage.
Learn from other countries. Stop pretending the U.S. is the only country on the planet. There are many success stories to learn from.
2
Private sector schools that charge exorbitant fees for meaningless certificates and diplomas are not so different from the majority of arts and sciences degrees being offered at many universities.
Granted, universities are essential for medical training and research, engineering and architecture, and a few other select professions, but otherwise, these institutions are doing nothing more than seducing people into believing that their educations will be worth a lifetime of debt.
Federal and State governments need to establish information centers at all high schools to inform their soon-to-graduate pupils that choosing to pursue studies with limited employment prospects may not be their best option.
Furthermore, these respective governments should also be encouraging more people to pursue trades and other professions that offer better chances of full employment.
Otherwise, unless you're rich or really have a craving for that "university experience," I recommend a cheaper version for higher education.
It's called a library.
The main library in my area has taken the place of Blockbuster. Now their money is spent on dvd’s to remain relevant. When I stand in the checkout line,
People are holding stacks of dvd’s, not books.
3
My brother was somehow talked into enrolling in a private for-profit college to study web design and given loans to do so. I couldn't believe anyone would loan him money for this since he was not very computer literate (he didn't even know where the escape key was on his keyboard), he was unemployed and he was in his early 50's. The loans for the first 3 semesters were federal loans, but for reasons unbeknownst to me, they switched him to a private loan from Chase Bank for the 4th semester. When the 5th semester rolled around, they told him he had to have a co-signer or they wouldn't approve it. Since the only way my brother would be able to pay back these loans was if he got a degree, I co-signed the $9,000 loan for that semester. But by the time the 5th semester rolled around, I had lost my job of 13 years due to the economic crash and could not co-sign any additional loans. My brother was forced to graduate with an associate's degree and has never been able to find employment in web design. He now works a minimum wage job and the only loan he's currently able to pay is the loan I co-signed. He's in forbearance on the 2 federal loans and in default on the first Chase loan. His loan balance on the $9,000 loan I co-signed is now $12,000. So, my brother is now 62, is in about $40,000 debt he will never be able to pay off and has nothing to show for it. We would have both been better off if he had never spoken with Atlanta School of Art.
96
I'm sorry to hear this story. My bright and creative son has chosen to forego getting an education, seeing how this country treats youth who want to go to school. He saw his sister graduate in 2010 with almost $50k in debt and enter a work-world offering few jobs even for her business degree with honors, and the struggle to get work due to intense competition driven by unpaid internships. I cosigned two of her loans that I'll be paying until I die. Millions of students graduating 2008-2012 were just thrown to the Wall Street wolves.
8
Sounds like your brother needs a better paying job or a second job AND you and he can live together to cut costs.
Wow, that's a sad story Tina.
Yeah, it's definitely a red flag when someone can't locate the "escape" key on the keyboard. Kudos to you for helping out your brother, but it's a shame that he wasn't better informed and now has to bear the financial consequences.
My old job paid for an online master's degree and then laid me off. I recently started a second master's degree at the same school. (In both cases the school was a forced choice, not one I would have chosen given the ability to go somewhere else.)
In the 4 or 5 years since I took the first degree the quality of the teachers, teaching material, and classes has significantly gotten worse. Period. The courses are the equivalent of self-study, and the "teachers" have no voice regarding curriculum, assignments, or tests. There are no webinars, and no communications between students or professor.
Yes, it's the school that Betsy DeVos stopped investigating and from which she hired much of her staff. They should ALL be sued for fraud. Nothing is being taught and the graduates whom I have stayed in touch with have not been able to leverage those useless bits of overpriced paper into jobs.
92
Betsy DeVos is one of the most evil people in this country. I get nauseated every time I see her picture or see her name. And to think she’s in charge of one of the most important facets of life here - Education!
Shame on Republicans who approved Trump’s appointment of her!
MIMA
4
I teach at the university level and I feel for these students who have massive loan amounts. I had loans, too, for college, along with scholarships, but my loan amount was manageable. Today, it is not for most students, who take out 15 to 20,000 thousand a semester so they can pay tuition, use some of the money to live on, even if they are working, and if they live on campus, pay for room and board. By the time they graduate, they are 60 to 100 thousand dollars debt, and they will probably get jobs, due to wage stagnation in this country, that bring in 30 to 40 thousand a year. It will take them 20 to 30 years to pay off that amount, if they are lucky. Many will have to defer their loans at times, and some will default. Some will pay them off eventually, but it is grossly unfair for these kids to be saddled with such debt when or if they graduate.
71
I agree that it is unfair to saddle young people with large debts when they have no prospects of paying them off. But, should students be attending college and taking on massive loans, as you said, if they have no real prospects to pay them off when they graduate? Isn't there a school administrator or counselor who tells them that borrowing that much is bad and they should quit school?
4
Student debt is not real, it's like goblins of Halloween, designed to scare ppl.
Tell your students about the Public Service Loan Forgiveness program, and the Income Based Repayment programs offered through the US Dept. of Education. Payments are made based on size of income, not size of debt. If they work for 10 years at a non-profit or for a government (local, state or federal) all student loans are forgiven, and it’s not considered income, so no IRS issues.
I attend law school at night while working a reasonably paid full time job during the day. While I make enough to cover all of my living expenses and put some money towards tuition, I will still be graduating with slightly under 100K in debt. After taxes, I don't earn enough to cover a year's tuition since a single credit hour is more than a paycheck. I'm not asking for my school to be free- all I want is for tuition to reflect the value of my education. As much as I may enjoy times when a professor plays a video in lieu of lecturing, the relief of dodging a cold call fades when I calculate that a single class session costs hundreds of dollars.
Law school is an extreme example, but I doubt that there are many BA and above programs where a student can actually work their way without significant loans. Many highly necessary fields such as teaching require at least an MA, which may cost tens of thousands. If no measures are taken to reduce tuition, professions need to reconsider what requirements are actually necessary to perform the job.
59
I certainly feel that your situation is dire. I just cannot contemplate that you will owe $100K or more after you attain this degree and procure employment that allows you to effectively pay this debt off and proceed with your life.
Living in a low cost state, I paid $105K for my house almost 25 years ago, and I still owe $30K. But my equity is about $250K.
I hope that in 25 years from now you see your decisions as the best options you had at the time.
Thank you- at this stage, I am confident in my employment prospects and ability to pay it off eventually. I should have clarified that this financial situation is decent compared to the debt carried by many other law students, which is absolutely horrifying.
2
Certainly I do not know your financial or future economic situation, but I do applaud your decisions. I would wish that our country would be able to reward contributors to our future economy rather than seeming to hold back. I hope that even 1 success would make up for X failures. I know I'm encouraging my grandson to be one of the successes.
I borrowed heavily to go a private, elite college and graduated over $100,000 in debt due to student loans. After working several years I was hospitalized for a bipolar psychiatric disease and placed on disability. I am now 3 years into full social security disability and my $100,000 student loan debt is forgiven but sadly reported to the IRS as "income" and the IRS just sent me notification I owe them $16,000 in taxes for 2017. This is nearly my entire year's income these days. I have been buried alive financially.
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Most Americans are only one illness, health crisis or physical accident away from poverty and or bankruptcy.
Hang in there and don't give up. You are not alone.
8
Go to a tax clinic and ask for help preparing an Offer in Compromise. Those commercials talking about “Erase your tax debts forever!” are scammy companies but they’re talking about a real thing. The IRS will reduce the debt to approximately what they could garnish from your wages and accounts over the next few years. If all of your income is disability, that would be roughly zero.
If you can afford it, or someone in your family is willing to help, a tax lawyer or CPA (I’m both) can do it most quickly and easily, but there are lots of clinics for taxpayers who should also be able to help. There may be a waiting list, but they’ll eventually get to you. Look for information about clinics on the actual IRS.gov website. There should be no charge. If you google it or use a phone book, you could easily end up picking a shady company. Good luck. The IRS is a lot more reasonable than they get credit for.
1
To Polly: Are you in touch with the IRS about working out a payment plan? They can and will impose interest on unpaid taxes, which in turn can foster its own ballooning debt, so a plan can hopefully reduce the potential damage. Also, might you be eligible for forms of assistance such as food stamps that could supplement and free up a bit of your social security disability benefit to put toward the tax payment? Get in touch with whatever social service organizations are in Cleveland, such as (if they are present there) religious or secular agencies (you don't have to adhere to their religion), which will at least have counselors who know what else you can apply for and where, and give you help with filling out the applications.
2
Without student loans, I would never have been able to complete my college degrees. However, after I graduated, my salary on my entry-level jobs was not nearly sufficient to re-pay, despite the low interest rate. I defaulted. By te time I got a job where I could start re-paying, the loan was owned by a debt collector. And they just kept selling it on to other debt-collectors. In the end, I paid $40,000 for an $18,000 loan and it took me 21 years. I still believe in student loans, but they have to be tied to what you are making and what you are able to pay. And a default should not be sold. It would also help to require students to complete money-management counseling and learn (what our parents never taught us) about money-management. Of course, if money-management was a required course in high-school, this would not be the problem it is today. Kids graduate from high-school completely unprepared for managing money. It's easy to acquire debt.
61
I went back to law school for a specialization in Health Law at the age of 57, having practiced law for 30+ years. My accountant told me to get a student loan instead of taking money from my retirement savings. I was sheepish about approaching the school's financial aid officer. When I asked him whether he thought I would qualify for a loan, he asked me if I had good credit. I told him I did and he laughed, telling me that they were making loans to kids whose only work history was at McDonald's. I got my loan and I'm still paying on it 8 years later. The extra education allowed me to reinvent myself and I am practicing in my new specialty area, but for a year of school, it cost me more than $30,000. I went to work in government to get experience in my new field, so my salary was not enough to make much of a dent in paying off the loan, even with regular payments for many years. I don't regret my decision, but I can't fathom how someone would pay off a six figure student loan or two six figure student loans for a married couple.
74
They pay off those six figure student loans by working at elite firms where they make over $300,000 per year, and they work 60 hours per week. If you don't want to do this, or you can't do it, consider another field besides law.
There are more lawyers per capita in the US than any place else in the world. We are the most litigious people in the world, and California is the most litigious state in the Union.
Income equals demand times hourly rate. You may bill at a high hourly rate if you are an attorney. But if you can't attract clients who will pay that rate, you will not make much money.
Look at how many law grads in your area are employed at various salary or income levels and how many years of experience they have. Law is very competitive. The people and corporations who pay the highest fees are those who can be most discriminating. If you are not in the top 10% of your class, forgettabout it. You won't be able to pay off your loans, bring up a family, etc., etc.
1
maybe you should have not listened to the financial officer and used some your retirement money.
1
You went into it with your eyes open, but what the heck, did you expect to be chasing ambulances and negligent physicians at 80? Your early career helped you out -- someone starting out of law school at your age would only get as close to health care as custodian in an hospital.
I'm in student debt up to my eyeballs.
Perhaps I'm part of the lucky few but the payments haven't been particularly onerous and I've had pretty O.K. interactions with my loan provider whenever a problem arose.
But these payments are always in the back of my mind when I consider any quality of life issues: a house (I've been renting and moving around for years), a vacation, a meal out, car payments/repairs, possible medical emergencies, serious relationships, etc. The best way I can describe it is that I'm simply treading water without getting anywhere financially. And I'm just one crisis away from not being able to make a payment.
As I said, it's not so much the individual monthly payments (though that can change obviously). It's the realization you still have so far to go in order to get out of this burden. I enjoy what my degree has enabled me to do and I even enjoyed the academic process of earning it but getting it was so expensive and characterized by greed on the part of school officials that the entire higher educational complex in this country leaves a disgusting taste in my mouth.
Is student debt the worst thing in the world? A quick glance at the news will tell you "no way". But it's just another example of the rotten social infrastructure of this country. We can do something about it but...we won't. Too many entrenched interests.
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Indentured servitude
You can do something--just give the bill collectors the two-handed flip-off.
No one forced you to go to college.
You should have either gone to a state school or a community college
Do not blame society for a situation you put yourself in when you went to a college you were unable to afford.
Yes we can do something about it.
Don't go if you can't afford it.
Being in the legal field, I often meet young people who burdened themselves with $100k-$250k debt from law school. So foolish and so sad. They don't know what to do now! Many can't find jobs. Some NY law firms are offering 40K/yr to first-years based on an expected 80-hour workweek! Billable hours. And they are supposed to live on that in NYC? When I talk to one of these kids I feel like I'm talking to someone with cancer. I don't know what to say that could possibly be encouraging. I'm just struck dumb. My son was dating a girl who was happily taking out loan after loan to attend NYU --she was not from a rich family!-- and I told him she's great, I like her lots but you can't marry her!
The greed, the greed. Google what deans of top schools take home, or any schools. When did they decide they should be as rich as their rich donors?And the new buildings all have to be glorious with every amenity.
150
People do foolishly rack up debt. But I doubt any law firms in NY are offering $40K per year.
Oh yes, I totally agree ! When will Americans finally start slaying sacred cows out of their own best interest ?
If it is possible to elect a transgressive egomaniac for president, you must surely possess the capacity to call into PUBLIC question the obscene tuition hikes US universities impose upon the gullible masses with reckless abandon. Write to your representatives, petition them to form an investigative committee to explore why US universities feel the need to plunge the masses into a state of permanent penury with no hope of escape.
The Founding Fathers would whirl in their graves if they knew of such injustice !
Trilby - First, and inappropriate - love your name, my first, maybe best love was a lady named Trilby.
You make great points, but we have to think multi-generationally - Parents need to take care to provide for their children. But as a grand-parent, I find I have the resources and the long-view and hope that my grand-son will surpass my expectations.
Well I am pretty fortunate. I only had minimal loans for undergrad and paid for my very expensive grad school loans while I was in school. Also my initial MA doubled my income in a year so while I'll be paying them off still for many years more I am simply fortunate.
The important thing to realize is this problem isn't about individual students but about systems. We converted much of our direct aid from grants to loans a long time ago and, at the same time in our public institutions cut tax levy support to the bone, raised tuition and pulled stunts like shifting enrollments from local students to out of state students who pay a higher rate. We also hired part time instead of full time faculty to meet budgetary needs. There was also a great deal of nonsense about online learning and technology that completely ignores the actual reality of teaching and learning and actually increases costs.
Lots of people will come up with some excuses like rising numbers of administrative staff or pretty student facilities but the bottom line is a collapse in baseline tax levy budgets.
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>> this problem isn't about individual students but about systems <<
HUH? Modern colleges and universities are robber barons in gowns. BUT, all these loans were signed for by "students" and in many cases by their parents as well. What happened to individual responsibility? Another bailout for American taxpayers? NO! Those of us who have jobs or paid their own student loans can't afford to take on someone else's debt. $22,000 each shortsighted student does not make a national crisis. You want me to pay $100,000 debt of someone who opted to go to an Ivy League school or just kept going to school? Hardly! Student up, even collecting cans pays better than sitting in your parents' basement playing FB and You Tube videos.
Cost and public support are one side of the coin. The other is students' and families' ability to pay. At the same time college costs have outstripped inflation, wages have lagged. If incomes for middle class Americans were not stagnant for the past 45+ years higher education would be more affordable because people would simply have more money.
Here in Texas the party that exercises hegemony over the entire government wants to turn the universities into inexpensive vocational education diploma mills. Doing so will not serve the economy or society in any positive way, but it will serve to expand the Base since people who aren't broadly educated tend to vote Red.
I am a former attorney who changed careers and became a teacher. I absolutely love what I do now. I did manage to pay off my undergraduate debt. Unfortunately, I left law school with $200,000 in students loans. I have been paying $900.00 per month for 13 years. I still owe 6 figures. As a single dad with three kids, I can no longer pay my debt. I am shocked by the comments asserting that there should be no loan defaults or fault students for making poor choices. For those of us without any family support or significant resources, loans are the only option. I was young and naive, but schools also make it seem like the loans will be easy to manage.
184
Did you take a pay cut when you changed careers from law to teaching, so that you could do work that you enjoy?
1
I have plenty of sympathy, but it is not the management of loans where schools make the false promises. It is in the careers intimated, or allowed to grow unchecked, in the minds of hopeful, but as you say naive, students.
What your law school didn't tell you was that you would have to like the law and make it as a lawyer, because other professions wouldn't justify the debt.
It took me 15 years to pay back my grad school loans. Fortunately, they didn't hold me back from buying a house or saving for retirement. Basically they were a heavy utility payment. I could have paid them off sooner only by not doing those other things. I'm lucky in that they weren't an albatross, but I can't say they weren't a burden of sorts. And I wouldn't have my job today without them. So, basically I bought my new career (I also changed to a lower-paying profession, but my grad school was to enter that profession).
Wages aren't budging and, since the Great Recession, employers are paying all categories of hires much less than they used to, even as the labor market is said to tighten up. Meanwhile, most areas of the nation have seen rents rise significantly since 2014, with housing crises in full swing in many states.
In a recent study, Pew Research has found that 64 million Americans live in multigenerational homes. This is unprecedented in our history. Between older workers who cannot retire, their children who are working gigs, and grandchildren who just graduated from school or are just entering the workforce, the nature of this economy is changing our social norms.
So, yes. The student debt is far worse and it is dragging everyone else down with it. This has been expected for some time since the recession and nothing was done to stem the problem this far down the line. With the Ferengi in charge of our economy, I expect it will get much worse until the next recession or depression hits. Back when Occupy Wall Street was in the news, we talked about student loan forgiveness. That was squelched and here we are a few years later.
This, sadly, is how things work.
Vote.
---
Things Trump Did While You Weren’t Looking
https://www.rimaregas.com/2018/08/07/greed-malfeasance-never-sleep-blog4...
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Rents are rising because loose money in the hands of people with far too much is driving up prices for both purchase and rental, especially in good locations like Manhattan and San Francisco (to name two). Many of those people are foreign ultra-rich who maintain a U.S. home or two they hardly use. Many are U.S. ultra-rich who maintain a U.S. home or three or four they hardly use. The money they use for this was taken from workers. There are many reasons for this. The destruction of unions under Reagan and his Republican successors is one. The corporate income tax structure is another. There are many more.
5
Thomas,
It isn't just the big cities anymore. The entirety of Southern California is in deep crisis, for example, as is NorCal. What's worse is that California has, for the last two years, held about two billion dollars of funding for affordable housing without a penny being spent. Why? NIMBY and the way the media has been portraying the homeless. In the wider LA area, there are approximately $100,000, and that isn't counting the thousands who live in hotels, motels, extended stay hotels, or with family and friends.
The same story is true in the middle and south of the nation. We just don't read about it in the headlines.
Add to that very poor construction starts for many years in a row.
Added to all the things you've listed and way more.
All is documented in my linked post.
5
The recent bipartisan approval of the NDAA's boost in Offense Department spending to $716B for 2018-19 shows the way it's going to work even if the House changes hands. Is the party out of power pushing for college funding for all?
4
In the catalog for my graduate school program at the University of North Carolina at Chapel Hill, 1977-78, the estimated in-state tuition for an unlimited number of credit class hours for an academic year (two semesters) was $256 (not a typo), plus $218 in fees. A nonresident paid $1,900 and $218 in fees. The minimum wage at the time was around $2.60 per hour.
I remember howling for having to pay $13.95 retail for a new labor-management relations textbook! But when I finally completed my program in 1981, I was in the black, not in the red for so much as one dime.
College costs have far outstripped the cost of living over the past 40 years.
But a student today would be wise to complete the first two years at the nearby community college and transfer between 60 to 64 credit hours to the nearby red brick college (a derisive phrase coined by FDR) and complete their undergraduate degree at a pittance of the cost of attending the prohibitively expensive private college reserved for the likes of trust fund baby Chip Farnsworth the IV.
Note to Jean Louis Lonne: I've made my living as a community college instructor for 36 years. 11,000+ students later I can certify that I am not overpaid; nor are my colleagues.
234
Qualified students for post-grad programs at my school pay no tuition and get marking TA gigs - if your marks aren't that good then you pay full tuition and no TAing - maybe that should be an early life lesson.
2
My local state U charges just over $600 per in-state, undergrad credit. The community college charges $275 per credit.
1
Your post inspired me break out my undergraduate handbook (1980 - 1982) from the University of North Dakota.
Semester Fee (12 hours or more)
Incidental Fee: $266.00
University Fee: 51.50
Student Activity: 12.50
Non-resident fee: 384.00 Reciprocity for Minn residents
Total: $330.00
The estimated yearly expenses including room and board and books totaled $2330! A non-resident paid $768.00 more with the non-resident fee.
I think when I graduated in 1986, I was paying about $550 per semester.
The root of the problem lies in a change to the bankruptcy laws in the 90's that removed student loans from bankruptcy protection. The idea was to make it easier for lower incomes to get higher education. It did that. It also spawned a ton of less than resonsible education financiers and suppliers as student debt could no longer discharged by bankruptcy. Student debt assumed was debt forever, ballooned by exorbitant late fees and loan shark level interest rates, ... Buttressed by cosigning parents, grandparents, ...
Universities offered ever more generous "aid packages" for ever more questionable courses, knowing full well they could sell the virtually guaranteed debt into a secondary market of shadowy collection agencies.
Now a trillion dollar, and expotentially growing) drag on our economy keeping the debt laden from investing, or buying new cars, houses, vacations, furniture, ...
2
We claim as a society that we value college education, but it is unreasonably expensive for most families. College costs have gotten out of control. I went to a public school, Penn State, and when I graduated in 1982, the tuition was about $2200 a year. It is now $18,436 a year. According to inflation calculators, $2200 in 1982 dollars is worth about $5800 now. Why is the school charging $13,000 more than that? Most schools have raised tuition similarly. Maybe the problem isn't with student loans but with the institutions themselves.
4
Your missing a big point. A student can borrow up to 26K. The parents are stuck with thousands more, and if you have multiple children your done. I could go on and on and on and give examples. But I've already complained to my Senator and sent in examples and I never heard back from her.
As the first in my family to attend college, I was and still am grateful that I was able to attend a SUNY college. I paid for it by working full time and borrowing from the federal student loan program. Because of my education, I have a career I enjoy. I am in the only one in my family living above poverty level and not relying on public assistance. However, in my 40s, I still make monthly payments for my student loans. The interest rate on the student loans is higher than on my home mortgage. Essentially, the bargain I made with the banks was that I would be able to move out of poverty and they would be able to take a slice of my income every month over my adulthood. We could do better as a nation.
10
It is a sad situation indeed. College costs money; it is an investment in the future; but as a society we treat treat that investment with less expertise than most children would exercise if--with parental help--they squirreled away a small-to-us but large-to-them amount of money during the summer from mowing lawns or running a lemonade stand. In the mad rush to pay the bills, there are flaws at very level--government, colleges, lending entities, expectations, professional athletic programs disguised as "scholar-athlete" driven but in fact run by multi-millionaires funded by multi-billionaires, and on and on and on. The system needs to be reformed comprehensively with all components deat with simultaneously. College loans are just the tip of the iceberg
1
I attended The City College of New York in the 1960s. It was tuition free. Today tuition free higher education is considered a socialist proposal. Over the past 30 years, there has been a massive shift in the financing of higher education from state governments and federal grants to individual students and their families. To be sure, colleges and universities have engaged in marketing and expenditures on facilities to attract students. While this is problematic, the major reason for debt ridden students and family anxiety over how to pay for college is the shift in the responsibility from government to individuals. This is but one feature of the privatization of American life that affects everything from health care to retirement. Until there is mass resistance to the accumulation of wealth at the top and a political movement to provide for education, retirement, and health care through public expenditures, far too many Americans will continue to face financial ruin, severe limitations to realizing their potentials and fulfilling their dreams, and the financial fear.
4
remember, we are not just talking about 20 year olds and high school students in college we are talking about over 40 years old and 50 and 60 years old that have taken out student loans during the recession of 2009 to present to better ourselves in the community most are in debt over $60,000 like me. What's going to be done about this?
4
"Forcing these students to borrow has turned one of America’s best investments in socioeconomic mobility — college — into a debt trap for far too many."
Forcing? Who is forcing anyone?
5
If students don't borrow, they don't get educated.
Then what?
Then they go to work, earn enough money for their education and enroll in a college. Or they start evening courses while working. It happens to the best of us...
Unfortunately, college expenses (except at the most elite schools) seem to track Federal student aid, especially loans. In other words, colleges jack up the tuition, fees, and room and board to suck up the aid available, leaving the student indebted. I note the explosion of counselors, diversity and inclusion programs plus dubious academic fields such as gender studies. All these cost money, money which ultimately ends up raising the cost to students, even the antediluvian accounting, business and engineering types. I am also informed dorms are fancier. I shared a room with 3 other guys and used a communal bath room in the dorm basement. I doubt such spartinn conditions exist to day.
2
I went to one of those 'most elite' schools and studied the 'antediluvian' engineering. I was woman living in a male dorm, sharing the floor bathroom with males. I'm so old, they had no female facilities. If you wanted to live in the dorms, you lived with the men. A little 'gender studies' might have helped with the mess you guys tended to leave in the bathrooms.
I agree, I doubt such spartan conditions exist today. Thank God.
But, I graduated debt free because costs were low even at those 'most elite' institutions. Work/study, summer jobs, some support from family and it all worked just fine. Now, kids graduate with the equivalent of a home mortgage to pay each month, and, guess what, at the end of the twenty years they don't even have a house. I wouldn't blame that on gender studies or decent dorm rooms or counselors.
1
It's a form of slavery.
3
Several generations back, organized crime bosses took their sons off the streets and sent them to college to study business and law. One long term objective was to legitimize basic racketeering techniques to preserve the profitability while eliminating the risks and costs of illegality. (Mario Puzo provided graphic exposure of this in his "Godfather" series of novels.)
It worked. The most ridiculously obvious example: Student Loans. That raised basic loan sharking to a level of sophistication that manipulated collusion between government, academia and Wall St. to run a cleverly managed scam wherein government has become both a patron and the "enforcer".
A major result of sucking kids and their parents into deep, long term, inescapable debt for a grossly overpriced, non-refundable product of statistically dubious actual value has been confirming the gullibility of the Greatest Sucker Nation.
2
What a pathetic commentary on today's youth and the parents who co-sign these unnecessary loans. If people cannot afford these expensive colleges they should do their first two years at community college and not major in basket weaving for a start. I have no sympathy for stupidity and this article epitomizes it.
4
Are there colleges that teach basket weaving?
What are these students learning, anyway?
1
Yes, there are classes for basket weaving. Some colleges have classes on Game of Thrones and Quidditch as a sport
1
Not all community college credits transfer to a 4 year school, and what credits do transfer do not always equate to a full 2-year sweep at a state university. There are students who manage to get an associate degree from a community college and still have to attend 2.5 to 3.5 years to get through the sequencing of a particular major.
As for "basket weaving" - this is a tired trope that has been played out and hasn't applied to college graduates or college students since the mid-to-late 2000s. The University of North Carolina, for example, has roughly 3000 students in Biology, 2500 in Psychology, close to 1200 in Computer Science, and around 700 students in Chemistry. The smallest majors are the so-called "useless majors" like Gender Studies and Comparative Literature. If you go to any state-funded university - where the vast majority of students attend, you will find thousands of college students majoring in "practical" subjects like Business, Chemistry, and Electrical Engineering. Unless they're extremely wealthy, they're probably paying with loans and if they're lucky, some grant aid.
The side effect of the sudden rush of people into STEM and Business, of course, is that it drives down wages in those fields, and makes it less likely that those students who majored in a "real field" can pay off their own loans.
1
Trillions of dollars of potential economic growth siphoned off to the banks, condemning generations of young people to a lower standard of living as they work to pay off their debt. This is why as a society we need tuition-free State colleges. We should also restructure the college degree to be a two-tier process where the student receives an Associate degree after two years as they progress to their full BS and BA degree at four years. This way, should they decide not to continue, they at least have something to show for two years of work. The graduate programs often do this now as one works to get a Ph.D., where the initial work one has done is summarized into a Master's thesis, and then the Ph.D is a continuation of this work. This country spends over $700 billion dollars a year on our military. Tuition-free State colleges would be a fraction of that cost and the return to society and the economy would lift the standard of living of everyone.
7
Without question--a 2008-level crisis is coming vis-a-via student debt. What is so infuriating is that the university and college administrators and professors who encouraged and benefitted from the ever-increasing student debt loads will retire to six-figure incomes for life, while many, many of their former students will be debt-slaves for a good percentage of their post-Maoist reeducation camp lives. So much "unfairness"?
2
My husband and I are both in our 60's and professors and NYU and Syracuse in Florence. We both graduated from undergraduate school debt free in the era when many lower middle class students (me) could attend a good university and graduate without owing a penny. 44 years later, our 18 year old son begins university this week in Rotterdam, Netherlands. We toured over 20 universities with our son. From Stanford and UCB (where I used to teach) to U of M, Yale (My husband's alma mater), Brown, Goucher, and Georgetown--we did not visit a school that cost less than $34,000 per year! Luckily for us a group of recruitment representatives from Holland came to my son's high school in Rome. Beautiful facilities, state of the art labs, gorgeous libraries, brand new studio apartment dorms for €3000/year EU citizen and €10,000/ year Americans and all other countries. Why? Because the Dutch believe EVERYONE should have the opportunity to go to college. Debt free if possible--interest free loans, free medical schools. Socialism--not capitalism. My husband paid $3000 a year to attend Yale in 1970, today it is approximately $70,000. The cost of American higher education is shameful. The price tag influences the choice of majors, who attends, where you may end up in life. To think we charge interest on these loans! Many of my NYU students tell me the graduate owing more than $100,000. What a harrowing introduction to life
6
Please inform your students about the Public Service Loan Forgiveness program, and the Income Based Repayment programs offered through the US Dept. of Education. Payments are made based on size of income, not size of debt. Work for 10 years at a non-profit or for a government (local, state or federal) all student loans are forgiven, and it’s not considered income, so no IRS issues.
As someone who works in finance, I have always found the terms for student loans to be wholly unbelievable. If they were to be applied to any other area of the economy people would revolt. Not sure why its ok for students....the fact that the interest rates are significantly higher than even a junk rated corporation would pay and you can never absolve yourself of the debt though bankruptcy I have always found it to be a total scam.
4
Amazingly great points! As Americans who recognize this as a crisis we should think multi-generationally, Grand-parents who have the fore-sight and economic means should fund a state-run 529 plan for their grand-children. I established a 529 plan in 2007 for my grandson, then an infant. Today he is 11 and the fund has $40K in it. My hope is that he can use this fund to pay for his education and he can prosper in the future economy.
Good points. A child born today will face a college cost of 100-500k - state school to private - inconceivable! Name the schools! The consumer should know!
2
Had a nice conversation with some visitors from Belgium the other day here in East Resume Speed, Utah. They mentioned they have two kids enrolled in top-notch Belgian universities at a cost of $900 (US)/year each.
4
These two kids were probably at the top of their high school classes. US students that could never get into European colleges can get loans here to go the second and third rate and lower colleges that have sprung up to make money off of student loans.
1
And thus we should think generationally - I am a grand-parent who has put investment money into Utah's 529 plan. I want my grand-son to go to college and graduate debt-free.
Even though he is in the sixth grade, he has heard from me since Kindergarten that school is his job right now. I know he does not like school overly much, but my hope is that he relies upon my judgement that education will lead to his promising economic future.
The rampant fraud in for-profit education is a symptom of the rampant fraud in America with an epicenter in Washington, DC, our Capital of Fraud.
3
What are my thoughts? These loans are never going to be paid back. Great article.
3
I think they ought never be paid back.
Now we need Congress to wipe clean the financial records of people who are forced to renege.
This is a truly sick system. The health and expansion of colleges and universities and financial institutions is built on the backs of students, mostly kids, who face decades (at best) of payments and servitude for debt designed to benefit the institutions, not the students themselves.
Lenders readily pour tens of thousands of debt-dollars every year into the accounts of naive and inexperienced young people who may have never even held a steady job. No responsible lender would lend these kids this kind of money if not for a system that enriches and strengthens the system itself, on the backs of the students.
Within this sick structure, a majority of students have no hope of getting an education at all without becoming a debt slave.
And about that $22k in debt for a 4-year education? That average factors in hundreds of thousands of students every year who borrow nothing because their more-affluent families are able to buy their education for them. So for the majority of students from less privileged families the actual average under-grad debt load is easily $10,000 a year for a "public" university -- double the $22,000 that the article claims.
3
Looking at this data validates one of my thoughts on this matter. Higher education is fine. Higher education can be a good for some. But for many it amounts to putting yourself into an indentured situation isn't it? You become a slave to your debtor. And this can be, given these statistics and the reality of the preponderance of service level jobs in our country, for the rest of your life or until you pay the debt off. So this is America and the myth of pursuing your dreams?? Financial slavery?
Perhaps the idea, or perhaps it's better to say the propaganda, promulgated by those vested in the educational system, should be ignored by many? After all the whole idea, as expressed by said propaganda, is to garner a better job, a better life, than they current have isn't it? Perhaps, for some, a vocational school is better. There's nothing wrong with pursuing a craft, etc., is there? Becoming a machinist, an electrician or a plumber (for instance), has high value in our society. And for many it might be a vastly better use of their time and money than the pursuit of a "sheepskin" that ultimately leaves one shackled to a grim future.
Just some thoughts.
John~
American Net'Zen
2
Megan McArdle's recent column in the Washington Post correctly calls out the problem. We have a social contract requiring college degrees, but they aren't serving the set of purposes that created this social requirement in the first place. The World has changed, but the very place that is supposed to educate our most promising citizens is very much as it was decades ago. The real problem with student debt is this combination of social requirement and ineffectiveness. If the debt was held against an asset, would we be having this crisis? The real crisis is the social bind we place our children in.
1
There is an extremely simple fix for this problem. Make private student loans (not the federal ones, but the ones from banks) dischargeable in bankruptcy. That will instantly undercut lending support for irresponsible loans. It will put bad institutions out of business overnight, and it will force legitimate colleges and univesrities to do the belt-tightening and fundraising necessary to make tuition affordable by students within the boundaries of federal loans totaling $7,000 a year.
College tuitions have skyrocketed because private lending underwrote it. And the private lending only exists because students are strapped to these loans for life. Nothing a bad lender likes better than a loan that never gets paid back and exists until the student dies. Let's put a stop to it..
2
The student loan scam by our nations elite to enslave the earnings of possible young high earners is despicable. The knowledge and grooming that colleges provide is a necessary good for our society. Our universities should be free institutions paid for by the taxation of all including wealthy persons in these United States. People forget the 90% tax rate on wealthy incomes during the 1950's. All that money rolling around the economy made everyone prosperous. Colleges turn out the people who will be running our country in the future. Their education will help provide medical expertise, industrial expertise, and people who can critically think to help solve our societies problems. Saddling them with debt, which is typically underwritten by the wealthy through their corporate institutions, is a practice that needs changing. I have seen nothing but harm coming from this practice. It can limit earnings for a person during the early to middle years of their professional careers keeping them from buying houses, cars, having children and otherwise spreading that money around in our economy. The money instead supports a few elite lifestyles instead of benefiting many not so elite people further down the income chain.
2
Why do we burden our brightest young people with enough debt to break their backs and spirit, often for life? Where are our country's priorities?
4
Private For Profit colleges should not have access to government funds. The federal student loan program was not initiated to include such predatory venues, nor were [today's] greedy high-interest practices of loaning institutions allowed.
Pandora's box was opened under the Reagan Admin, and for decades For Profit 'schools' have actually used federal loans as recruitment lures. Congress has turned a blind eye, so the corruption has spread to Private and Public colleges that have strayed from their mission to educate, and now see students as $$$.
1
It is a national scandal that former students who need and qualify for bankruptcy cannot include their defaulted student loans.
2
Lend monies to college and let colleges lend monies to students ... they then are responsible for student loans and payments.
Take that graph back four decades, adjust for inflation, and it will look far worse.This is a burden on America’s youth, and will ultimately make the nation far worse off. It is a form of quiet corruption that should be stopped.
3
It is now apparent that many students were sold a lie telling them that a college education was their ticket to a great life - middle class comfort, you can buy a house, have kids, make good money blah blah blah. For many that is absolutely not true. There is a bill moving at a glacial pace to reinstitute bankruptcy protection - it must go through. HR 2366 - it's the least that should be done. Apart from that, colleges are not only to blame. The Fed government and of course the banks - the banks greed is ridiculous though of course the government has allowed them to run amok. There are always those that say well you took out the loan, you pay it - your problem. They don't understand that you can't refinance without taking on an enormous monthly payment often, many are taking loans into retirement and may have their SS garnished and the loan servicing companies have been allowed to practice usury with unfair fees and other unfair practices that make it nearly impossible to get rid of these loans if your life does not run on a perfect straight line of no illness, no divorce, no job loss and a stellar rise to making 6 figures.
1
For profit colleges should not exist. This country should provide a free education at nonprofit colleges for all with the ability and desire to go to college. We must do a better job with public schools in general. devos and her crowd, as well as many at the state level, want to kill public schools. All this will take money which means tax increases. There is no other way or this country will continue on a downhill slide.
1
Some countries want their people to be as educated as possible and have access to an affordable higher education. Success is based on merit. Oh noooo, evil socialists!! In Germany, Students just have to pay an administration fee between 100 and 200 EUR/semester, that covers the public transportation ticket and other student services. In France, 200 EUR and 650 EUR/year, depending on the level of study (Bachelor’s/Master's) and study programme.
For instance, average tuition fees for Medicine studies can lead to 452 EUR/year, while for Engineering, students will have to pay around 620 EUR/year. If you want a good education at an affordable price and no debt, (you might also get affordable healthcare) I regret to let you know that you should leave the United States.
2
A friend's daughter had about $100,000 debt after getting her Master's Degree from a better university. She couldn't find any work for almost two years, and couldn't make her loan payments. She's finally working now, albeit in an inferior job than one she was trained for, and even though she's been making payments faithfully, owes MORE than she originally started out with.
This is wrong wrong wrong.
3
Tell your friend's daughter about the Public Service Loan Forgiveness program, and the Income Based Repayment programs offered through the US Dept. of Education. Payments are made based on size of income, not size of debt. Work for 10 years at a non-profit or for a government (local, state or federal) all student loans are forgiven, and it’s not considered income, so no IRS issues.
After running up that first $50,000 and you don't have something lined up, even part-time, how can you not take a time out and rethink things?
1779…public education
Thomas Jefferson proposes a two-track educational system, with different tracks in his words for "the laboring and the learned." Scholarship would allow a very few of the laboring class to advance, Jefferson says, by "raking a few geniuses from the rubbish."
Substitute 'the learned' with 'the wealthy'. So much for the advancement of our civilization.
We tell our children they 'must' go to college to achieve the American Dream and exceed their parents' level of success. So then we put them into debt and say, "Don't go bankrupt or it'll be the end of you" (unless you're a certain orange-haired illegitimate president who appointed a despicable 'Education Secretary who is doing her level best to kill of public education, which should be America's crown jewel).
So we set them up to fail. They can't afford to get married, have children, buy houses and stoves and fridges without going into even more debt.
This money system in America is rigged. Rigged for the rich. Rigged against the poor and middle class. But the top 10% of our country? They're doing great. Because they had parents that did great.
I went to Ohio State in the 70's. I worked and that work paid for my inexpensive state university education (I had to be a 'townie' and live at home to achieve that though). I was the first and so far only person to go to college. My own daughter, when she realized that the money paying for her elite Hampshire College (money from her father's side of family) arts education said "No, thanks, it's not worth many thousands of dollars a year". She may regret it some day but at 31 she's doing fine. Her father wanted her to go to 'meet people, make contacts'. For that amount of money?
Just think what our country could produce if state run schools were tuition free?
9
Re: "Just think what our country could produce if state run schools were tuition free?"
Exactly! High education costs burdening students are an attack on the country.
1
John Grisham has a book out that depicts one law school and how they market their degrees to the detriment of the students.
Many universities today are offering degrees for which there are no good jobs. There should be some rule that makes universities disclose how many of their graduates actually got jobs.
My law school actually cut back on how many students they would accept as a recognition of the lack of opportunity in this field.
2
Two ideas:
#1 In the next election ask the American people if they'd rather give tax cuts to the wealthy worth XYZ dollars or forgive XYZ dollars of student debt. You could do the same with that extra super-expensive missile or fighter jet. Put number against number.
#2 ask colleges to reign in their admin cost and top salaries - and make any funding dependent on that. We now have top administrators and sports on salaries that take 30-40 student tuitions to finance (not one professor is paid yet in this count, and they make a LOT less than administrators).
2
I am fortunate to have been able to pursue higher education thanks to loans. From a low-income family, I would not have been able to otherwise. However, today my debt thanks to interest has ballooned to $150K. During the past 2 years, I was laid off from 3 successive positions and have been on and off unemployment. Ive had to go into deferment, each time accruing more interest. But why should this be? As an American citizen who works and pays taxes, why should I need to go into astronomical debt because I want to contribute intellectually and more robustly economically to society? It feels like a punishment to have this debt lingering over me. At 38, I cannot have children, I cannot contemplate buying a house. I will never be able to pay off this debt and live like a human being in the process. My only hope is to die.
2
It's awful; I am so sorry. You'll get a good paying job soon, I bet, plus inflation might help you pay this down. Hang in there.
There should be a higher accountability for all students who take out loans for study. The problem is that too many students take out loans when they don;t know what they want to do in the future. There's a lot of wasted money! Students should be obligated to pay back loans and not continue to procrastinate in not paying up. That's called responsibility!
1
The author has identified a problem, then recommended a solution that will exacerbate the problem. I would like to see a chart mapping the ease of credit for student loans with the cost of college. The student debt crisis is identical in structure to the mortgage or consumer debt crisis -- the average person will buy more of something than they normally would if the credit to do so readily available. Of course we could solve this problem in 10 seconds -- put the educational institutions on the hook for student load default. Getting the federal government to step in to make college more affordable is a prescription for more of the same illness.
1
Huh, guess this wasn't as blatantly obvious as I thought it was. I figured the entire nation was aware of how badly we are collectively decimating students, and were just cool with it. Okay then. Well now you know. So. Let's move on to the elephant that wasn't addressed--Tuition is absolutely staggering, yet colleges are paying my friends who are now professors the equivalent of dog-food wages. I have yet to find one that makes above the federal poverty line, and there is zero chance that any of them will be tenured. Research budgets in my old department were disturbing to say the least. Every single research endeavor was funded completely by outside grants, and when we received these grants from NIH, NSF, NASA, et al. over 60% of the grant money was taken right off the top to pay for "facilities management". Meaning we as researchers had forty percent of the requested money to pay for using the facility, pay for equipment and testing, pay undergrads, grad students, and our own salaries. Digging into the reeds uncovers that all of that "Facilities Management" money goes straight into the university's general fund, which pays for, among other things, athletics, building construction, and non-teaching staff pay. Our athletics program is on a 30 year losing streak, and to my understanding, most of the University's peons are paid as badly as the professors. So This begs the question. where is all of that tuition and research money going?
12
This is another symptom of the relentless monetization of the American economy. Industrial capitalism must expand to avoid recession, and when there is no new territory to expand into, it attempts to extract more value from existing resources using a combination of lower wages and increased debt. Eventually someone realizes that the debt cannot be serviced, the squeeze fails, and the system crashes. 2008 anyone?
In this calculus, college students and their parents are a resource, and they are being squeezed big time. We don't know when the crash will come, but the increasing defaults are a warning sign. The system runs on faith that the debt can be serviced, until the faith runs out.
6
IT seems odd while Congress voted to increase federal funding for student aide, College's and University's both public and private would increase the cost of tuition by the same rate. This continuing cycle of funding increases offset by tuition increases has left the country with a younger citizens that can not earn enough to cover their student loans. The fact that no one in congress saw this day coming is dis-heartening to say the least if not a total failure of the Governments fiduciary responsibility to the public.
5
I attended a top-tier private university for grad school and graduated into a disaster economy in 2008 with $80,000 in debt after two years, even though I had gotten a $50,000 scholarship the second year. After a year in employment limbo, I got a lucrative job abroad and paid it off. I was one of the lucky ones. Several of my friends are still paying their loans off now, to the tune of 700-800 dollars a month. I look back on my grad school experience and do not regret it, but I don’t think I would recommend doing what I did to any young person who approached about that program.
I have heard now that the tuition is several thousand dollars more at this program than when I attended. I often wondered what substantiated, honestly, a tuition of $45,000+ per year, before you buy one book or eat one meal or pay one month in rent? There doesn’t need to be just some research into default rates, but also some research into HOW these swanky private universities (in this case Columbia University, but it certainly applies to any of the others) justify these rates of tuition. They will argue that they are private and therefore should not have to do so, but when many of your students are funding their education with federal money I think that argument doesn’t hold water. PLUS, many of these programs employ “lecturers” for several of their courses, who make very little money. Half the schedule is taught by these “lecturers”. The tuition rates need some serious looking into.
10
As a believer that a college education is essential to democracy and for individuals to advance, I have been watching this slow motion crash for the last 30 years as the cost of tuition and attendance has increased faster than inflation for at least that time. Here are some root causes:
1. Today's colleges and universities are mega businesses whose primary purpose is to enrich the faculty and and administration to increase their brand. Let's start with frequently huge endowments and real estate ownership, both of which avoid taxation, and little of which is actually used to further the educational purpose of the institution. Practices such as tenured professors teaching few courses, using underpaid Adjuncts to teach most courses, building country club like dorms, buildings and cafeterias (sushi anyone?) show the drift from the emphasis on education.
2. There is a disassociation in many cases from the subjects / skills taught and the modern economy. The focus on a liberal arts education is admirable but misplaced for many students. Yes, each student must be exposed to multiple subjects, taught to question, reason and figure things out for themselves. But the economy is shifting and many of these topics are less important to economic self sufficiency than in the past.
3. Education is the only purchasing decision of this magnitude made without consideration of the utility of being purchased. Students are not given the info to analyze the economic benefit of their investment.
4
Faculty are not becoming enriched, with very few exceptions. You note this later in the paragraph, but your first sentence in #1 is misleading.
3
The root of the problem seems to be that the for-profit loan system is totally out of control. Why should any student pay more interest than the inflation rate, unless the point is to just turn them into little profit centers for some bank? This country has lost all sense of the common good because every politician is afraid of being accused of being a socialist (gasp!) - and we fall for it every time. What's the point of having a country if we aren't going to try to make life easier and better for each other?
7
Our youth are our greatest resource, our future. But, they are exploited financially when they attend college and leave college debt ridden. It makes no national sense. College students should be seen collectively as a national asset that will pay dividends by improving this nation. They will earn higher income and pay higher taxes. The will contribute creatively to research solve our most pressing challenges, and contribute to the development of new technologies. They will be more informed citizens and they will teach the next generations. Students should be venerated, not hamstrung. They should be helped, not exploited.
4
I think more transparency is necessary. These institutions should make prospective students aware of what risk are involved in attending college and borrowing money. Otherwise, it is fraud to sell young people on a dream that isn't consistent with reality. How many people with "advanced" degrees are underemployed or unemployed? It's the old bait and switch. Someone has to be liable. It is false advertising.
2
The college system in America survives plainly because we fear the alternative for our children (no college). Because the alternative is horrifying to everyone, borrowing for college will continue escalating.
2
Absolutely yes -- any objective look at the US (and world) economy today shows that unskilled, uneducated workers have to take the worst jobs -- no more well paying union factory jobs! (all gone to Mexico and China!) -- so you have a "choice" of being a minimum wage Walmart cashier, Starbucks barista or McD burger flipper.
What career path does a non-degreed person even have today? And parents are terrified their kids will drop out of the middle class entirely.
The saddest thing of all...is that often the overpriced degree...especially if it is from a mediocre college or university (does not even have to be one of the heinous "for profit" ones) is often $80K to $200K spent on a piece of paper, that cannot even get you an UNPAID internship.
I know young people with master's degrees, who are driving school buses, part time, for $10 an hour.
1
We are no longer an agricultural nation.
No-tuition education should include university.
All educational debts should immediately be forgiven.
3
Sorry, but anyone saying that this problem is "worse than we imagined" has not been paying attention for the past 20 years.
I guess it was hidden in plain sight. Or maybe the news media chose not to report on issues during the past presidential campaigns where it was brought up. In fact, way back in early 2016, college students were talking about this as a defining issue in the upcoming election.
I am happy that this is being reported now, but the media could have been running articles for 15 or 20 years to let young people and parents know about, for example, predatory lending from private banks and the elimination of bankruptcy protection for young people in regard to student loans and other "guarantees" to private lenders so they would reap big profits off of students.
The problem we have is a GREED problem. And even today, most students and parents don't know that the GOVERNMENT makes a profit off of student loans. This is outrageous.
8
Interesting article that would benefit from additional information including the share of student debt held by students at private nonprofit, public colleges and private for profit; share of debt held by graduate vs. undergraduate students; financial demographic of those attending the three school types; and the percentage of school loans held by those out of school and those in school.
It would also be good to address how much educational inflation contributed to the growth rate of student lending. Since the early 1980s, the inflation rate of higher ed has been over 4x the rate of general inflation. That is an outlier.
Another factor is the federal government's role as student lender. Over $1 trillion of treasury debt has been issued to fund student loans and going forward over $100 billion a year is expected to be issued annually and that adds to the financial burden of the government.
One last issue - the level of student debt outstanding more than doubled since 2009, which means it grew at over 8% a year. Did the quality of the product provided improve that much?
Makes one wonder if student loans are a symptom of a bigger problem.
5
We made a policy mistake nearly 40 years ago when we decided to shift funds from the Colleges and Universities to individuals. The assumption was that they would make better decisions because of self-interest. The reality is that they have poor information, inherent decision biases and emotion which makes their decisions less efficient and effective then institutions. The outcome of this policy decision are private for profit diploma mills of questionable vale and public universities charging tuition of $12-$15k not including room and board.
7
I agree with Elizabeth Warren. Banks get zero percent interest loans from the government, why shouldn't students? This is just another way of ensuring that those with money are always advantaged. Either make college free, or at least provide zero interest loans.
23
This is a trade off where a lot of rules are placed on banks to make sure they're fiscally responsible (not always successfuly, but that's the idea). Would we accept regulations on what students can do with their 0% student loan? The impulse might be to allow people to study fields that are more safe and likely to provide a return on an investment (medicine, STEM fields) as opposed to arts and humanities. I don't think that kind of control is healthy.
1
Banks need to mark up loans. Otherwise they couldn't even pay window washers.
I borrowed over 200,000 to complete a doctoral degree. I was told I would be able to pay via income based payments for 25 years at which time the debt would be forgiven. However, no one told me that I would be required to pay taxes on the amount of forgiveness. At that point the amount forgiven will be much larger than the original debt. I don't look forward to that time. I am pleased that I finished my degree but I may have chosen different finance options had I know all the facts.
11
And none of these horror stories consider the fact that in many families there is more than one child who will need a college education. The biggest thing: parents, NEVER cosign a child's college loan. You may end up paying it off for them, but do not get on the hook personally.
10
I worked in the for profit education industry for fifteen years. The school I worked for granted more graduate degrees for people of color than any other in the nation. One of the things I learned was that student loans are being granted to tens of thousands who are not prepared to do college level work. The biggest default rates are among those who get into debt but are unable to compete their degrees. Obama's reforms helped to improve that situation but now Trump is not enforcing the reforms.
Profit and non-profit schools are both victimizing the unprepared.
19
Everyone should stop paying their student loans - sorry but it was deceptive and predatory lending. i graduated HS in 07, college in 12. the jobs in my field never paid more than minimum wage - i left the field entirely. im no better off now then when i graduated HS - actually, worse off.
if everyone withheld their debt payments to this indentured servitude system, it would collapse overnight.
im looking forward to this debt bubble bursting the economy into a million little pieces. its not a question of if, but when. i bet at the same time we will conveniently find another major war of choice to fight!
7
Just curious. Did you research your chosen career choice, and its compensation, before you entered school? This could be an argument for more financial education classes in high school.
What about the negative effects of this debt on the students? The failure to make their payments and defaulting on student loans crushes their credit reports. Which in turn hurts their ability to do business... shop, rent, buy automobiles, homes. The ex-student pays the price in terms of life style and financial well being. And, of course, these effects ripple on.
8
Only in America. This whole racket needs to be shut down. But I fear, as with past financial excesses and malfeasance, reform will only come after the whole s- show comes crashing down. I went to Canada and the UK for my graduate education. Got a better education for about 1/5 of the price. Students and would-be students, vote with your feet!
Whoever wrote "teachers and staff need to be paid" is missing the point here.
And P Weisback's comment about usurious student loan lending (6.8% when you can't even get 2% on a savings account?) is spot on. But no one except maybe E Warren and B Sanders ever seemed to care.
23
Here in NJ we have an excellent state university system. It was once affordable and a great alternative to high-priced privates and out-of-states; this is no longer true. All of them are now $25-$30 K per year which is completely unaffordable to any middle-class family without incurring extreme debt. Where does the money go? Stadiums, workout centers, hotel-style dorms, athletics, million dollar salaries for administrators and coaches, and billion dollar endowments.
None of this will change as long as families continue to mortgage their lives to pay for college. Unfortunately, the wealthy will continue to pay whatever is asked, and everyone else will borrow and borrow and borrow to try to keep up. This is yet another issue where government regulation could easily help to alleviate the problem, yet we refuse to see the obvious - this is unsustainable. The only affordable alternative here are the county colleges, which are also excellent and far, far more affordable, but unfortunately can only take you through the first 2 years of a 4 year degree.
22
One offered solution to the problem, the Public Service Loan Forgiveness (PSLF) program, has evolved into another scam for exploiting students. This program is supposed to allow teachers in public education to have their loans forgiven after ten years. After ten years I signed the form and then learned a) the ten-year clock starts only *after* the form is signed; and b) upon signing, the loan interest rate can go up – mine went up 73%. None of this is explained in the PSLF form, or by the university offices that manage the forms. Once scammed, no university office or government agency exists on behalf of defending students’ rights.
14
You should check with the US Dept of Ed. A teacher friend of mine just signed the the form you're referring to. She has been making income based payments for about 8 years, and was informed she only has 26 payments to go. Hopefully you were given some bad info, I'd double check. She's having about $198,000 cancelled.
What you say doesn't make sense. How can your interest rate go up like that? 73%??? And further, what 'form' are you talking about? The employer certification form? They didn't even have that for a number of years after the program first started. The clock starts the moment you begin working in an acceptable job area. I didn't fill out my certification form until 6 years after starting the job. No problems here. You mention a university office that 'manages the forms." This doesn't make sense either, FedLoan is handling all PSLF loans now. FYI-NPR is doing a special on Monday on how FedLoan is messing things up.
Why not cite other possible options, outside of 4 year colleges? We are at a juncture where many trades are about to see skilled workers retire, and still we promote this 4 year college dream as the only option. IT IS NOT! We need to retool our thinking, offer other routes, like community colleges and trade schools.
19
Banks should just make the interest rate affordable for students, instead of 6 or 7% make it 2 or 3%. The interest is what can sink a college grad who doesn’t make that much to start. I can refinance my house from 7% to 4%, but banks won’t let college loans get refinanced, and thanks to President Clinton discharging loans are now impossible. Why can’t student loans be locked in at 3%?
5
Not just Clinton. George W. Bush, too.
The interest rates are at this level because of risk, mainly the risk of default, which as we can see if fairly high. Banks aren't charities.
Colleges cost money to operate. Teachers and staff need to be paid. Facilities need to be maintained. Student tuition makes up a fraction f this total cost. However, what I've observed at CU is a building frenzy of lavish student centers and nonacademic amenities meant to attract wealthy students. I doubt if this investment pays off. When will colleges and universities learn that academic and teaching excellence doesn't require making their campuses into resorts?
11
Righto, and; "When will colleges and universities learn that academic and teaching excellence doesn't require" paying football coaches millions/year to help kids major in concussion?
4
And that you don't give your student-clients the same learning opportunities with adjunct faculty running among several institutions, as you do with full-time faculty.
1
Let's look at the data from NCES as well as their source data from the federal reserve. The one item missing from the analyses is the distribution of student loan debt. The average debt is 22,000 and there is no question this is troubling but here is where it gets interesting. The average debt is calculated from students who have debt but 30% graduate without any debt. Second, the median debt is slightly less than 17,000. Third, of those with debt, over 25% have less than 7,000 of debt and almost one third have debt less than 10,000. Taking these all together, over half of college graduates have less than 10,000 in student debt (or none at all). It is even better if one removes for profit and private college debt. What is true is a quarter of all students with debt owe 43,000 or more (about 17.5% of all college graduates) and this skews the average debt statistic. The data is not normally distributed and the average debt is a misleading figure.
6
Thank you for this clarification! Very interesting.
I have learned through the years, merely from reading newpaper articles, how to design the financials of any given system here in America. The proper approach is one that: 1) is run by and benefits those at the top, while misleading and exploiting those at the bottom; 2) obscures the view of its shortcomings; 3) has loose and ineffectual regulatory mechanisms, and token disciplinary actions; and 4) addresses sustainability by seeing to it that those who support the system -- and in the particular, the political class -- are richly compensated, directly or indirectly.
15
Why are lenders involved in education at all? Education should be publicly funded.
11
Wonder why we have a shortage of teachers? Most would have to live more than one lifetime to pay off the tens of thousands of debt they accrued in their vocational pursuits.
A friend of mine has a PhD from Columbia's Teacher's College. If she lives and works (quiet literally) until she's 100 as a tenured department chair at a major university, she will not be able to cover her debt.
Two things we've got terribly wrong in the U.S. -- Access to affordable higher education and healthcare for all.
30
One other college problem to consider and address is the trend away from full-time professors toward the use of "adjunct" teachers. An adjunct teacher is paid a little over minimum wage, dozens can be hired, and the college or university saves a bundle of money. Unfortunately, institutions of higher learning tend to spend the money they save on salaries for more employees in administration. Colleges are top-heavy. Would parents (who are often in debt for their children's education, too) be angry to learn that the teachers at their students' colleges may be on food stamps because the salaries are so low?
I know all this because I was one of those adjuncts.
38
The real root of the problem is that many students are not getting any education, even if they are graduating. A 2008 study by the US Department of Education found that 5% of recent 'college graduates' are functionally illiterate, and another 20% read at the fifth-grade level. Anyone who has read books like 'Academically Adrift' will not be surprised.
'College graduates' like this are not going to find the sorts of jobs that will allow them to pay back their loans. Employers will put them to work waiting on tables and answering the phone, and rightly so.
5
I appreciate the writer keeping the burden of student loan debt in the public consciousness. However, these articles consistently leave out two significant issues. The most glaring is the issue of interest rates on student loans. They can be as low as 3 1/2 percent or as high as 8 or 9 percent on parent plus loans. The US government could affect a significant change in the rate of repayment, while significantly reducing the repayment burden on borrowers by simply lowering the interest rate to something that is more reasonable. If borrowers could refinance their loans at a 2 or 3 percent interest rate, the ability to repay those loans would increase dramatically. And the burden on students to repay would be diminished, freeing up income to buy a home or save for retirement. The second issue never discussed in these articles is the issue of parent plus loans. When students are allowed to borrow up to $6,600 each year to help finance their education, the parents are often left shouldering the remaining costs. Many parents resort to parent plus loans. The interest rates are high on these loans, making them difficult to pay back. Those of us that are trying to save for retirement are hampered by the existence of these loans. Why is the government making money on students and families? The vast majority of Americans are paying their debts back faithfully, but are burdened by this debt both at the beginning of their careers, and at the end, for parents.
23
rates,rates and more rates!
you hit the nail right,democrats and republicans do not care.
Obama was elected by overwhelming support of the young(mostly students) and democrats had the majority;all they did was halfhearted LIP SERVICE!
Exactly!
College tuition is unaffordable for many reasons. States cut back on support, federal government filled the gap, colleges saw the money flow and the desire and need to get college education increase and jacked the rates and the federal government loaned more, etc etc etc.
7
That the private for profit schools are the ones with the highest default rates does not surprise me. These schools prey on the students who go part time or are lower skilled and dream of advancing. Many of the students take on this debt, then do not even finish school and earn their degree. Sometimes it takes many years if they do, as they also hold down jobs to help make ends meet. Those that do make it out in the typical 4 years earn their degree then cannot find employment at a high enough salary/wage to pay for these debts. The amount of litigation the private for profit schools have been in over the last 5 years or so is incredible. And now the feds want to regulate them even less. That's not going to help the default rate on student debt.
4
"Loan performance should also be tracked for at least five years instead of three."
Ahhh, excuse me, but why shouldn't loan performance be traced over the entire term? My guess is, mortgage lenders, for example, can measure the performance of their mortgage portfolio over the term of all the loans.
10
Has anyone come up with an answer to whether or not most of those in default are simply waiting for the notion of 'debt relief' to surface, what Bernie Sanders continually floated as the Pied Piper of those drowning in Student Loan Debt?
2
The problem has been growing for a lot longer than Bernie's attention to it, so I'd say probably no, most aren't counting on debt relief coming to the rescue.
1
Way too many parents and kids willing to take on debt for the sake of status and luxurious settings and amenities. Far too many students graduating with relatively worthless majors. Far too many parents and kids look down on community colleges and state colleges where tuitions are affordable.
There are many reasonably priced options
7
Both of my children attend SUNYs. Both of them received offers at private and out of state colleges. Neither of them could really justify taking out loans for those schools-but many of their friends are doing just that. A lot of families are sold a bill of goods that they are doing something great for their kids by overextending themselves for the more expensive option. The guidance counselors at the private schools in NYC do not ever even mention SUNYs as an option to their students.
1
When the federal government started backing student loans universities saw the sky was the limit for tuition and charged accordingly. Parents and students apparently can't figure out what the interest rates are don''t believe they will have to make payment. An education system and government that is out of control.
5
College prices were considerably more affordable when individual states provided more subsidies for their state school systems. Now these subsidies are greatly reduced and the student pays more. Priorities need to change if there is to be any lessening of student loan debt.
9
They're spending all the money on Medicaid and retiree pensions. There is not easy way too reduce these costs, since they are required by the Federal government and union contracts, respectively.
3
Please cite your stats for this. Professors need to be paid, and colleges are constantly expanding and providing more services. The interest rates for college loans are several times more than for many Wall Street and other investment schemes, and unlike them, are one of the two things cited in Bush's bankruptcy bill that CANNOT be declared under bankruptcy. The other is credit card debt, i.e., payments to the huge banks that carry these loans and enjoy lending rates as low as 2% and can even get bailed out by taxpayers.
This is yet another of the many reasons why young Americans should consider moving to a more humane country.
7
Do some research. It's incredibly hard to immigrate to a "better" country. They've wised up about Americans fleeing our rotten health care system, and now this. There are visa requirements, limitations on being able to work, etc. Face it: you're trapped here.
3
Perhaps it is time to look more closely at the value proposition of higher education. Public universities have become sinkholes of money with inflated administrative and faculty salaries that is beginning to trend in a similar fashion to athletic coaches. Students and their parents are treated like ATM machines with no attempt to control cost by high paid administrators. Education should be about empowerment and engagement of young minds not entertainment places for wealthy Americans and most recently privileged foreign students. It should not be another way to burden the less affluent students for life with student loan debt and taxpayers who will end up paying for the mess being created.
7
All of private higher education should be pay-what-you-weigh, a system based on family income and assets, whereby a students family pays a fixed % of assets/income as tuition. As it stands, "tuition" is an artificial construct, an exorbitant drain for some, and an artificially capped cost for others. Colleges market the "real cost" of the actual education in development/fundraising materials, and yet the sticker price - "tuition" - remains, despite the discount. This would eliminate the need to borrow, in most instances anyway, and would also force colleges into a more transparent enrollment management process (i.e. the richest families would be recruited like star athletes since they could pay the most.)
1
"the richest families would be recruited like star athletes since they could pay the most." Is this really the best way to decide who goes to college and where?
7
@JP - No, but it's a pretty apt description of how the real world works!
3
There is another negative factor here which isn't mentioned: Parents don't finance tuition like they used to. (At least I don't believe so but I lack hard data.) I'm 58. My middle-class parents financed around 70% of my tuition at a 4-year private college without any other financial aid. It was always the question growing up: Are your parents going to send you to college? Well, maybe the firstborn but not the others, etc. Perhaps this warrants an article just by itself.
3
Consider yourself lucky because most of the people I graduated with received $0 from their parents. Moms sent care packages now and then but anything else, no. The reasons varied from too poor to you're 18 stand on your own two feet. I went to a major land grant university, was offered jobs that complimented my major to pay for tuition, room and board. The combines Federal and State governments were required to pay a minimum of 60% of operating costs. Tuition then was $16 per credit hour and you typically took 12 credit hours a term. Room and board was about $300 a month, a bit higher than off campus but helpful. Tuition now is $499 per credit hour and Federal and State funding is around 26%. Only a handful of undergrads get jobs and they do not pay enough to cover books.
The Morrill Act set up universities where people that wanted to go to college could afford to go. My $7 an hour campus job, small scholarship, and Pell Grant paid for my expenses. We need to hold government and land grant universities to the letter of the law.
16
Soaring tuition costs combined with flat wages is a metaphor for the economy as a whole. University costs have risen dramatically, pushing the money to the top (administrators) and the burden to the bottom (students with high interest loans and adjunct professors with little benefits). When education becomes a cash cow for both the learning and lending institutions and wages are suppressed in the economy, the only people who can afford to get an education are the students whose family's private pay. College becomes a mirage for anyone who relies on loans as they are exploited through high interest rates and, in the case of some trade schools, false promises of career success and the ability to pay back loans. The kids trying to climb out of poverty are suppressed by years of debt burden while the kids from wealthy families get internships, work unfettered by debt and will be freer to succeed in their chosen field. It's a subtle suppression and shame of the American dream.
10
What is the average balance on loans in default? If it matches the $22,000 average debt taken on (I have no idea, but a good place to start), this seems to be quite manageable. Anyone with a job that pays better than minimum wage should be able to service a loan of this size. I suspect that many of these defaulted loans are to individuals who (1) have much larger loan balances than average or (2) would rather spend the money on something else.
5
I would suggest that you look at the MIT Living Wage calculator. In almost every area of the US, the minimum wage is much lower than the living wage. That living wage assumes full time employment and uses federal numbers for food that ensure a very meager food day. There is nothing in that estimate for paying back a student loan. There are many factors behind the student debt problem. If we are to solve the problem, we need to address each one, not just blame students.
4
"(2) would rather spend the money on something else."
yeah, like in my case - food and rent. the debt service companies will survive without my debt slavery.
Agree. Collusive system. College costs have been allowed to skyrocket on the backs of these loans. The "true cost" of education is impossible to deduce. There is no consumer-friendly way to understand the cost or value - everyone is tied into the cost growth, borrow more fee structure. (Instead of a presidential run, it would be interesting to deputize Ellizabeth Warren on this - applying some of the same reforms she brought to the credit card and reporting system to this large, complex program.)
A real problem also is the lack of consumer friendly policies on the debt. Loans are complicated and sometimes costly to refinance, consolidate. Sometimes it is not permissable to pay them off early without penalty. The loan servicers do not feel as if they are consumer/student focused at all. US Government as loan shark.
I'd like to see a "percentage of income" sliding fee scale for repayment, as well as consideration of caps on tuition based on family income or based on going into certain fields. And, let's look at why we need four years instead of three (like many international programs) for a college degree. And, should there be a year of service or work before attending? 18 seems younger than ever before and in some ways we're encouraging kids to finance a year of exploration in college while they figure out what they want to do before getting serious. Heck, I think we need an overhaul of the entire post-secondary education system.
2
The short term consequences are tragic. The long term consequences are catastrophic. And entire generation burdened with student loans will put off marriage and children, they won't buy houses, they will get handcuffed to the jobs that barely keep them afloat, they will put off every car purchase by a year or two, every luxury purchase by more. The result, in the long term, is a stagnant economy. We cannot, as a nation, survive, if two of the largest segments of our economy are Medicare and student debt service.
2
Not exactly an entire generation. We live in a rural area, and there are many non-college educated in that generation who are running their own small businesses (plumbers, electricians, etc.) Also, about 30% of the people who do go to college graduate debt free.
3
Corporate profiteering first infected our retirement system by transferring pension funds into 401K accounts. Profit making is the cause of our exorbitant health care costs that drive patients into bankruptcy. Now, our For-Profit education system has become another means of transferring wealth from the middle class to the financial class.
In developed countries, health care, retirement, and education are funded through rational taxation. Our country has allowed these institutions to prey on our citizens.
10
Where is all that tuition money going? What is it being spent on? Why are college costs rising so much faster than everything else in the economy, except, perhaps, medical costs? Something here is totally out of whack.
10
Interesting, don't you think, that the 2 areas that have costs rising substantially faster than the core inflation rate are the two areas where the federal government is trying to help us citizens with affordability?
To answer your question, the reason why college costs are rising so fast is due to the expansion of credit available to cover those cost. Expansion of credit is inflationary.
The worst thing a society can do to hold down costs when something becomse unaffordable is to make credit available to buy what is expensive.
We saw this with housing just over 10 years ago. Easier and more credit just led to higher costs.
We know how that worked out.
2
College and University costs, like medical costs are driven by labor costs, are service intensive and therefore not amenable to the type of productivity improvements seen in less specialized labor intensive industries.
I laugh at this student debt situation. Actually it is no different than our national debt. No government entity pays any attention to debt. We opened the doors to students to borrow, and we expected what we have today: no payments, chaos. Why be concerned? Is it always the American taxpayer that must be concerned? Was there ever a problem in D.C. that the taxpayer couldn't solve by taking out his wallet and paying more taxes. Our government's freedom of no fiscal oversight is pitiful.
2
The federal student loan program began in 1965 for the purpose of making college education available to the masses. The underlying principle was that banks would make very low interest rate loans available which the federal government would guarantee so the banks were totally protected. Over the years this "high minded" idea to give our young people a chance to rise to their best selves has been co-opted and changed into a program that allows big business (banks and colleges) to take earn big profits by putting innocent, unsuspecting young people into long-term debilitating debt.
- Abusive colleges non-profit and for-profit tuition practices: With easy credit available colleges have raised tuition over 3x faster than the cost of living and over 2x faster than health care costs rose over the last 40 years.
- Even though the loans are risk free: interest rates have soared with banks taking rapacious returns and penalties from these young people.
- The government protects the banks not the student citizens: A special law was passed so that the students cannot discharge these loans by bankruptcy even though most any other debt could be discharged through that process.
What we have is a collusive system between colleges, banks and government that baits students into borrowing for a significantly overpriced education and turns them into, at best struggling youth and at worst, "dead beats" before they even get a chance to succeed in life.
24
I agree with this post completely, "a collusive system between colleges, banks and government". Two events created this situation. The government changed the law to prevent discharge of student loans in bankruptcy and then began to guarantee banks loans so that the banks could not lose money. This has resulted in a flood of new money to college education, now around $1.2 trillion.
With the flood of new money flowing into college education simple supply and demand took over. As demand for education soared with all the new money three things occurred. Schools raised tuition substantially, went on a spending binge, and raised salaries. The colleges and banks need to have some skin in the game.
6
How to live in USA:
Rent your dwelling, drive an old car, throw yer bills in the wastebasket.
Don't expect the colleges, banks or government to do anything significant to change the student loan system as it exists today. They like it just the way it is. Our only option is to vote out the old and vote in the new - only those legislators willing to make the hard choices - no, not everyone gets a government loan to go to college - only the best, hardest working students and then, only for tuition and only to public colleges. No more government loans for private or for-profit schools.
Until then, parents and students must reign in their own greed, ego and sense of entitlement. Never borrow money from private banks. Never borrow money for the first 2 years of college. If parents can't afford the first 2 years of tuition and living costs at Cool U after having 18 years to save for it, send the kid to the local community college and have them live at home. Be smart. Only take on the limited federal loans for tuition costs for the last 2 years. Do not borrow for living costs. Don't borrow more in total then the expected first year salary out of school. If you can't work it out with the advice above, don't go to college until you work and save for it in advance or just don't go. You can thank me later when you watch the horror that happens when kids graduate to loans that will suck all the joy out of their lives and you remain free.
Like like ruinous medical bills that should not be tolerated. The same should be worked out for college debt. On and individual bases the the student should be followed all through their collage career and their debt should be adjusted accordingly.. loans should be given or not depending on the situation. The loan should not just be given but it should never be taken away just because the student can’t pay if they are doing the right thing
1
The problem is that If a student attends college for 4 years (8 semesters) and receives Federal loans for each semester, said student will depart with 16 separate loans (1 subsidized and 1 unsubsidized for each semester). One loan is far easier to manage than 16. Consolidation is not automatic, it can be requested and denied, meaning payment must be made on 16 loans monthly. In many cases, student loan default would be harder to achieve if payback was intelligently managed.
3
I attended my city college in 2008. As a single minority parent with 2 two boys and a full job as a assistant property manager watching over 100 apts at most was very challenging for me. However, with all registered semesters and taking up to 12 units per semester with my understanding that i would, and could achieve my goals. Not true, talking to some counselors with the understanding what my goal was i was referred to different counselors each one of them telling me that a course that a prior counselor had suggested i take would be a waist of time, this type of situation became overwhelming and i went into a major tailspin. Nobody at my city college was of any help to me when I applied for a loan nobody discuss with me how the loan process worked and what my responsibilities would be and how much interest, or anything for that matter.
Here i am at 50 years old 10 years later, with no associates degree, but however carry over $12.000 In loans. Thank you to my city college for bouncing me around counselor to counselor with really no interest in my education.
6
Don't try to blame the college for your lack of responsibilty. The loan process is that borrowed money needs to be repaid. Did you really need that explained? The loan documents you signed contain the interest rate, payment terms, and other details. If you did not understand them then you should have asked and asked again until you understood.
College catalogs have course requirements for the degrees offered. Sometimes there are electives required so maybe that was the disagreement among conselors?
8
Reader in Wash, DC, I'd like to agree entirely with your perspective, but I would temper it with my first-hand observations at a large university. Nowadays, students typically have multiple, often conflicting, sources of information about their degree requirements and which courses satisfy those. There will be a course catalog, and advisors who may or may not be well-trained. There are also probably computer systems students can access to see what requirements they have completed and online course schedules through which they can search for courses that satisfy remaining requirements. These sources may not align well. Add to that that when schools change their requirements, what's required for, say, students who enter in 2015 might not be the same as what's required for those who enter in 2016 and you get plenty of reasonable room for student confusion. Schools need to take responsibility for those issues.
4
Yes, the paperwork is a nightmare. Some lenders send you coupon books, others bungle your repayments. It is not straightforward, reader in DC. My lender actually tried to extend my payments beyond principle and interest thinking I wouldn't notice. I had to force a three way phone call with the state authority in Austin and the lender to "magically" win a letter announcing "everyone" was getting $500 "off" - there's a class action suit waiting to happen when a few kids keep perfect records (finance majors, any takers?) and show how these lenders diddle the math. Loans get sold and repackaged, your original note is sold off to other agencies in a chain of plausible deniability.
How many people do you know who can actually do a time value of money calculation? Can calculate in any way other than straight line?
1
If our laws and practices cannot help the future generations find affordable options for a college education, our society will soon pay the price in ways that cannot be measured by loan charts. Solving this crisis should be a major priority for all voters and lawmakers.
9
Why burden students with high tuition? If a college educated workforce is essential to maintaining a strong economy, then one of our priorities should be to maintain a low tuition post-secondary education system. A sensible definition of low cost would be that a hard working student should be able to earn enough income to cover tuition and fees as well as living costs.
My oldest grandson is beginning his second year in a nearby state university, Winona State. Undergraduate tuition and fees at Winona State for 2018 - 2019 are estimated to be $9,693. That's 3.35% more than he paid during his 2017 - 2018 year. The CPI for Urban Consumers in 2017 was about 2.1%. Room and board in the residence halls, textbooks, supplies etc adds about $12.000. His cost of attendance for the 2018-2019 year will be $21,700
During his first year, my grandson worked about 20 hours per week during the school year and about 40 hours per week during the preceding summer at a wage of $11.75 per hour. His gross income was about $16,000. His gross income for the 2018-2019 school year will remain constant.
That's a $11,000 shortfall in two years.
11
So what? Your grandson will be making considerably more than minimum wage after he graduates (I assume). He will be working more than 20 hours per week. He should not be expected to pay for an entire college education out of a minimum wage paycheck. Of course kids don't earn enough to pay for a college education while they are young and in school. That is what parents, loans, other financial aid, and (dare I say it) grandparents are for. Did no one save anything to pay for your grandson's college education?
3
@SB The anecdote is intended to make real the struggle faced by young men and women today as they enter college. My point is this. I believe that students should be able to earn their education and pay as they go. That is just not possible for my grandson's generation.
2
Every single parent I know is highly concerned about the cost of education. Many Alumni from my college are upset that, although they are dual upper middle class earners, they can't afford to send their kids to the school where they met. Middle class schools should charge middle class prices, and we should make it easier to borrow. College loans should not be a trap laid for college graduates.
4
Mr. Powell the new Fed Chairman has suggested that immediate relief can be had, by Congress repealing its counterproductive law, passed by pressure from the financial racket, which disallows discharging student debt through bankruptcy.
As it stands now, a lot of people are taking out student loans, to "go to college" and "earn more lifetime money", for courses which do them no benefit, and will not lead to well paying jobs, not enough to ever to pay off the loans. They're doomed to failure and indenture to the financial industry and the government. The banks and the colleges get their money no matter what.
It is the intersection of the financial racket with the increasingly worthless "higher education" racket, the result of conning the public that it's a good deal for everybody to go to college, even if they are not capable of it and is guaranteed to bring them trouble. The Fed prints some more money to pay off the banks. What a total corrupt fraud.
Congress is responsible. As specified, Congress wrote the law in the 90s disallowing bankruptcy in discharging these debts ,for essentially worthless "education", which will never ever be repaid. The politicians are scared enough of the financial racket that they won't confront this.
8
If Bankruptcy Court could discharge student debt, the next stop after graduation would be the Court. Bankers have figured this out.
4
heckler - you act like bankruptcy comes with no punishments. good luck getting anything other than an extremely high interest rate loan for any major purchase for the next 7 years after bankruptcy.
its ok though, the debt servicers will eat up my SS checks if SS even exists when its time for me to collect.
Tax cuts for the rich even while there are federal deficits and trillions in national debt, means that no relief for college students is on the cards.
11
Here is the unspoken dilemma:
The very wealthy 1% are just as concerned about their children being educated, inheriting wealth, and getting the levers of power, as the working stiffs are about their children being educated and competing for a better life than their parents. The 1% do not want their children to actually HAVE to compete for power based on ability, so decimating higher education for the working folks using unreasonable debt gives the 1% children a much less competitive position towards power and retaining wealth. Now, the economic benefits of fleecing the poor, and middle class, cannot be ignored either. There is profit in the poor and middle class chasing an unattainable pot of gold at the end of the education rainbow.
27
Yes, spot on. The wealthier classes graduate debt free and do internships to pad their resumes, landing jobs at Google, Amazon, Apple, etc. and get stock options and are set by the time they're 35 (not to mention a trust fund too). The lower classes are working a career job and driving Uber on the side trying to make ends meet and are harried and tired and unable to network on weekends for their day job (golfing, barbeques, etc.). The wealthier classes, to quote the late, great Molly Ivins, "think they've hit a home run when they were born on 3rd base." (she said re: George Bush II)
6
Mike W, you nailed it.
Let's add: as even the most rudimentary political science will show, the 1% most likely vote Republican
1
Why are we giving tax breaks and then indenturing out young people to pay for them? Investing in our youth is the best thing we can do to insure the prosperity of all our citizens.
14
Young people can work their way through college as they have done for generations. Studet loans offer cheap and easy money and the colleges waste it. This has nothing to do with tax cuts.
3
I'm not sure it's as possible as it was when I was young to work your way through school anymore because of the very inflated costs. This is the problem people are trying to describe. Loan program enables tuition to be unreasonably high - my daughter's school is above 70,000 this year.You have to look at tuition as % of income to see that a part-time min wage part-time job can't help kids get through school like it used to. We've built this problem into the system.
6
When I attended the "West Coast Ivy" in the '60s, tuition started at $900/year and had risen to $1500/year by the time I graduated. Tuition at UCLA law school a few years later was $525.
Yes, I could meet those costs with the income from summer jobs. Those numbers are NOT true any more.
And yes, it DOES have to do with tax cuts: starting with Reagan as governor, huge cuts were made to the CA university system to give tax cuts. Provide more state support to the university system [and yes, cut the administrators], and tuition can be reduced.
3
I don't know why anyone should have college debt when our national household net worth (financial assets plus homeowners equity) is $100 trillion, 40% of which is owned by the top 1%. We can easily afford to put 20 million kids through college, with the government funding two full years at an in-state school and the family covering the first two years of community college.
That would probably cost about $200 billion, roughly the amount of the Trump tax cuts per year; the bottom 60% only gets about 20% of the benefit of those. Or if we want just the top 1% to fund it, we could combine going back to year 2000 rates and treating capital gains and dividends as ordinary income, bringing in about $200 billion. In the latter case, we'd probably have to also tax stock buybacks around 20%, to limit shifting from dividends to buybacks.
Tax increases on the rich preceded both the Clinton and Obama booms. After Obama's 2013 tax hikes on the top 1% (due to the ACA and partial expiration of the Bush tax cuts), GDP growth was faster in 2014 and 2015 than in 2017.
11
Yes, this makes great sense. However the wealthy don't want to give up their privileged positions and secret society. There are morally wealthy individuals who are for this (Nick Hanauer, Warren Buffett and other billionaires who speak out against their own and in favor of a more equitable society) however just not enough of them.
3
My analysis of why this is happening is because schools are focused on attracting students in order to maximize their revenue and/or reputations. But that often means only teaching "fun" "exciting" stuff and avoiding teaching things that have real life application. The boring "reality" factor is pushed aside because it can be. So students leave school often being unemployable (I stopped hiring recent grads because they're too entitled and lack critical thinking or problem solving skills - skills no longer taught in the identity politics ruled academy).
So yes, if schools were held accountable for making their students employable, that would go a long way towards getting loans repaid on time.
4
This may be correct, but does not address the "for profit" schools. These are money making organizations (for try to hide their profit motive behind a 'foundation' facade). If these were to be required to find the positions they promise the potential students with a guarantee "if we fail to find you the job we promised, we will give you your money back", this would be a great improvement.
4
One strategy for lowering the cost of higher education while making it more responsive to the needs of the workforce would be for public institutions to design more programs that are flexible enough to allow someone to pursue a degree or other certification while working full time. I have taught such students in an evening program for many years and find them highly dedicated and motivated. It also provides flexibility for faculty like me who are nightowls rather than larks!
4
Anyone who takes student loan should check back a few years to see that students in similar majors from the same college are working in the field making goos money.
3
Continue to put pressure on these for-profit "schools" to treat students better. Lifting this pressure, as the administration intends, is crazy. And maybe better education in high school about the options available. Very often there is a public course being offered, especially at community colleges, which prepare students with similar vocational tracks, for much less money and with much better chances of being hired. Helping these students and their parents become better consumers of educational products would be in everyone's best interest. (Well, maybe not Betsy DeVos and her ilk.)
6
Accepted. Rising student debt, a problem for years since student loans exploded in availability and popularity, is becoming unmanageable. That argues for some sort of massive social subsidy. Equally apparent are the attractions to other Western European approaches to other social ills that in turn argue for guaranteed minimum income, free healthcare and other social panaceas.
What this piece-part analysis does not offer is a solution to ALL these apparent needs while still maintaining the incentives required to drive innovation and incentivize the marginal (most people) to strive. Taken together, they represent a black hole of human need into which all production must be dedicated, which in turn requires a leveling of society and an acceptance of administrative states that restrain individualism and dictate the norms by which all people must live.
We have no real solutions, as Euros are finding as they face the need to defend themselves for the first time in over seventy years (and can’t afford to) and as they’ve built immense social safety nets that feature high structural unemployment and creaking economies.
We’ll be arguing about the sustainability of such solutions for decades more, at least. In the meantime, and as regards this one problem, we will need to find different, far less expensive ways to educate our young, because neither the money nor the will currently exists to prioritize THIS problem above all others and unburden students of their debt.
2
Student loan debt is the only debt that can follow a borrower to the grave. If they have a co-signer, it can flow the borrower beyond the grave.
Without the ability to discharge student loan debt in bankruptcy, higher education has become a racket. The student takes all of the financial risk, while everyone else is literally guaranteed to get paid.
7
The borrower being responsible for repaying the loan is as it should be.
2
Sorry, 18 year old ain't wisest. They find themselves with useless and frankly suspicious majors (to the employer) plus massive debt stemming in part to the inflation in college costs, fueled one suspects by easy money (to the 18-21 year old bowerer). That explosion in costs seems be driven by dubious academic fields and amenities used to attract the marks (students).
1
But billionaire bankers aren't responsible. They can claim bankruptcy and have their negligence absolved.
Yes, we need reform. Neither the government nor private banks should profit from young adults seeking an education.
Instead, schools need their own non-profit foundations (separate from any endowment) to administer loans to their own students.
Professional money managers would invest the capital to increase the foundation's resources, so as to allow a modest interest rate on student loans.
Students would be required to remain in good academic standing to continue borrowing from their school's foundation.
Alumni would then repay their own school's foundation, funding the next cohort of students, not some far-off government entity or for-profit bank. After the initial 4-5 years, the cycle would be fully operational.
If I were a philanthropist seeking to invest in higher education, this is the pathway I would take.
7
I'm a fan of the emerging trend at some schools to forego tuition in favor of a percentage of future income.
2
Those very helpful graphics in the Times article illustrate that what Betsy DeVos proposes - for profit schools - have more than twice as many defaults on their loans as other non-profit or state colleges.
State colleges are one of the greatest bargains in the world. Pell Grants were one of the greatest educations aids for students in the world. We have to start electing House Representatives, Senators, and a President who will help our students get the best educations in the world. We must pay teacherrs what they are worth to society from kindergarten. Finland provides a great example of how to raise the standards for all teachers and make education more fun and profitable for students. This is good science and common sense - healthy, productive students will result in a richer America with better health and environmental outcomes. We cannot afford not to do this!
18
I live in a small town with a community college. High school students can take college courses during high school and some finish high school with 2 years of college completed at a very low cost of something like $2K per semester. HIgh schools across the country need to publicize these options and steer students at risk for high levels of debt in that direction. The costs of college should be part of counseling and proactive efforts during high school.
10
Why barely a mention of the reason for such high costs? College administrators have made out like bandits in the last ten years; and often at failing colleges. The University of Montana lost 24% enrollment in 6 years, yet not one senior administrator lost a position, not even after having the DOJ show up to show them how to do their job properly after a string of sexual assault allegations were shoved under the rug! College administrations are ripe places for empire building, crony protectionism, and nepotism. A decent story would examine the college HR departments to see how many complaints get shoved aside in order to protect favored managers. It's a you scratch my back, I'll scratch yours environment on the taxpayer's and student's dime.
29
This is a great article. At this point, federal funding is like air dropping dollars on colleges - education from this point on (from pre-k onwards) is pointless. In next 15 years, these kids and everyone after them will be statistically out-of-a-real-job (for 95%+ and increasing, only made up work will exist - the story of digging a hole and filling another, and repeating the process to-and-fro comes to mind). Given this certainty, why not give kids the money, and let them enjoy life and pursue their passions (or develop them) - instead of to colleges (where the magic of corporate structure makes the money vanish to the sliver on top)?
At this point, there should be more articles about the privilege of the few (who should be thankful that they get to do useful work - e.g. develop AI that develops AI/ robots/ factories/ farms food/ etc...) instead of any class struggles - and the belief that God desires individuals to work. Forgive these individuals their loans even as we provide them with more as God forgives us our sins and our useless beliefs (that in America everyone can succeed with hard work).
I am so outraged at what we are doing to these kids. When I was in college, it was about how good the teacher was. Now, it's all about the football coach's salary, the outrageous salaries for those at the top. How posh the dorm lounge areas are. It's ridiculous. I work with several grads who are depressed and broken by their student debt. All to make the 1% even richer.
26
Some people can't buy a home in the neighborlimited hood they'd prefer. Some can't buy sneakers that cost too much, or clothes that cost too much. Some folks can not afford college or university. That's the way it is. Don't take out loans that you can't afford to pay off. If you can't afford college, learn a trade. But don't shift your financial mistakes and burdens onto the public. It's not our problem, and the public shouldn't be spending tax dollars for your debt.
7
As a semi-recent college grad (2015), I agree with you. The problem is that no one ever explains this to you. This issue has really only come to light in the last few years. When I was in high school, teachers literally explained to me how loans work and that is how everyone goes to school. Three of my teachers had doctorates and we're still paying off their student loans. They taught us that getting a degree is the only way to make a living. 'It's like a high school diploma!' How does most of society look at people without a high school diploma? Now I know better and I take responsibility for my mistakes, but we need to lower the cost of "education" for future generations if we want to keep America from devolving into a caste system.
3
Not sure I agree with the insinuation that everyone else but the student is at fault for taking on debt. The statement that "no one ever explains it to you" is whiny. We educate kids in high school to be critical thinkers...or that is what schools and parents should be doing for their kids. As these debtors age, hopefully they will have learned to think twice before they sign the dotted line for more debt. Or will they continue to blame everyone but themselves?
3
As a senior in college getting ready to apply to graduate schools, the loan issue is naturally partly the fault of the students - however, it's also very much an issue with an economy where the BA and/or the BS degree is common. They're a dime a dozen, and as such employers require them (though, this is starting to change) unless the position is low-level or in the service industry. So, in order to get a job, one likely must have a degree, which necessitates being wealthy or taking out loans. Critical thinking is a valuable skill, but in the face of the economic inevitability that most employers require a college degree at the moment, students who are not independently wealthy are faced with either not going to college or taking out loans.
I'm extremely lucky and grateful that I have been able to get through loan-free using grant-based aid and working, but I attend a college where only 47% of the student body is eligible to receive financial aid (meaning 53% of the student body is wealthy) and as such my case is not the norm. For colleges where there are a lot of working-class families, financial aid is spread thin and as such loans are larger and more common at those schools.
The little island of Cuba educates people far better than we do. No college loans, no tuition period. European countries do far, far better. We are a dog-eat-dog country however you look at it. Keep people down, make it harder and harder for them. Corporations, which elect our governments, don't give a blank, so neither do the so-called politicians they put in power.
marthastephens.wordpress.com
25
I doubt Cuba educates people better than the US and in Europe much fewer people perecentage wise go to college and probably fewer in Cuba, too.
The US pays for Europe's defense so of course they have more money for social spending.
Cubans are still driving the cars Americans brought there in the 50s. If they were so brilliant and well educated, wouldn't they have at the very least invented and manufactured their own cars by now? Or maybe electric hoverboards or something? It's a dirt poor country with close to zero innovation.
The whole idea of a student having to borrow money to get education is immoral. It is the duty of the nation and the student's parents to pay for his/her education at least upto a level that the student can support himself after graduation. If the parents are poor, then the nation’s tax revenues should kick in. There are nations which do just that without becoming bankrupt because these nations are not so tax averse and care a lot about their future generations.
But we have Koch brothers, republican ideologues, and their followers whose mantra is to cut taxes but to have no compunction for borrowing money, thereby increasing the national debt to pay for just basic services.
Why is America becoming so miserly, so stingy, and so uncaring?
19
When did young people assume they have the right to a college education? In the past a much smaller, and more realistic, percentage of people were college educated. If that percentage were kept the same, there wouldn't be a debt crisis. The mainstreaming of a college education has made colleges rich but made the degree meaningless, and therefore the graduates are less employable than ever.
8
Every young person needs education, not necessarily college education, to become a self supporting citizen. Education in the trades, to become electricians, carpenters, bricklayers, sheet metal workers, hospital technicians, research technicians, video camera operators, stage hands, movie makers, construction workers, farming, etc., is needed without a student having to take out a loan. Providing education is the responsibility of the parents and the State.
1
"Why is America becoming so miserly, so stingy, and so uncaring?"
We just gotta do what we're good at.
I am not sure what statistics you are using, but one of the major sets of data includes degree programs at for profit schools, but only certificate programs and public and private not-for-profit schools. Since degree programs are longer than certificate programs, this is likely to understate the default rates for public and private not-for-profit schools (and make them look better compared to for profit schools than they actually are).
1
For starter we should stop calling Financial Aid a government subsidized loan at a 5 percent rate. The government should let student borrow at the same bank overnight rate. It is the taxpayer's money after all.
9
I worked for a for-profit university named Academic of Art University in San Francisco for about five years in the late 00's. They were predatory in the worst way, with a six-year graduation rate around 28% (this is a number from 2010), as most UG students dropped out before graduating, and still owed quite a bit of money. The cost of the school plus the cost of living in SF was very difficult to sustain for a long period of time. One student who I encountered early in my career there, and who managed to graduate, was $170,000 in debt. Granted he wasn't the best student, but still, he more or less set himself for indentured servitude for the rest of his life (though who knows...I'm not in touch with him anymore). All to say, systems that bet on failure are immoral.
How is Academy of Art University doing these days? Great! They are the largest land owner in SF, their real estate empire built on the backs of the students who are still, to this day, paying back their loans.
16
I literally just moved to California a few months ago to see if teacher wages would be OK out here, compared to what felt like slave wages in AZ (no raise in 10 years, since the crash, hence the strikes). At our new teachers meetings, which I need to attend (even though I'm not new to teaching but new to the state), I've already met multiple teachers with student loan debt over 100k!! I am beyond shocked that this is the new normal. They are all considering the 10 year public service plan, since they know they will never be able to pay that back in their lifetimes. How can we accept this? How have we devolved this much?
31
Did you need to move to a state just to find out what the wages were? I think you can find out these things on the internet beforehand.
Just don't pay. The unfortunate impact of 'paying' far exceeds the consequences of 'not paying.'
One of he worse attacks on student loans was the GOP laws that allow interest to accrue while students were in school. It wasn't always this way prior to Ronald Reagan. I didn't start repaying my undergraduate loans until I was out of graduate school, and only then did the Interest start on the loan. The loans were subsidized now 50 years later they seen to be big business. Maybe we should remember the program was called the National Defense Student Loan Program. The originators understood the economic and defense importance of higher education. All we see now is a system driven by bank profit.
38
"National Defense Student Loan Program," and we had the National Defense Interstate Highways. Everything was National Defense--What a joke!
"The typical student borrower will take out $6,600 in a single year, averaging $22,000 in debt by graduation, according to the National Center for Education Statistics."
I'm sure. What is this? Either our elites are maliciously trying to destroy our lives, or they are woefully out of touch with the reality of most Americans. $22,000 is tremendous amount of money, especially for a 22 year old (unless the 22 year old's parents have a great deal of money). An amount such as this requires an excellent, high-paying job to be repaid. In the United States of 2018, there are few excellent high-paying jobs available to the vast majority of us. It is affront to our reason and humanity that our entire economy has shifted to providing benefits to millionaires and billionaires, ignoring the rest of us, while pretending that we are living in 1960, or 1965 or 1975.
8
I am still sick at heart that my wonderful daughter graduated in 2010 (first in her family to graduate!) with almost $50k in debt and entered a work-world offering few jobs even for her business degree with honors. The struggle for jobs was amplified by the intense competition created by unpaid internships. I cosigned two of her loans that I'll be paying literally until I die. They'll pull it out of my Social Security if I can't make a payment.
That $22k debt the article mentions is a fantasy, a low figure averaged by including hundreds of thousands of fortunate kids whose more affluent parents bought their education for them and borrowed nothing. Millions of students graduating 2008-2012 were just thrown to the Wall Street wolves. And the trajectory is no better today.
3
Betsy: but what did you say while your daughter was IN SCHOOL? did you tell her to combine that business degree with computer science or another STEM field?
Did you tell her to go to a cheaper school, or live at home to save money vs. a dorm or apartment?
Did you (or a school guidance counselor) tell her that TODAY...you need an MBA? and a BA in "business" is not going to be enough to meet the competition?
A BA in business will get you....a job in a retail store at the mall. Or if lucky, as an administrative assistant (i.e., formerly called a clerk or secretary).
Also: doing several UNPAID INTERNSHIPS is mandatory today, not optional. It should be considered part of the cost of a student's education and it is VERY EXPENSIVE, as the most desired internships are in costly big blue cities.
2
What if there was a graph that showed "% of total loan amount repaid" against the age of the loan? Not loan by loan, but for the entire pool of loans. Then you could see by value how much has been paid back in any cohort, and how much there is left to go. Another valuable number to know for each cohort would be "indebtedness per student who still has outstanding debt".
1
This would also show how the debt piles up - many of these loans charge high up-front "points" - and they charge interest while you're in school (added to your loan balance).
Once you graduate, you're paying a big chunk of your entry-level job in loan repayments. If you don't have a job, you can apply for "forbearance" - which means that they take the interest due and add it to your loan balance for while. You only get so many months of forbearance - then you must pay whether you can afford to or not.
There's no way out - bankruptcy doesn't discharge student loan debts absent very unusual circumstances (such as permanent disability). Once the collections folks take over, there are more fees and interest piled onto the debt owed. (The interest charged is far higher that the prime rate, incidentally.)
I was finally able to repay my student loans, despite periods of unemployment. I'd strongly advise against anyone taking out student loans, though - it's simply not worth it for most people.
5
The loan burden is partly a result of a massive deinvestment in state schools. this is the end result of many trends, but a general unwillingness to pay taxes is a rood cause. Conservatives have been trying to privatize many areas of society, and they have succeeded with education. In the end, it come sac to bite us all when graduates can no longer afford houses in our neighborhoods, new cars, or other products and services. The big conservative success is breathtakingly short-sighted.
13
At this point, a student debt jubilee is needed for those who are earning less than they expected, especially with so many under-employed.
Other reforms that are needed:
1. Make university tuition free in public universities (this was a part of the Bernie Sanders campaign in 2016).
2. Make student debt dischargable in bankruptcy.
3. Apart from providing additional funding for universities for tuition, provide it for R&D spending. Limit the construction of "luxury" housing though.
4. Invest more in primary and secondary public education.
5. Create a healthcare system that resembles the UK's NHS.
6. Stop funding for profit private schools. Many, most notoriously the University of Phoenix and Trump University are quite exploitative.
These are not impossible goals. Other nations have these and contrary to what conservatives say, are not bankrupt.
The other is to simply support politicians that will solve the problem. Bernie Sanders and similar social democrats would be a good start.
13
RE: 2. Make student debt dischargable in bankruptcy.
No way. Don't stick the taxpayer with the bills these fools ran up.
When I was in college in the seventies a kid came to school one quarter with a car. When we asked how he bought it he said he had gotten a student loan.
None of us in the dorm had ever heard of a student loan. We all had part time jobs and our parents paid the rest.
10
My stepdaughter in the 00s -- she graduated in 2011 -- borrowed the maximum in student loans despite going to relatively modestly priced state schools.
I remember the semester her loans came in....and she bought a $4000 laptop that was "the world's most advanced GAMING COMPUTER". It weighed a ton! you could hardly carry it around! but you could play fantastic multi-player games on it, which she loved.
She also rented an apartment by herself, because she didn't "like roommates" and went on countless vacations, etc.
She has a great job today, but also $65,000 in loans at 8% interest. She'll be 50 before they are paid off.
This was despite declaring bankruptcy on her credit cards and various personal loans in 2010, which wiped out about $25K of her college debts.
@William: I was in college in the middle 70s. I absolutely knew about student loans! they were not remotely new. EVERYONE I KNEW had some student loans, though of course for far less money than today.
1
Pre-Reagan.
One of my sons decided to attend university in Germany to avoid debt. He did not pay ANY tuition until grad school when Purdue sent professors to teach business classes, leading to an MBA.
The second son began in the USA. He attended Western Michigan, Michigan State, and finally, Lansing Community College.
My opinion is that university in the USA is just BIG BIZ. Other countries do not guide students to run up debt.
10
Article could use a good editing job. For example, what is the difference between being in "default" and "severely delinquent or not repaying their loans"? How does one access a college-by-college list of default rates? Isn't it time to publicly expose the fraudulent colleges by name (Trump University was one), rather than more of these generalities, which are interesting but of little practical use. Colleges with high default rates, over all years - not just 3 or 5 - need to suffer the marketplace impact of reduced enrollment that presumably will result if prospective students are provided with the facts that are material to their decision regarding whether or not to "invest" in a degree from a college whose graduates presumably don't make enough money to pay their loans.
5
Thank you. It is important to understand the truth about this terrible problem, a scourge on our democracy. The rise in tuition appears to correspond with funding cuts to public colleges, which were and are related to tax cuts in general. There is little incentive for colleges to hold down costs, because banks who issue loans have been guaranteed repayment. Borrowers cannot ask for protection in bankruptcy court when they fail to obtain good employment post graduation. There are too few "good" entry level jobs that pay enough to cover monthly loan payments. The "gig economy" creates poor employment, underemployment, and is abusive to workers. Even newly graduated surgeons have trouble finding good jobs. "Internships" are required by too many big companies before an interview is even granted for a job that pays enough to live. The waiting list for these coveted internships can be a year or more, open to students from select colleges that have relationships with "important" companies. Do the research. There is nothing democratic about higher education. College is now just another Republican commodity, another opportunity to drain working class Americans.
19
When and how did this happen? I recall working my way through college at relatively affordable state school. Why has an education become so expensive?
(My cynical guess is another negative with its origins in the Reagan era.)
2
Kids who are not qualified for jobs that require a college degree, will still be not qualified after going to one of these for profit colleges with lower admisssion standards. These are false promises to students which give them hope that their college degree with make them "smart" when in reality they are stuck with the hand that nature dealt them. OK to have private for profit colleges, but eligibility for loans should be tied to SAT or ACT test scores. Period.
2
I get the sentiment. I went to a for-profit college, got a degree and did well. But many did not. The thing is, who are we to deny someone the chance if they think they can make it? Some people I met did not test well, did not do their daily work well, but were quite intelligent and creative. Having said that, I am not sure what kind of careers they had. And for those who did not make it, yes, it was an expensive lesson.
1
I work at a large university. I can tell you from first-hand experience that faculty and many administrators don’t have a clue what our own tuition is. They really just don’t care. Especially with tenured faculty, why should they care? They cannot get fired not caring and not doing their job.
10
there are still plenty of ways to get education inexpensively. Go to a community college. Go work for a company that reimburses tuition (now, in the age of full employment, this is a definite possibility, unless you're an english major type), got a trade school, join the National Guard or enlist. The wildest thing is that today's entitled youth and their helicopter parents want the most prestigious college name while discarding the tuition math altogether.
3
"Unless you are an English major type".
I find this short sighted. Do companies not have HR, communications, advertising, community outreach departments? Do English majors not know how to organized projects, do research, write proposals, summarize ideas for others, and more? I was an engineer by profession, but my degree in history helped me a lot when it came to the reams of paper I had to go evaluate or write up. And, as mentioned, there were many other parts of the company that did business, not engineering. And a lot of the business parts could have used a decent English major who knew how to write a simple paragraph (looking at you, accounting majors). The degrees are not one's life. They just help develop skills that are used in the real world. Learning how to write and communicate while studying something that one finds interesting is not the economic doom many seem to make it.
30
Yulia,
You mean like the "entitled" kids of your era?
Those that had cheap college's and university's. That could work a summer job that paid for tuition. That had a career at one plant for life that paid a better than living wage. That allowed a family to have one bread winner, owned a house and a car. That retired with a pension and Soc. Sec.
Yes, these sooo entitled kids these days.
Did you read the Op-Ed?
Just tell them to get off your lawn.
That'll show them.
3
That would be "There," not "there;" "English," not "english;" "go to," not "got a."
And yes, English was one of my undergraduate majors.
5
It's very simple. When I was a student at a major state university in the late 1970s, my tuition was $4 a credit; miscellaneous fees brought my costs to attend college up to about $250 per semester. What happened in the 1980s and later? Ronald Reagan, Howard Jarvis, and the Republican festishization of tax cuts and massive disinvestment in public goods. There are plenty of ways that colleges can cut costs, that I do not doubt. But the real solution is to bring back the idea of actual "public" higher education.
90
Yes. Conservative thinking was that education was too cheap. The poor paid too little. Our country needs to limit education to only the rich. And if we pretend that the middle class kids can make it when they cannot, well, more transfer of wealth from the middle class to the rich. Win win.
3
It's the availabilty of easy money via loans that causes the ever increasing tuitions and need to borrow even more money. Tax cuts are very good. People keeping their own money is a very good thing.
1
Has anyone checked the humongous salaries that professors, deans, and the presidents of colleges "earn"?
"42 Private College Presidents Make More Than $1M, And Harvard's Isn't One Of Them"*
*https://www.huffingtonpost.ca/entry/private-college-presidents-salary-ha...
Consider the analogue with our Union directed public school education where despite the highest salaries of any major nation out student outcomes remain modest compared with other nations for which data is available. Similarly our college level teachers and administrators are paid higher than any other major nation. And our proportion of post high school students attending college is unmatched. Our public school and college education community appears to be a true privileged class. Sadly our college students, especially those in for profit appear to be disproportionately financing this privileged class.
Of course if college degrees were pre-requisites to good jobs the story would be different. But with many students taking fields of study offering few if any good jobs upon graduation the prospects are not promising. Some problems have no straightforward solution. The education business is one of them. And its going to become worse.
3
Sorry Peter, The US is not the highest paid. Add in the US GDP, class size and hours worked and the US is lower still.
https://economix.blogs.nytimes.com/2009/09/09/teacher-pay-around-the-world/
https://www.brookings.edu/blog/brown-center-chalkboard/2016/06/20/teache...
As for outcomes, you should compare the results with like groups. Our poverty levels are some of the highest in the OECD countries. Those in the wealthier groups, match up with the best in the world. But our huge number of poverty children drag our scores down and skew the results.
https://data.oecd.org/inequality/poverty-rate.htm
Time to rethink your comment.
Wealthier area's match up with the best in the world.
6
During the decades of widely shared and increasing prosperity after the second world war, people were willing to share the wealth by paying taxes to provide for the common good and to lay the foundation for future personal and collective economic growth.
Today, an increasing sense of insecurity brought about by the policies of both parties on healthcare, housing, trade, immigration, financialization, and business concentration, has fostered an ethic of every man for himself. Universities, politicians, and lenders have exploited these forces, along with the increasingly technical nature of the modern economy, to pursue a type of private gain that is not achieved through shared prosperity, but by constraining young people to roll the dice in the kind of high-stakes zero-sum gamble that higher education has become.
8
One of the issues I see, particularly in the for-profit college category - and to a lesser extend in 2-year community colleges, is that there are less, if any real, admissions requirements. You can walk up, sign some papers, get your loans, and begin taking classes. At our local community college - where you earn 2 year degrees or prepare for transfer to a 4-year institution - you are asked to take a form of basic aptitude test for math and english. Your results determine whether you need to first take a remedial level class (translation: high-school class) before you can take "true" college-level courses. This of course has nothing to do with merit either, but at least it's something. The for-profit colleges don't even to that. My suggestion is if you are accepting federally-subsidized/guaranteed loans, can't we at least require students to 'apply' as if they are working to attend a public or private-non-profit 4-year university?
2
In any kind of analysis education, tuition free or subsidzed, would yield greater returns on investment to this country than collected interest or default.
5
Perhaps. But that is not the point.
My car loan interest rate is lower than my federal direct loan interest rate.
What does that tell us?
30
Really? With a car loan the lender can repossess the car if payment is not made. Its called collateral. The lender has no such recourse with a student loan. This is an easy fix:
1) Pay your student loan debt or;
2) Don't take out a loan you aren't sure you can pau back.
Easy, huh?
4
I have always been sure that I will be able to pay back my loans, thanks to the income-based repayment plan.
The government has the best collateral in the world for my education -- a debt that can never be discharged. Even if I default, there's no escaping my loans. For this excellent collateral, they get an educated, productive member of society with the potential to contribute increasing value over time as I apply my education.
The value of most cars declines so quickly that most people with loans will owe more than the value of the car for a good portion of the life of the loan. Yes, the "collateral" of the car would have some value to the holder of the loan, but they will almost certainly lose money if I default on my payments and they repossess the car.
If I were a lender, I'd go for the guaranteed repayment rather than the "collateral" of a rapidly depreciating car.
In my case, I would argue that my education has been a very good investment for society -- I am a family doctor working in a Federally Qualified Health Center (a clinic that provides care to uninsured patients for a nominal fee based on income, and to patients with medicaid plans most traditional clinics don't accept due to poor reimbursement).
2
These data cannot be stressed enough. Thank you.
So, a few thoughts.
The first line of defense may not be the federal government. Instead, it might be more effective to consider the first line of defense to be high school guidance counselors.
What should high school guidance counselors say....and say....and say.....and broadcast over the loudspeaker?
My suggestions:
1. Paying to attend a for-profit college is not "going to college." Instead, it is "going to a business that is more interested in your student loan than in your education."
2. Go the Community College-->State School route. Go the Community College-->State School route. Go the Community College-->State School route. Go the Community College-->State School route.
3. Start working summer jobs when you are 16. Save half for college, spend half on your iphone or whatever.
4. While in college work summers full time. Work the school year part time.
End result: GRADUATE WITH A LEGITIMATE DEGREE WITH VIRTUALLY NO DEBT.
This is what high school guidance counselors should say....and say....and say.....and broadcast over the loudspeaker.
7
Years ago, this strategy might have worked to pay a significant part of the costs at the state university where I work. But today, every time the trustees raise tuition, the tuition increase is more than a student could earn and clear above expenses in the summer time.
5
@Chris: I intentionally did not mention parents' savings, for the reason that some students' parents really can't help.
But most can. A 529 plan, putting $10 a week into it, could make the difference for another large percentage of students. How many parents spend that on their cell phone plans? Or on eating out? Or on homes that have grown immense since the 1950s, needlessly?
In other words, folks, do it right. Save, plan. And the investment will be repaid with a good life.
I'm surprised you did not recommend that the student open & fund a Roth IRA with those dollars from summer earnings.
1
There is a profound difference between healthcare and higher education. Everybody needs healthcare. Not everybody is capable of getting a college degree. The insane rise in tuition cost is fueled by the belief that everybody, no matter how poor their grades and how empty their heads, is entitled to go to college. In European countries with low tuition costs the entrance competition is fierce. Young people from poor families don’t need to take on high debt but they need to apply themselves throughout high school to receive matriculation grades that will enable them to be accepted to colleges and universities. I wish the US would acknowledge the fact that higher education is not a means of social equality. Higher education is an end in itself. It should only be open to people who are capable of benefiting from it, whether they are rich or poor.
42
The rise in tuition costs for public higher education is directly related to the drop in state support. Among the reasons for this decline is the drop in tax rates, particularly at the upper end of income. The University of California was tuition free until the 1990’s as the “tax revolt” begun in the 1970’s decreased state revenue. At the same time, Prop 13, which capped property taxes required the state to bail out localities for K-12 education. State supported higher education was the engine for the steep rise in productivity aster WWII.
13
" I wish the US would acknowledge the fact that higher education is not a means of social equality." Mor, you have got it backwards
There is a large racial component to education policy.
Burdening the coming generations that will ostensibly 'inherit' the United States and its basic functions -- financial, military, governance -- the situation of student defaults on loans makes no sense whatsoever. It is a significant burden to walk the 'straight and narrow' -- obtaining a university or college education, keeping focus and the proverbial 'nose to the grindstone', and, as always, looking for a better way to 'move' forward; for the self, the nation, for parents, and the future. As is the case will all nations and societies through time, youth is the future of the nation. It is bewildering that the POTUS, Congress and all levels of governance seem not to understand the fundamentals of the exhorbitant cost of obtaining a college or university degree. The nation needs a far more considerate program to ease or erase the cost of higher education. A significant aspect of the present situation is that there a very few opportunities for youth to gain employable skills without the burdens of higher education. To this end the federal, and all state, governments should create a nation-wide program of 'technical colleges' though which many degrees of value for employment are issued. The American 'way' yes indeed, to pauperize the next generations, eviscerate hope, and advance the nation to the eventual collapse.
6
Now retired I recall that New York State Colleges did now charge in state students any tuition. There were a few fees but the state provided the costs of the education.
Now Virginia state government provides less than 10% of the funds of their state schools while maintaining Board control. Wisconsin and most other Republican state governments have done the same. Since degrees are most likely to provide stable jobs, many teens are too scared not to try for degrees. This means debt.
5
What a mess. There should be no interest at all on federal student loans, just an annual fee to cover the government's administrative cost. Educating our future brain workers is an investment in our economic prosperity, our democracy and our civic life. Students do the work, unpaid and foregoing wages they could have earned, to make those future contributions to our general welfare. Any country that thinks it can prosper without college-educated workers and citizens in a 21st century global economy is self-destructive. Even with tuition-free public college, even working part-time jobs, many students will still need loans to cover living expenses but the debt they graduate with will be much lower and more manageable. It's time America's business and government leaders took a stand for higher education and the smart and ambitious citizens, of every age, who are willing to do the work of learning not just for themselves and their families but for America.
10
The Federal government (taxpayers) end up paying off the loans? In a sense via all these loans that default, they are paying the cost of college anyway, through a rigamarole Rube Goldberg system.
Why not just go back to the days when state schools were fully funded by taxes and attending was affordable? Seems like it would be cheaper!
16
Well you can't have it both ways.
Of course private non-profit schools have a far lower default rate - they are MORE - much more -selective
Then come public universities. Some are selective -U of VA, Berkley - and some take any breathing body and end with a high dropout rate and awful job prospects - Ferris State in Mi. The less non-selective public schools raise the default rate
For profit and community college? If it is breathing (or at least looks to be breathing) admit. No minimum standards for admission required. They drop out and/or can find jobs that pay enough so they default
The problem is admitting UNQUALIFIED students in a misguided "oohhhh we have to let all try" and who drop out or get lousy "degrees" and no job that will pay it back.
So how about rules that says to
* get a federal student loan, the applicant must have a certain minimum GPA - like 3.0 - and a certain minimum on the SAT or ACT in the top 25%
* cap the amount that can be borrowed to a amount equal to what the typical grad with that degree makes on average over 10 years so that by paying 5% of income, the loan is paid off in 20 years. For ex, average income over 10 years = $50000. 5% of $50000 = $2500 $2500 x 20 = students loans of not more than $50000 including interest - so more like not more than $30000 in actual loans
Borrowing $16000 to go to community college to learn to be a cook is NUTS! Cooks make maybe $12-15 an hour.
5
I am disgusted (but not surprised) that for-profit colleges benefit the most from student loans, for which students default at the highest rate. An institution or business that is heavily subsidized by government loans and/or programs should be disallowed that government help when they are for profit. By the same token, private businesses that rely on minimum wage workers, should not be given tax breaks when those same employees must rely on government health insurance and EBT (food stamps) to make ends meet and show up at their low-paying jobs.
3
All this sounds to me like I wanted the Ferrari and I got one and now I do not want to pay for it because I was naive back then buying it. No one forced you to pick expensive private Uni/College over cheaper public one. Both private and public Unis teach the same thing so you have paid for some luxury that has not worked out for you but do we taxpayers have to do with it? Our society would be ok if people get educated in public unis and those who can afford would buy private diplomas.
6
But the private nonprofit schools have the lowest default rates, so maybe the Ferrari isn't such a bad deal, and there are no inexpensive schools -- even a CSU is quite expensive with cost of living, to pick an example from your state.
8
Public higher education in California was tuition free until the 1990’s and the state benefited greatly. The tax revolt finally put an end to that. Tuition is now considerable at all three levels of public higher education in California. Although less than at private colleges it is still a considerable barrier for many. The obvious answer is substantially increased state support.
6
This is a tone deaf response based on an old and very mistaken set of assumptions. The vast majority of debt does not result from poor kids thinking they are worthy of a Harvard education. State schools generate most of the debt today.
What generates the high levels of debt are three intersecting errors. First, Republicans have abandoned our children to reduce taxes. Second, we have assumed everyone wants and needs a college degree. Third, employers bought into error three and jobs that a trained monkey could do now require a college degree (giving error 2 an illegitimate pseudo-validity). The ramifications of these errors have created a nightmare. I wish I knew how to correct all of the errors but they interact with one another in a manner that makes it hard to solve any one without solving all three.
1
If we channeled funding to State colleges we would be able to maintain standards. If these were tuition free the competition that they provided would keep private prices down plus students would not need to mortgage their future for an education. Free college for all!
3
There is no such thing as "free." What's the source of the money to channel to state schools?
Student's wouldn't have to borrow if the grants and scholarships were based on a student's real life. Instead they limit their funding to force the students into loan debt. The Pell Grants entice them by giving them just a little money to get them in but not enough which forces them to have to get the loans. It's almost like the loan providers and the government are in each others pockets.
2
This op-ed really doesn't tell the whole story. The bottom line is that predatory lenders have stolen our public education system. For example, if a low income student want to go to a public college, their budget is calculated by taking a poverty level income (e.g. $12,000) and adding tuition and fees (e.g. $8000). The financial aid award is $5900 for a Pell grant, $5000 in subsidized loans and then $7000 in unsubsidized loans. Their total debt will be $48,000 in loans plus interest, and they have to pay interest on the bulk of that while they are in college. Moreover, that debt cannot be expunged through bankruptcy. The real problem, much like our health care system, is those who profiteer off of the disadvantaged. We are a morally bankrupt nation.
74
Good points. Most Americans have become indoctrinated into thinking education and medical care should be paid for to support those who profit from it. Instead, these should be considered human rights, and society should develop a way to ensure all those who wish to continue their education be able to access it for free, or very little. Turning everything into a profit-making enterprise has allowed money grubbers to insert themselves between provider and patient, student and professor, and distort the relationship into some sort of bizarre situation where they can squeeze patients and students for money at usury rates, driving families into bankruptcy.
22
As with healthcare, government involvement in college funding has grossly inflated costs. To return rationality to both college costs and loan underwriting, the government should get out of the business of guaranteeing loans and let market forces and competition drive down costs.
I believe the country would be improved if education were not “free” at any level. Education would be more highly valued if everyone had some skin in the game, not just the 10% who end up paying for 70% of everything. Education (like healthcare) is neither a right nor a privilege, it’s a product and service that should compete in the marketplace without government intervention.
“Free” should become the eighth word the George Carlin list.
6
The most "spot-on" comment of all. The analogy to healthcare is perfect. Whenever the government increases the loan amount eligible for students, the colleges raise their prices. This Bureau of Labor Statistics chart speaks volumes. It show College tuition increasing at three (3) times the rate of the increase in the overall Consumer Price Index.
https://www.bls.gov/opub/ted/2016/college-tuition-and-fees-increase-63-p...
Sound familiar? Think healthcare costs, which have behaved similarly over the last 20 years. At least with healthcare costs we are told "the constant improvements in technology/pharmacology are driving the increases." But is that true with higher education? Of course not. As Bill Lairamore correctly opines, get the government completely away from higher education, and the market will give us the relationship between price and quality we need. Otherwise, we will be constantly battling between which schools/students/majors should get which level of funding, hand wringing over default rates, etc. And yes, promising poor students will still be fought after.
3
Save having debt altogether, don't go to schools that cost money.
1
1. Eliminate private loans for education. I've seen private loans @ 20% given to young people who have no clue about compound interest. 2. Federal loans should not seek to make a profit off of students. They should be at the prime rate not higher.
4
Let's not overlook another problem. Parents who took out loans for their children to attend college. The parents saddled themselves with a debt burden which can follow them into retirement age! With no relief. Can't declare bankruptcy to get rid of it. What happens if the parents default - do the money-lenders go after the children? What a financial mess the education system is in America..
2
Too many students who don't really belong in college have been promised the sun, moon, and stars that a college degree will open doors for them that wouldn't otherwise be accessible. The only doors many of those students saw opened and actually walked through led to many decades of personal debt (often, for degrees which were never completed). However, in trip up to those doors offered on campus included spa-like athletic centers, rock climbing walls, lazy rivers, and Starbucks outlets. Sadly, if the students spent as much time in the library or research labs as they spent on the rock climbing walls, they probably would be better off in their careers and would be able to pay off their college debts.
6
Simple. Vote for Bernie Sanders, Alexandria Ocasio-Cortez, and other socialists who are committed to making state universities free again. (Perhaps with stipends for living expenses as they do in Scandinavian countries.)
We should also restore bankruptcy for student loans. If you believe in the free market, then you should also believe that lenders should take the hit for loans that go bad. That way, lenders would not offer loans to people who can not realistically be expected to repay them (as they did in the housing collapse).
The underlying problem is that states have financialized higher education, instead of treating it as a public service that benefits all of society. But socialists know that.
29
It won't help. They are only pushing for tuition free for state colleges, not private universities. Why is this point so hard to get across to all of you?
Free tuition for state universities is a good start. When tuition was free, state (and city) universities gave an excellent education.
City College New York has a wall of photos of graduates who won Nobel prizes, or who created the computer industry, like Andrew Grove, CEO of Intel, or otherwise created the 20th and 21st Century.
The intellectual atmosphere of CCNY was equal to Harvard or Stanford. I'd be happy to eat in the CCNY cafeteria. I don't need the dining clubs of Princeton.
1
What is the source of money for "free" stuff?
1
One minor reform that would be helpful. Interest on a student loan does not accrue until nine months after the student graduates or no longer is enrolled full time (perhaps set the limit at half-time enrollment). This was common practice until the Reagan administration. Needless to say, a more significant move would be to rein in and more tightly regulate for profit educational institutions. This move, to say the least, will remain impossible as long as DeVoss or someone of her ilk (and with deep ties to the target institutions) is Secretary of Education.
8
If a student's post-graduation earnings are insufficient to pay off debt taken to get an education then obviously the education was not worth the money spent on it.
The solution to this problem is not to give more grants or loan forgiveness.
The solution is to get the government out of the student loan business so the lenders offering the loans must bear the default risk. If we do that then the lenders will apply the same tools that they now apply to credit card and other unsecured lending to identify students who will be able to pay off loans and lend only to them.
You are doing no favors to a young person by encouraging them to go to college and get a degree if that degree does not deliver value that exceeds its cost.
1
Michael Friedman, I agree with you to some extent. College was never meant to be a substitute for learning a trade or doing any other job that doesn't require more than a high school education. At some point in America, possibly the 1960s, a decision was made to stop having a college prep track in high school and a vocational track alongside it. When I was in high school it was never ever mentioned to us when we signed up for our courses. This decision may have been related to school desegregation or something similar.
What I do know is that not preparing children for a life that doesn't include a college degree has lessened the value of a college education. Telling students and parents that the only degree worth anything is a STEM degree will create an oversupply of STEM graduates just as the insistence that there weren't enough science majors did in the 80s and 90s.
College is not for every person. But every child who is intellectually able should be able to choose not to go to college and learn a trade while still getting a first rate high school education. Earning a decent salary, advancing through the ranks, and being able to retire should not require one to mortgage one's future.
2
I plan to become a psychologist. I'm an honor's student, but I'm poor, have few assets, and am in recovery from chemical dependency. I'm a non-traditional returning-adult student who is 41. I just finished going to a community college for two years, where all tuition was covered through financial aid - but I finished $12,000 in debt because I had to borrow to pay for the student dorms I was staying in, since financial aid covered only some of this rent.
In January, I'll be starting at a private-for-profit school with a an annual tuition of $50,000. Phi Theta Kappa guarantees me a $10,000 scholarship; ACCES-VR, a government organization that helps pave the way for low-income people seeking vocations through education, will provide another $9,000. The FAFSA and TAP (financial aid) will provide another $7,000 annually. This leaves me $20,000 short for each of the next two years that I'll have to borrow.
I'm now reconsidering whether this is a good idea. I'm deathly afraid that I'm going to be one of the last students having to go through this sort of ordeal before student debt reform becomes a reality. Will it really be worth it, even if I graduate with honors, move into post-graduate programs, and eventually become the forensic psychologist I want to be?
2
I fail to see whether, with $30,000 per year given you, it should be someone else's problem to find you the rest. Seems to me you have obtained gifts that will pay you 60% of the cost of your undergraduate education of the next two years, no work for it and no expectation to pay it back. That's pretty darn good. Your 40% contribution (assuming you don't find someone to pay you even more) garners a 150% return on investment. Pretty darn good, try doing that in investments where the usual high-success benchmark for risk free is in the low single digits. Just how much have you researched the job prospects really, against the costs and time of education? Are there no other undergraduate programs in your area except one that costs 50K per year? Do you plan to work (I did) during your schooling to help pay for school, or reduce the need for loans? Shouldn't your education be at least partly your responsibility? Not a word from you about contributing yourself to your own education, investing yourself in it; just what others provide. Is that your true expectation, to get but not to give? I have heard about the psychological structural self-centered point of reference of drug users...could this be an example?
1
Thanks for your feedback, Marek. I was only illustrating my current goals and life circumstance. I did work while in the community college where I attended full-time and graduated with honors, on top of going to therapy, meetings, and the rest. I am grateful for the benefits that are being provided.
I did not elucidate all of the other problems of someone in my situation... for example, going to group therapy three days a week, seeing two therapists and a psychiatrist, going to meetings and other support groups, all while also not having a car and having to do all my grocery shopping by bus, on top of trying to stay clean and maintaining my support networks (and having time for healthy recreation, too). Even things like going to ACCES-VR, having to go to DSS, and doctor appointments all have to take the public transportation by bus into account, which can eat up several hours per day alone. I understand that these are all first-world problems and that the things I do have make me wealthy by many standards.
I was not asking anyone to fix or carry me through the consequences of my actions and the decisions I make, at least beyond what I'm already being given; I was merely illustrating the one small data point that is my current life juxtaposed against said article.
Again, thanks for replying.
Something else: when I said "student debt reform" in my original post, I did not have anything specific in mind for my particular case, except that perhaps private schools shouldn't need to be $50,000 in annual tuition, or as someone below me mentioned $70,000 for NYU. However, it is my choice to attend such a school because of the reputation it has as a research university and the opportunities of contacts it will provide. While I could go to a much less expensive public school and essentially pay no tuition, they are all in small college towns outside of Rochester, where I would be stuck without a car. Besides, I now have a year's lease renting a room in someone's house here in the city proper. I've essentially committed myself to attending either the University of Rochester or RIT, where I was also accepted.
Student loan reform could still affect the tuition of these private schools because of the student loan traps currently in place. All of these loans are given without any need for a student to justify their chances of success in their chosen field. The deep pools of money loaned to students encourages universities to raise their tuition to sop up the excess, exacerbating the problem.
Oh, and about becoming a psychologist. It's a field highly in demand with good career outcomes. Psychologists in the New York area, especially, are the highest paid in the nation.
Nearly every other kind of debt carries a lower interest rate than student loans. The way interest is compounded is downright deceptive, and the fact that many private loans have variable rates which only "vary" upward is further evidence of the predatory and usurious practices in student lending. The rule can't be that only rich kids can go to college, so we have to come up with something better. The US government and the private loan companies make billions off these loans. There is no reason for that. At all.
Many whose debts have been paid decry how unfair unilateral across-the-board loan forgiveness would be. I can say that while I've paid six figures in student loans and never missed a payment, if tomorrow all student debt were erased for everyone, I'd celebrate the end of this craven period in our history and be thankful that others won't have struggle like many of us did, even with good jobs and modest lifestyles.
5
The next time the Democrats are in political control, they had better exclude for-profit colleges from receiving publicly backed student loan money, or any other federal financial aid. Also, drop student loan interest rates to the government's 10-year bond rate, retroactively to include all previous debt.
Or, you know, make public college degrees tuition-free, as Sanders et al. demand. But I'm willing to be much more reasonable and just settle for retroactive low interest rates and stricter rules on college eligibility to receive those funds.
Those are my minimum demands. I will support Democrats to the extent they try to meet or exceed them.
If they ever have an opportunity like they did in 2009-10, but again deliver us only Change We Can Believe In, I will consider it a betrayal, turn on them and support the Greens or any better third-party challengers. From that point, I will not care about the electoral math of my decision even if the Republicans turn outright neofascist such that Trump looks like a moderate.
I'm not a single-issue voter in general, but this is a red line. My first political act was driving five hours on icy roads to caucus for Obama in Iowa at the age of 18. I am now 29, 110k in debt, and far more aware of the mainstream Democrats' behavior toward financial interests. Don't let me, and those like me, down again, or you'll lose our votes. Mostly to abstentions, but mine and those of anyone else I can influence to third parties.
50
the democrats are owned by the bankers. as are the republicans. third parties are our only hope, but the propaganda works - no one will vote for them out of fear that the worst choice will win. sad.
I hear you! By the time I'm graduating medical school I will be about $160,000 in debt. That is far less than what others graduate with. Some students will be in debt $250,000+. Some even more than that.
It's insane.
The Republicans won't help you. If you research the Greens, they're just a tool that the Republicans are using to take votes from the Democrats. They don't offer solutions either. Look at Jill Stein. Why did she visit Russia? If you want to make a difference, vote for progressive Democrats in the primaries. Because of the US two party system, a vote for the Green Party is a vote for the Republicans.
The Bernie Sanders folks push for 'free tuition' but what that really means is state colleges, not private universities. Most students want to attend the best universities they can find, regardless of how much they cost. My daughter is at NYU, which is around $70K a year. It's insane, but it's also NYU. Since they made the decision to give their medical students free tuition we see what can be done even if the government isn't involved. The conversation revolves usually around colleges and universities that aren't as sought after as the ones that can ruin lives with how much they cost. On the other hand, the Obama administration implemented the 'Income contingent plan,' which means you only pay what you can afford. It doesn't erase the debt but it helps ease the monthly. I don't regret sending my daughter to NYU even if I'll be paying it back for the rest of my life. I don't regret it because it's a great school and an invaluable experience.
1
As a parent of dual citizens the comparison between the cost and quality of education in this country and New Zealand is shocking. My daughters tuition for a BFA was 6,600.00 NZ per year, She got an interest free student loan and a weekly stipend (stipend without need for repayment for students older than 24) from the government. Free healthcare as well. The repayment for her loan is based on employment status and income post graduation.
Why do we allow these for profit universities and lenders to pray on our youth to begin with? i can only reason that our leaders see a benefit in increasing the numbers of educated poor and the poorly educated.
16
We all care about a great education. This issue should be brought up in every state and county debate.
2
It's incredible the number of common sense solutions there are to the federal student loan debacle, and it amazes me that we've chosen horrible and complicated answers to these problems (IBR and this 3-year default window being Exhibits A and B for band-aids on the shotgun wound). The most obvious solution is that the schools must guarantee the federal student debt of their students. The second is students at for-profit institutions should not be eligible for federal aid.
But the real problem is (1) credential inflation that makes people need an undergraduate degree to work at a call center and other such places and (2) the abysmal state of public primary and secondary education that manages to graduate huge proportions of students (1/3?) that are functionally illiterate. We need to come to a consensus as a society that most people shouldn't need to go to college, and that college isn't the place where half of students go to learn the basic literacy, numeracy, and analytical skills they should have been learning in high school.
21
There are so many countries (gasp - those Socialist! ones) that offer (at least 2 years) higher education for all of their citizens. It is deemed an essential investment in the future of the country - let alone the world.
Higher education is much like health care, where so many of the costs are hidden and ''baked in''. You cannot fully measure what the education is worth, unless you follow quite closely the track record of graduates, their grades and their employment afterwards. (especially what they are making)
Having said that, at the very, very least, student loans should be (0%) zero interest, or at some low or prime rate. There should be the utmost flexible schedules for repayment and as a last resort again, possible discharge scenarios, so the person doesn't become shackled to the debt for the rest of their lives. If billionaires can do it, then students should be allowed to as well.
Besides, if you make it easier at every point and cost effective for an education for all, then you reduce judicial and social payments down the road. it is a given and fact.
Pay now or more later.
11
I would hope that you are "preachin' to the choir".
THAT WAS THE RIVER, THIS IS THE SEA The Waterboys
Your hope would be great, most young adults might be able to determine that they are able or not able to swim in the sea. Some would go to college and thrive. Some would go to the military and then be able to swim better. Some would intern in some capacity and swim better. Some would mature and be able to swim better.
But as parents or grand-parents we ought to be able to influence our children to make effective choices. Do not fail them!
I encourage my 11 year old grand son to do the best he can, rely on me to help him, even though he feels that school is holding him back. He lacks the world-view we have, I pray that he heeds my advice as he matures further.
2
@RG
Love the references and appreciate the feedback. indeed, those kids nowadays are quite sheltered, even with the entire world at their fingertips (online). One could explore and learn from other cultures, but social media is the death star that pulls almost all in. Alas...
If I go by just your comment, then I know that your child/grandchild are getting great advice. Keep at er' mate.
2
The Waterboys! I was never a punk, but such a good group!
Myself, at 16 a smart, and exceptional kid, was told by my father that he would not pay for a college education, and I knew that I had to find another resource.
I enlisted in the US Air Force. Certainly this after Vietnam, so I knew I was safe from any combat.
My hope is that my grandson will enlist in the Air Force and gain knowledge, mature and be able to go to a college and not accumulate severe debt.
1
Eliminate federal loans and guarantees. If the kids could not borrow the money the schools would not be able to charge what they do. The easy money creates the problem just as easy money created the housing bubble.
27
Last time I checked the state school I went to has at least three times as many administrators as it did when I matriculated. And from I can tell even the lowest paid of these folks make more than a full professor in the humanities.
94
The idea that young people, many of whom graduated during the Great Recession, are being saddled with debt reflecting a healthy economy is one of the greatest threats to the future of our nation. Many of these students, who were forced to accept jobs unrelated to their degree simply to make ends meet will NEVER recover from the hit to their future earning potential. To ask them to service a student loan under these conditions is unconscionable. Many of these students are unable to relocate for those crucial initial job opportunities because their income level requires them to live with their parents. Add the burden of collage loan debt, and many will be delayed a decade or more in setting up their own household (let alone purchase a home!). This will certainly have a lasting negative effect on the national economy. It seems only sensible to offer some level of student loan forgiveness depending on individual economic circumstances.
6
Yes, advanced learning is expensive.
Those multi million dollar coaches aren't going to pay themselves.
Add in the billion dollar stadiums and those incoming students don't stand a chance.
Sadly, so much of todays businesses, don't need an academic degree.
But the days of apprenticeship and on the job training seem passé. Corp. can't earn the profits if they are spent getting new hires up to speed. Or so that MBA learned in college. Even though, that is what they do anyway.
We had a system that worked previously. One that benefited all, not just the few.
Once again, Profit Uber Alles ie. unfettered capitalism, has trounced that ideal.
This is America.
Future work force...learn a trade that can't be outsourced or robotized. G'luck.
4
I'm surprised that the default rates for the for-profit institutions are not higher. It's quite clear they have a lot more interest in pleasing their owners than educating students. But the for-profit institutions are not only to blame, how many borrowers really understand the math behind the interest rate. Let's face it, how many students really considered the employment prospect of a degree before borrowing?
Is there any way we could gain access to the raw data that the author obtained through the FOIA so various colleges and universities could be analyzed individually as well. Thanks.
2
The NYT had a great opinion piece just a few years ago about why college education costs so much: administrative bloat. https://www.nytimes.com/2015/04/05/opinion/sunday/the-real-reason-colleg... I saw it at my own law school, a top one, where the budget for tuition was somewhere around $40K a year. Just tuition alone! And you signed an agreement to not work during the school year, requiring further loans for a full package of about $70K/year by the time I graduated. Professors there made about $200K, and that was nearly a decade ago. Why is that even a thing?
7
It is ridiculous that the government would pay for-profit institutions to enroll the most at-risk students without regard to these students life prospects. The government should be in the business of regulating the education industry (i.e., setting reasonable COLA tuition increases) to protect tax payers (i.e., students taking on debt and others on the hook for said debt).
In addition to meaningful regulation, we should move to a system similar to Australia where your earnings automatically dictate your repayment amount via paycheck withholding. It is incredibly inefficient to pay for-profit college to education students with loans and then pay for-profit loan service companies to determine debtors ability to pay when the IRS already collects this information and a computer program could make adjustments automatically. Those with low earnings would automatically pay little or nothing.
Another issue is that educating the most at-risk students *IS* risky business. Giving elite schools the ability to increase tuition because their students will almost always repay says little about Harvard but more about the selection process. We need to compare for-profit schools to schools serving similar profiles of at-risk students to determine if they are really doing terrible. Its likely many institutions are doing terrible and even at more elite schools, at-risk students are similarly floundering but there are fewer of them.
1
I completed a Master's Degree (MSW) when I was 45 and have struggle with repaying a 6 figure student loan debt. As a social worker I would love to participate in the public service repayment program but my ability to pay the 15% of income amount has remained perpetually out of reach. I have long felt that the best solution would be one proposed by President Clinton, allowing borrowers to choose the option of repaying though their income taxes by adding an affordable percentage to their income tax withholding. This ends the threat of default and allows loans to be repaid over a long term (unless the borrower wanted to opt out and pay in the traditional manner).
9
Do what many students do--join the armed forces to get your college paid for. Even state schools are becoming prohibitively expensive for many families. As a high school teacher, I've heard myself saying, "Go to Ohio State University/Ohio University/Miami of Ohio," and declaring that 25k per year is 'cheap.' Many people who aren't actually informed will tell you that scholarship money is out there. In my experience, a thousand here and five hundred there, even for the best students, usually does not begin to cover the cost of a year, even a year at a state school. State schools give out very little aid. Private schools give out more aid, but if the school is, say, 35k to begin with, the 10k you might earn in scholarship money will still leave a significant debt.
The military is a workable way to earn free college.
5
Not an option for those who have poor eyesight, the military isn't handing out that many waivers. What's the plan for them? Cane and begging?
3
Glad to hear a teacher debunk the "scholarships are out there" myth. The only full scholarships are for athletes and maybe students with perfect SATs. But telling students to put their lives on the line in a war zone just to get a college degree is pretty callous. The military is not in the education business. It's in the fighting, killing and dying business.
2
The crushing burden of student loans may be the rock, but bankruptcy law is the real hard place. Student loans are non-dischargeable, meaning debtors cannot use bankruptcy to gain a fresh start.
The problem is compounded by the fact that many students' loans are guaranteed by their parents who should otherwise be well on their way to building a retirement nest egg. Instead, they are adding something like a decade to the time when they can retire, if they can even ever retire at all.
4
Today's college degree is usually the equivalent of a high school diploma 50 years ago. Picture paying $25,000 per year for a high school education.
The mindless mantra that you have to have a college degree is to assure your future employers (often corporate conglomerates that don't care a wit for you) that you can read and write, and have a modicum knowledge of arithmetic. (I studied calculus in high school, now it's a college elective.)
Most colleges are in the business of selling seats to support bloated administrative bureaucracies and tenured overpaid and underworked faculty.
The bulk of the teaching is done by adjuncts who make the equivalent of Starbucks baristas.
2
The biggest increase in school costs has been More Administrators.
Schools are just another means of exploitation of the poor and middle class for the benefit of the upper class. The DOE with DeVos is making it easier.
VOTE in November.
Vote for a better and more honest future.
4
The cost of higher education has become absurd. That's what we should be addressing. How did the cost of a college education increase so much faster than incomes over the past 40 years? It's probably due to a mix of factors, just like healthcare. But certainly, one of the potential factors we can dismiss is that education has improved. If you look at the remainder of our economy you'll find a recurring theme. The cost of living has far outpaced income growth for all but the top 5%. The blame for this horrendous imbalance falls directly on the shoulders of Republicans and their thieving tax policy. We have a very top-heavy economy and it's only getting worse. Republicans believe healthcare, college and election influence are not rights, but privileges. If you're not in the top 5% and you vote for them, they're hurting you. Good!
6
Naked Capitalism has covered this.
Like so many who have put three children in recent years through private liberal arts college (one still in, too, and one with one class to go), I can attest the colleges are too quick to have a loan on hand for every situation, whether it is remotely affordable for their victims--er students and families--or not. And then they wonder why they can't attract students?? I had the benefits of a liberal arts education in the days it was affordable and rational and wanted to pass on that gift, but I now understand that the world has changed. The situation is awful, horrendous, the loan system must be ended fast to save future students, and a new system must be invented, such as increasing middle class wages or much more public support of higher education or both, and more different types of college instead of the current cookie cutter options. And this doesn't begin to address mytwo sons who had some bumps in the road and needed a fifth year. One school, Earlham College, was utterly merciless and self righteous about not granting him any more aid--but so quick on giving out loans your head would spin. We admit it was, as they said, my son's "fault" (he failed some courses) but does that justify ruthlessness? Does every 19-20, 21 year old make good decisions every day of their lives? Why is the system so unaffordable a student can make nary one micron an error? What about the large number of students who need extra years of school these days?
8
Too much cost ; schools are too expensive: suites, beautiful gyms, great meal plans. All offered to 18 year olds, many ignorant about debt. We have allowed this to slowly unfold and now we are surprised?
3
Average debt is only 20k? That's also grossly misleading. Four years at a public in state university would put you at around 60-100k in debt.
And what of the people who weren't able to finish their degree but borrowed money?
4
In addition to not very good interest rates on student loans, they charge a bunch of "fees". You do not actually get what you borrow on a student loan, the take some of your money up front and then charge bad rates.
3
Loan eligibility requirements are valid, but this crisis is exacerbated by a score of compounding factors, none of which seem to be so much as a blip on the current administrations radar.
Consider tuition costs at state flagship university over the past 10 years, which has far outpaced inflation:
https://trends.collegeboard.org/college-pricing/figures-tables/tuition-f...
And no, Mrs. DeVos, the answer is not greater blind trust in the private system, which collectively would deride the solutions proposed in this article as a "breach of sacrosanct principles" in the guise of "student choice".
Those already free of student debt will dismiss the potential productivity of Generation Z, mocking their decision to take on such debt in the first place
("gasp! at such a young age too, those silly, immature minds!") as though an educational investment were on the same plane as luxury sedan or timeshare in a tropical paradise - ill-conceived and impulsive rather than imperative.
Wage growth and in-field employability (unpaid internships come to mind) also need to be part of the conversation. High deferment, forbearance, and default rates are indicative of post-graduation realities. Americans have spend decades extolling the benefits of higher education, so we don't get to ignore collective responsibilities for the future of the workforce.
-PRG
3
This is a surprise to all but those in education or with kids around college age.
I went to Brooklyn College for well under 1000$ a semester in the 1980s and nineties.
Economic slavery effects all races but non-whites the most.
Vote Blue in every election.
4
More direct support for students is needed. Wealthy traditional private college, already committed to need-blind admissions, should up the ante and provide all funding via grants, not loans. State legislatures need to walk back decades of cuts in funding to higher education, and find ways to fund direct grants as well. For those already with student-loan debt that's crushing their dreams, these loans need to be made dichargeable via bankruptcy (and newer, harsher forms of bankruptcy need to be reformed to prior standards). And let me just add that this affects me -- I borrowed about $21,000 during the time I earned my Ph.D. at Brown University, 27 years ago. It was a difficult time in the hiring market, and even though I eventially found a full-time teaching position I ended up filing for perosnal bankruptcy (this was 23 years ago) but my loans were excluded. My student loans, though, were not dismissed, and even though I began paying them again as soon as I was able -- nearly 20 years ago! -- I now owe $55,000 on them. I've taught at a small pubic college all this time, but although that's public sector nonprofit work, the fact that I missed a small handful of payments over the years has excluded me from any debt forgiveness programs, which demand a perfect payment record. I will probably never be able to pay off these loans in full. What kind of a system is that?
8
Not to argue with you, but I'm pretty sure payments do not have to be consecutive to qualify for Public Service Loan Forgiveness. See https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/public....
If Congress were to change the law and allow student debt to be discharged in bankruptcy, do you think it would help the problem?
1
Clearly the problem is for-profit colleges. It annoys me that non-profits and state schools get lumped in there as well, as if all colleges and universities were bad actors. Of course, the problem is only going to get worse, now that our Secretary of Education has filled her ranks with for-profit operators. Buyer beware--if the college is in it for the money, you are in for some serious debt.
3
Colleges are not the problem. Lenders are. Colleges will sometimes (much more rarely than one is given to believe) take advantage of lending programs, but even in these cases, make no mistake - it is not the colleges that are reaping the greatest rewards. Banks and other lending institutions have inserted themselves indispensably into the most vital areas of our lives: education, shelter, transportation. The costs of these transactions are driven higher by their presence, a mathematical compounding of the expense for these necessities. Don't blame the colleges; if these loans were not available (and easily so), they would adapt. Only one institution benefits categorically from the now enshrined institution of student loans: lenders.
1
Public colleges are not perfect. But at least public schools have some oversight and the possibility for change. For-profit colleges no longer have ANY oversight. In fact, the Dept. of Education under Donald Trump now refuses to assist states that investigate for-profit schools. Caveat emptor.
4
I bet the debt at default value is a lot more than the average 22k at graduation and that it is owed by a small percentage of borrowers. If this is the case then one remedy might be limiting borrowing to a reasonable percentage of tuition. Another may be to require institutions to pay a yearly insurance premium on the total amount lent over a reasonable aggregate student debt amount of its incoming classes, perhaps factored by size of endowment as well as risk. In any event, without appropriate regulation the beneficiaries are banks and colleges and the cost is borne by unprotected taxpayers and irresponsible borrowers. Wait, that sounds familiar.
Abraham Lincoln signed legislation that established "land grant" colleges and universities, intended to provide higher education for the children of the working classes. His own father considered book learning to be time wasted, so Abe understood the need.
These land grant schools have now mostly been priced beyond the reach of the common citizen. The problem is exacerbated by state cuts in education funding, lotteries and usurious increases in tuition and fees.
3
The article is incomplete and very misleading. It doesn't address the serious problem of skyrocketing costs to attend college and the inability of parents to help out with those costs. Furthermore, I'd like to see what percentage of college graduates are getting jobs and how well can their beginning salaries cover college loan payments? This is all just another symptom, or evidence, of the growing divide between the middle and lower classes trying to attain the "American Dream" and the "Haves" whose style of capitalism pinches us out of the system ---- e.g. inflation, fewer benefits, stagnating income, fewer good paying jobs, increasing costs of healthcare, etc.
12
Currently the loan programs do not distinguish between good and bad performing schools and programs and instead provide a single equal rate (depending on loan type). Essentially this means students attending a great program with high quality student outcomes has the same loan costs as from a third tier school with third tier results. The data exists to allow for loans based on underlying program and school performance. This would allows students to see that they are entering into a professional or school track with good or bad outcomes based on the interest rate charged. It would also drive schools to improve their student outcomes. If a student really wants to be a basketweaving major at a third tier school and get charged 15%, so be it.
2
Um, Chris, what you are proposing has a name. It is called a "market."
I don't understand why anyone is defaulting on student loans. I never see PAYE or REPAYE mentioned in any of these articles. Under these programs students should be able to pay 10-15% of their income towards their loans. If they have no income they don't owe anything. If they make very little, they pay very little. After 20-25 years the loans are forgiven (although the forgiven amount is treated as taxable income). Of course higher education is still overpriced and there are still problems with this system, but literally nobody should be defaulting on student loans.
3
A simple example: A student loan from a "national" bank 2008. Payback began 2011. I co-signed loan. Primary loan recipient could not complete schooling and otherwise would have defaulted. I've been making payments since 2011. The original loan was for 65k. Now, 7 years later, on a 15yr loan, I still owe 60K. How is that possible?. I suspect that "student loans" commonly follow the "payday loan" construct. This cost of money seems criminal to me. Perhaps a law to "recalculate" student loan costs would lower this "legal" theft.
11
The Federal government could immediately pay off the loans and charge its interest rate on student loans -- perhaps with .2% fee to cover costs of billing the debtors. The 20 year bond rate is less than 3%; it would be a good investment in the future; and, since future interest charges would be drastically reduced, the current student loan payments would decline immensely.
Free college education would also be a good investment for the country's future -- let people pay extra for Harvard, Yale, etc. -- but that is another tale.
4
"The federal government, states and institutions also need to make significant investments in college affordability to reduce the number of students who need a loan in the first place."
Why is a high school education free and college tuition a staggering expense when a college degree is the equivalent of what a high school degree was 50 years ago?
If "free" high school is a good thing than free college should be even better for the welfare of our nation as a whole. Let young people, whose brains are not even fully assembled yet, acquire the education they need to flourish and then pay for their educations collectively through a common tax when they are reaping the rewards of their education through good paying jobs. Free them from the stress of crushing debt so they can focus on their education and then developing their careers before main payback occurs by way of taxation.
If free education works well up to high school why should it stop there?
It is much like the argument for universal medicare- if it works well for seniors why wouldn't it work just as well for the rest of us?
56
High school is not free in many districts. Some are so cash strapped due to all the extraordinary needs that courses such as PreCalc are pay-to-play. It cost me $4k to pay for Dual Enrollment and AP online for my compelled child, since the district only offered study hall and the three required classes (PE, SS, Engl) for Grade 12. Sure, I could have graduated the child after 11th grade, but who sends a 15 year old to college without appropriate coursework?
We need to offer all our students appropriate coursework, not just the politically favored subgroups.
Run colleges as institutions of higher learning, as they were until the 1980s, instead of running them as businesses. That means cut administrative positions by at least half. The rise in the number of administrators is a major factor in the cost of tuition. End "Assessment" the buzz word for the past 18 years. Assessing how students learn has not in anyway increased student learning;, it has increased the salaries of assessors, to no purpose whatsoever. Students should avoid for profit colleges, and attend state and local community colleges, where tuition is minimal and most who need subsidies get it. Don't take out student loans. Even if you have to work and take longer to graduate, don't get in debt.
6
Why are so many parents enabling their children to attend private colleges when they cannot afford it? Why do parents allow their children to pursue majors that have very little chance of getting a job that would allow them to pay off the debt they are acquiring? Why is the solution to these problems More government intervention and griping about other people's income and tax rates?
My parents did not go to college, had a vey low income, had seven children that they put through college. Through the combination of saving drastically, sending 5 of them to state schools, and making sure we kids knew that we needed to get a job to help pay for the loans, we all busted our backside to get through it , and we all succeeded. Parents and children need to plan realistically.
12
Greatly improve the US public education system?!? Prioritize primary and secondary education for the masses? Oh, but the US - I mean the millionaires and oligarchs that have bought and manipulated their way into the government - have way more important priorities than providing a solid education and good healthcare care for its worker ant citizens: fund the endless war machine, support team america world police, subsidize corporate welfare, and bankroll the huge tax breaks for the ultra wealthy 3%-er's. Sorry! No money left for public education, healthcare, family-centric work benefits, the arts, science/research, clean water/food, progressive environmental actions, and infrastructure investment. This displacement of priorities is a disheartening and dangerous path.
8
There's some pressure to give passing grades in high school, in my experience (in some schools, not all) even if a failing grade is deserved. I can see why--the F would show up on transcripts and hurt the student when applying to college. Teacher doesn't want to ruin Student's future. The student, however, will likely not get the training needed to succeed in college or life, and will fail.
Therefore, I think high schools should give a 'Did Not Pass' grade that can be replaced with the passing grade (once the student passes for real, i.e., gains the required knowledge.) No F on the transcript whatsoever, nor any mention of the number of attempts.
The is because high school is free for the student, and the teachers are experienced in teaching basic subjects, and the student might well buckle down and learn after a few 'Did Not Pass' grades. If this causes discipline problems, send the students who aren't ready to work to the cafeteria and let them hang out and watch TV until they are ready to return to class and learn. They wouldn't get an F, just a 'Did Not Pass'. At some point, they will feel stupid about their behavior, realize (hopefully) that they are giving up the chance to get a good, free education and return to class.
If high schools pass failing students, the students will have to take out student loans to pay tuition for remedial classes = student debt = bad. The students don't see it at the time, but we adults should see it and do something about it.
Great idea, America-since-Reagan: let's make fun of people with higher education degrees AND make college prohibitively expensive. Because countries with poor education systems have always done so much better than the well-educated ones.
Who did Reagan think made those weapons that he liked so much, anyway?
29
Not ethnic-studies majors.
1
Hey, we are funding the higher education industrial complex. and it will get worse when Betsy Bigbucks gets her wish of for-profit institutions of higher tuition and no hope for the future graduates having no oversight at all.
It's good for the banks and the administrators at the post secondary institutions without standards. It's bad for students and taxpayers.
6
The best solution would be one where the college gets paid a percentage of the student's income above a threshold (set by law) for a finite period of years following the end of schooling. The student and school can agree to the percentage and period ahead of time, subject to limits in the law. The IRS can do the collection. The advantage here is first that the impact to the student is finite, more easily understood beforehand, and unable to cause bankruptcy, as the obligation shrinks with income. Secondly, the college shares in the success or failure of the student. Colleges that teach no useful skills, or have low graduation rates, will suffer from the poor success of their students. Third, colleges and majors are more easily compared. Fourth, programs where the tuition can never be justified economically, and thus need cash up front, will stick out like a sore thumb.
.
This creates a potential cash flow problem for colleges as they get paid years after the fact, but the government can ease the pain of that transition with a cash float representing realistic future returns for those schools that lack the endowment to handle it themselves. Banks would also be happy to provide that float. You could sell that future income stream as a security.
8
Hmm, a problem with that is most 17 - 21 years old people don't negotiate well. Certainly a trained negotiator would have a tragic advantage.
3
Allow bankruptcy for student loans which is currently prohibited by law. If corporations with highly paid CEOs and expert tax lawyers can declare bankruptcy, financially unsophisticated twenty-somethings should be allowed the same financial reset opportunity.
Household formation is the best form of economic growth. It drives the following industries: construction, appliances, furniture, household retail stores, and so forth. Drywall may come from China, but construction labor cannot be outsourced. Most people still buy US made appliances such as Carrier air conditioners.
For-profit colleges is responsible for the worst cases of student debt. Impose due diligence on banks that lend to students attending for-profit schools. For-profit schools aggressively sell admissions to anyone regardless of ability to succeed and connect the students to lending institutions. These institutions should assess the risk of default and assume the risk.
Crushing student debt delays household formation. The indebted student lives with her parents or with several roommates. Marriage is delayed along with having children which also stimulates the economy. Demographics, a powerful force of nature as we learned from baby boomers joining the work force, is destiny.
17
The only reason that an 18 year-old with no credit history and no income can get a loan is because of the requirement to repay it. You seriously think a bank will offer a loan that can be written off by a 22 year-old simply declaring bankruptcy?
10
@SteveRR: You hit the nail on the head. Precious few 18-year-olds are worthy credit risks for large amounts of unsecured debt. In my view, this is why higher education has to be viewed as a public investment. Financing it as a private commodity just doesn't work.
1
The elephant in the room that no one wants to talk about is the fact that over the years it has become well-nigh impossible for anyone to discharge student loans in bankruptcy. This includes not only the student but guarantors (parents, most often).
This is NOT the way it was when the present Bankruptcy Code was enacted (in 1978) and went into effect (in 1979). Back then, student loans were dischargeable once they had been in repayment status for at least five years (later increased to seven years). The theory was that if someone had been paying for five (or seven) years and still wasn't making enough to pay off the debt, it could be forgiven in bankruptcy. That's the same thing we do with income taxes -- if they're old enough, they can be discharged in bankruptcy without the need even to show hardship (much less "undue" hardship. which is the requirement to discharge student loans in bankruptcy.
Note also that student loans used to be dischargeable in Chapter 13 cases, where the debtor successfully completed a repayment plan of between three and five years.
When Congress amended the Bankruptcy Code to make student loans dischargeable only if the student could prove "undue" hardship, the costs of college (and, hence, the amount of student debt people were burdened with) were much lower than they are now.
Resolving the student loan crisis will require a lot of work from Congress. It won't get done properly as long as the Bankruptcy Code remains as it is.
45
It should be added that in the rare instances when student loan debt is forgiven, as in, say, cases of disability, the government still views the forgiven debt amount as a taxable event that must be paid off to the IRS. This too needs to be fixed.
3
If people can discharge a student loan in bankruptcy, it gives the incentive for people in high earning professions with high debt to declare bankruptcy immediately out of college, discharge the debt to the taxpayer, and then spend the rest of their life earning a high salary.
Even worse than we imagined is that with private money subsidizing public colleges, such as CUNY where taxes pay for only 70%. The rest is private, which means, our public colleges and universities are hybrid. Brooklyn College, where I attended is therefore, 30% "for-profit" or private.
Worse: public schools aren't able to compete with private and charters ones in terms of academic excellence, so the publicly educated student is less prepared to compete for seats and scholarships in the better public colleges and universities, making them the prey of the for-profit schools and for-profit student loan version of indentured servitude.
Even worse: the option of civil disobedience, to refuse to pay back the loan is not being pursued by enough to protest what is happening to the other students who are being harmed. We are a culture of peaceful protest, yet, that proactive stance is subordinated to a fear of consequences.
Less bad: as the economy is being drained by taking money away from children and adolescents, future tax revenues will not meet the Trump/Republican goal and there will be further cuts to education.
My solution, when I couldn't afford American college prices was to go to France where the education was free. I encourage young people to study abroad and to resist the temptation to pay back the loan. Paying it back only further impoverishes the rest of the class.
2
This is a result of the neoliberal view that the pains of globalization can be fixed by education, but not free education, of course! Yes, the republicans are the forces of evil, but the milquetoast do-gooder policies of neoliberals, who want to be republicans with a heart, always choose compromise solutions that first and foremost make sure the rich keep theirs and hopefully manage to give a little to the poor. We can't just have an efficient single payer healthcare solution, we have to make sure the insurance companies are getting theirs. We can't just have an affordable federal student loan system that cuts out the banks and gives students the same interest rates (next to nothing) that the fed loans money to banks at. For the last decade the federal government has lent banks money at next to zero interest and the banks have then lent that money to students at an immense mark-up AND the government insures those loans, so that if the student defaults on the loan, the federal government pays the bank back.
8
There are many ways to deal with this.
1) What if we didn't give the biggest tax cuts in history to the wealthiest 1%. 2) Following #1, free public university education based on merit (i.e., need to maintain a certain GPA, tailored to the major);
3) End the in-state/out-of state tuition racket: If a kid from South Carolina wants to go to Penn State and a kid from Pennsylvania wants to go to Clemson, keep the tuition the same (out of state can be nearly double).
4) Good idea regarding for-profit colleges--if their student default rates exceed 30% (already too generous!), cut off any aid and subsidized loans. Tax payers should not be subsidizing failing private for-profit colleges.
Again, scrap the tax cuts to the ones that need it the least and use that money for college education. That's trickle down economics at work.
29
Students had a choice. Inexpensive community colleges are available to nearly all. Less expensive state schools provide excellent educational opportunities at reasonable costs. There are many programs which help defray costs of higher ed. The wrong choice made by a student is solely their responsibility, no one else’s.
7
A problem with community colleges is that the credits may not be transferable. Certainly this should not be a problem within a state.
My judgement was fortuitous. I was in the Air Force at Grand Forks AFB at 17 years old taking basic classes like English, psych, and stayed at University of North Dakota after I was discharged from my enlistment in the Air Force.
But your point is correct - the student has a choice, do not decry the choices you made in your life.
3
It is at best disengenous to describe community colleges that provide excellent educational opportunities as being available to all. Some community colleges are excellent but the majority are not. Completion rates at community colleges are not that good. Finally much of the cost of college is consists of food , clothing, shelter , etc; these costs do not differentiate between community colleges and 4 year colleges.
4
Community colleges aren't necessarily affordable. Mine charges $275 per credit. The state U charges a hair over $600 per credit (in-state, undergrad).
Not to mention, the military has become very selective. I read somewhere that 75% of U.S. high school seniors do not qualify for military service due to obesity, low ASVAB scores, or congenital disease. The Air Force rejected a friend of mine for mild hearing loss in one ear.
2
According to the College Scorecard, only 47% of all students have paid at least $1 of repayment of their student loans within 3 years of leaving school. That sounds pretty ominous to me.
The student loan problem is really a college tuition problem. College has become far too expensive. Teaching income has declined through the use of low paid adjunct professors, but non-teaching administrative staff costs have exploded.
This is a perfect recipe for massive disruption, brought about by technology. If you want to better understand how this works, try taking a class through Harvard EdX or a similar accredited on-line program. There are no admission requirements, the courses are excellent, at least those I have taken and the costs are low if you want college credit, and free if you don't.
If you work in the field of higher education, hold onto your hat, change is coming.
28
Students and parents need to accept some responsibility for the problem. How many students start their college years with a financial plan -- one that includes an analysis of expected loans AND what their post graduation income will be? It takes a little effort but the information is out on the web at sites like https://www.yourmoneypage.com/education/studentloan.php
5
How many parents (or grandparents) start out their childrens' lives with a plan? I established a 529 plan for my grand-child when he was 2, today he is 11 and the fund has $40K. I hope that he he will enter the Air Force after HS and when he goes to college the 529 plan will have more than $100K.
7
The job market for any field can change overnight. Ask anyone who graduated into the Great Recession.
I graduated from nursing school in 2008. NO ONE wanted to hire nurses, especially new grads. It took me 10 months and a 250-mile move to find my first job. Some of my classmates never found jobs.
1
I don't see the debt burden as something that will ever actually pop, like a bubble. Instead, it's like a snowball rolling down a hill, or a sprinkler stuck in place, watering only one area of a lawn. Whatever money that may have been used by my generation to purchase homes or cars, start families, take career risks, start companies and travel, will be paid to a handful of companies, and none of the money will be re-invested. Along with the money, we also lose people's time and their potential. All talk of personal responsibility aside, it's troubling to have so many people being stripped of the ability to contribute to the economy, or to society, in any meaningful way. I can feel the anger simmering.
99
Colleges and Universities should not get a free ride. As default rates for particular higher education institutions rise, there ought to be a net reduction in financial assistance to students in the way of loans. As default rates decline or particular higher education institutions then they ought to benefit in financial services and lower rates for borrowers. This would encourage higher education institutions to work with students to provide loans and grants to benefit both.
3
Two pieces of data analysis were intentionally omitted from the article, If you split the public college category into four year schools and community colleges, the default rate for community colleges is indistinguishable from for-profit colleges. The reason for that is they draw from the same student populations: Those who do not qualify for admission to a four year college. Which is not to denigrate people who go to community college or for-profit schools and do pay back their student loans.
The other piece of information that was intentionally omitted is that the number of participants, total debt as well as average and mean debt for each group varies significantly. Community colleges and for-profit schools have higher default rates, but relatively low loan balances.
Community colleges are subsidized by local and state governments and provide opportunities for a low cost first two years for the academically prepared, as well as remedial instruction for those who graduated from high school unprepared for college, for students who want specialized certificates, and for older students re-entering academia. If some of their students default on federal loans, it may be the price of not shutting them off from opportunity.
For-profit schools provide similar opportunities without taxpayer contributions from state and local governments. They take a lot of heat from Democrats [except when Bill Clinton is accepting a $1 million annual fee as spokesperson.]
3
@ebmem: You're quite right to differentiate between 4-year and 2-year public colleges. But talking about intentionally omitting data! You and this column omit the observation that students attending for-profit "universities" (I exclude small trade schools, which can be perfectly reasonable) are frequently unqualified, after getting their "degree", for either the jobs they were supposedly trained for or transfer to a normal 4-year college. As far as I've been reading, this is a big problem with for-profit "universities" that isn't shared by community colleges.
2
I was lucky to go to college when Social Security benefits for education extended to the age of 23. My dad passed away when I was 11 and I was able to use his social security death benefit and work study jobs to pay for college. Those Social Security benefits now end at the age of 18 for dependent children. Does anyone know why?
35
I am glad that you were able to use your fathers' SS benefits to your advantage. I'm not at all understanding when this ended, but if I had known, my wifes' daughter may have been able to take advantage of this when she graduated HS in about 1998. But I thought her SS benefits ended when she was 18. Now that she is almost 40, she is trying to go part-time to college to get a marketing degree.
2
Reagan nixed them as part of his economic platform.
I think the plans for reducing this benefit started during the Carter years, though. I got this benefit for a few years when Ford and Carter were in office, and my benefit was tiny, even for the mid-1970s. I could not possibly have paid for an entire college degree with the saved checks--besides, I needed the money for living expenses in high school. This benefit is tied to what the late parent paid in taxes. The Paul Ryan example doesn't seem possible to me, based on the facts of Mr. Ryan's family as written in so many news stories.
1
This is more of the rigging of our system by de-regulation and rewriting law and misusing grammar to undo what had been done to lift the people up from 1932 to 1979 and give us what we have today.
Every single problem anyone has in America today can be traced directly to an intentional act by republicans in government to cause that problem.
15
They just wanna make America grate again.
DURING MY FIRST SEMESTER IN COLLEGE in 1965 for Tuition, room and board were about $387. Textbooks were maybe $20 to $50 more. Depending. My first semester in graduate school full time was $1,000.00. I could not have afforded the same schools today. I did incur some student debt, but it was less than $10K and I was able to pay it off over a period of 10 years at very low interest rates, which helped my credit rating considerably. But now stop schools are above $100K per year plus expenses and state schools range from about a low of $20K to about $40K plus expenses. Textbooks now can cost hundreds of dollars per semester for online books that are rented for one term only. No copy becomes the property of the student. On top of that, many for-profit universities (or, in the case of Trump, bogus, predatory phony "universities") have predatory tuition rates, predatory bank loans and poor job placement records. In a wealthy township nearby, 94% of the graduates complete 4 year degrees. After that 50% return home because they cannot find jobs in their areas of major study. So the students and their co-signatories for the loans are stuck with debts that are never removed from their financial records, even in case of bankruptcy and are, I believe, must be repaid from any monies in the estates of former students before anything else is paid. So what we have in the US is Cradle to Grave Educational Loans for kids who start at private infant care centers. Happy now!?
12
Wow, is that a fact - text books are rental?
As an electrical engr student in the 80's, I bought an optional Fields textbook for a huge! cost of $125. It was invaluable at the time for my interest in Electrical Fields. No help in future employment, unfortunately.
Most texts were around $30 and some were applicable for at least 2 semesters. 1980's prob the last great decade for education?
2
@John Jones, I agree with all this in principle (and I went to a good, free-tuition college) but are you sure about $100,000 per year plus expenses? I never saw any numbers near this.
Renegade, many textbooks can be rented but they can also be bought. The sale price of some technical textbooks is several hundred dollars. The book that cost $35 is probably $150+ now. Much depends on what field of study you're thinking of.
I have been predicting for years that our next financial crisis will come from one of two sources - unfunded public employee pensions or student loans. Both are problems created by government and the likely solution is another bailout by the taxpayers.
The availability of student loans has allowed colleges and universities to raise tuition and fees at a rate much higher than inflation. It's also attracted its share of profit seekers trying to cash in on the government gravy train.
The best way to solve the problem of unaffordable student debt is to make the schools responsible for payment if the student defaults. Then schools would be more careful about letting students incur debt inconsistent with their career choice.
7
I am grateful that I went to college in the late 1970s and not any later. I'm also grateful that I never went on for an advanced degree because, even then, it was expensive and there were no guarantees that an advanced degree would help us find jobs.
In this reader's opinion, if businesses have decided that every job requires a college degree businesses, particularly the large corporations, should not be expecting tax breaks. It's that or we take a look at improving public education in grades K-12 so that students who graduate from high school have the necessary skills to get and keep decent jobs. Continuing to require a college education is counterproductive when students need remedial subjects just to get up to college level or when what they want does not require a college degree.
There's nothing wrong with not going to college and serving an apprenticeship or getting high quality training in high school. There's nothing wrong with not wanting a college education as long as good alternatives are available to students. By forcing every student into a college prep program or not having adequate training available when students are in high school we are failing them. We are failing college students in our refusal to fund state university systems properly, telling students that a STEM degree guarantees them a good job (it doesn't and I heard similar lies in the 70s and 80s), and allowing them to amass enough debt to interfere with their future.
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I am reminded of my daughter's middle school math teacher who had a Ph.D in Math! That's right, a Ph.D to teach middle school math! Her answer to my kid when she didn't understand a concept: "Here, take this worksheet and turn it in tomorrow." Superfluous credentialing is also a problem which drives up costs, and debt, especially in education.
3
hen3ry, I appreciate your many thoughtful comments and want to add a few thoughts of my own.
The world of work is changing at an increasing rate and, with the rise of AI, most jobs will be vulnerable to automation, outsourcing, downgrading, or downsizing over one's working life. The availability of lifelong, quality education is more essential than ever. People need to understand this, continually upgrade their skills and knowledge, and be flexible about their career path.
Public support for the full range of educational opportunities should be a basic public good. Public colleges and universities should have affordable, if not free, tuition. And technical training, perhaps in partnership with industry, should also expand. Given the poor record of for-profit institutions, we should put our resources into enhanced JC's.
A rich country like the US should invest sufficiently for citizens of all ages to find productive and rewarding employment in a competitive economy.
Clearly the cost of many forms of college or post high school education is beyond the means of many people. Since the federal govt backs most of the loans, the cost falls primarily to the taxpayers; ~6%+ of the national debt in total.
Currently the student loan industry is rife with abuse by almost all of the segments participating. Loan providers have no incentive to qualify the recipients. Colleges are incented to raise costs knowing that they can market loans right along with their new dorms. Students get their money up front without really understanding that the interest starts on day one, just like a mortgage.
The only recourse is that taxpayers must hold their legislators accountable for fixing the system. Taxpayers currently subsidize the education industry. We are going to pay for student loans whether we "eat" the defaults incurred in the current system or whether we increase the subsidization of the costs.
Ironically, taxpayers are either indifferent or ignorant. There certainly is no clamor to raise taxes to better subsidize higher ed. There is no demand for more accountability in the system. There are no legislators arguing coherently for change.
Meanwhile, student loan debt continues to grow as a percentage of national debt. Today it is second only to mortgage debt.
2
A default rate of 10% is horrific! We need to low the allowable default rate to something like 1%. Drying up this source of funding will help force higher-ed to deliver a useful education at a lower cost, or go out of business. All forms of higher education should face more scrutiny in their ability to offer these loans to young people, with little experience in the world. Especially considering the loans cannot be discharged through bankruptcy.
I used college loans twice in my life and paid it all back, on time. I was always aware that I was borrowing money and would have to pay it back.
3
Over here in "social democratic" Germany, my daughter (Greek/U.S citizen) is attending a prestigious university for NO TUITION! We pay about 120 euros per semester (which includes her 6-month ticket for public transportation) and for her room and board. Nothing more! If we couldn't afford her room and board, she would be eligible for a government stipend covering those costs (repayable up to only 10,000 euros in total, interest free, with payments starting 5 years after graduation).
Americans scoff when Bernie Sanders, Ocasia-Cortez and others talk about "free" college education. But that is not some crazy pipe dream, the only prerequisite is that people have to pay taxes and believe in the common good.
I myself barely squeaked through my undergraduate education. As a half-orphan, I had (like Paul Ryan) Social Security to cover my tuition in my first year. Then Reagan cut the payments in half. The next year another half. The reason I came to Germany was that I found an exchange program that was much cheaper than the college I was attending. (And when in Germany, I took so many classes--at no extra charge--that I managed to get my Bachelor's in only 3 1/2 years, thus saving $4,500!)
Americans need to look around the world and recognize that both America's miserable education and health care systems do not have to be that way. Students do not need to be saddled with debt their whole lives and sick people do not need to declare bankruptcy. There are solutions.
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''Americans need to look around the world and recognize that both America's miserable education and health care systems do not have to be that way''.
Let's add America's miserable job market and unplayable rents and housing - which does not have to be that way!
5
Look into college in Canada too. The costs are more reasonable and humanely possible. The educational system there is overall better too.
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Oh, but the US - I mean, the millionaires and oligarchs that have bought and manipulated their way into our government - have way more important priorities than providing a solid education and good healthcare care for its citizen worker ants: fund the endless war machine, support team america world police, subsidize corporate welfare, and bankroll the huge tax breaks for the ultra wealthy 3%-er's. Sorry! No money left for public education, healthcare, family-centric work benefits, the arts, science/research, clean water/food, progressive environmental actions, and infrastructure investment. This displacement of priorities is a disheartening and dangerous path.
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Unfortunately, the current Secretary of Education is profiting from the status quo. The Obama administration asked fairly little of ED in regard to oversight for the loan servicers, although there was some movement in the right direction. Since then, it has been Christmas for the servicers and the for-profit institutions.
Title IV of the Higher Education Act entrusts the Department of Education with providing oversight of education institutions (so they don't "sell" an education product that won't help the purchaser) and of the loan servicers (who can't seem to do anything right besides make it terribly hard for borrowers to stay compliant and to avail themselves of certain forgiveness programs to which they are entitled). Unfortunately, the department under DeVos has backtracked.
We are not treating our borrowers, or the taxpayers who fund them, with respect or fairnless.
But that's ok. Before long, my high school can cut their budgets for guidance and instruction so that there's money around for guns!!!!
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For-profit education is taking advantage of the pervasive myth that higher education is necessary for a successful, fulfilled life.
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What goes unsaid is the ripple effect of these loans.
First, we have created yet another economic "bubble", that when it bursts will require another bailout of the many financial institutions that create and sell these loans. Does anyone still remember 2008.
Secondly, those with federally backed student loans from not for profit institutions (ie: legitimate) are forbidden by the law from seeking lower interest rates for those loans, for the life of the loan. As a result, they postpone major purchases, such as cars and homes, simply because the monthly payment affects their credit worthiness.
Finally, those who attended for profit schools find themselves caught in a huge financial trap when the "careers" the schools advertised they would become eligible for upon graduation no longer exist, or require additional education or certification (think Trump University) These student tend to come from the poorest. least educated segment, and their ongoing debt becomes, literally a life sentence in poverty.
The fact that the Department of Education under Sec. DeVos is removing the meager safeguards instituted to attempt to prevent these students from economic ruin, is an indication that education is not the first priority of her department.
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@AWG: Your second point is factually incorrect. There are a variety of private sector and state-based options for refinancing federal student loans. I know because the State of Minnesota started an excellent program a few years ago I used to refinance my Direct Loans.
I reduced my interest rate from 6.25% to 3.25%. I will save about $15,000 in student loan interest and pay off my loans 3 years earlier than I would have otherwise. My only regret is this program didn't exist 10 years so I could have refinanced my loans at the very start of the ultra-low-interest-rate era, rather than being locked in at a 6.25% rate from the late '90s.
Single thought - 529 Plan.
Grandparents, you can establish a 529 plan for your grand-children. You can contribute to it, and depending on your state of residence, be eligible for a state income tax credit.
Many people say that Utahs' my529.0rg plan is one of the lowest cost and well-run plans in the nation.
I started my Grandsons' 529 plan in Utahs' 529 when he was 2, so that was 2008. Today he is 11 and that plan has $40K accrued. Additionally I am hoping that he will go into the Air Force after HS and get additional educational benefits.
Now that my adult daughter has married again and has three more children, I have to figure out what my strategy is.
If I thought the Stock Market was going to crash tomorrow, I could put all that into a money market option and he would have at least $40K when he goes to college.
I know student loans are not written off when a person declares bankruptcy. What does happen to those who remain in default?
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Their tax refunds are garnished. Bank accounts are garnished. Wages are garnished. And, if they still owe by the time they retire and get social security benefits, those are garnished, too.
In some states, you lose your professional license if you are in default. Think of nurses, for example, who have to be licensed in order to work.
That's how it works.
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As Dylan once sang - To live outside the law, you must be honest.
That's how it should work.
When a person doesn't pay then either the bank will stop giving out loans or everyone else ends up paying as the bank will have to get the money someway so they make everyone else pay by charging them more.
Is that the way you want it to work.
What makes this so excruciatingly painful is that civilized Countries pay for a student’s education. There are some exam-based limits on the direction in which a student may go without paying his or her own way, but education is considered a human right. Civilized Countries also cover Healthcare, which they consider to be a human right. Given the rate at which our most recent tax cuts are driving our Country into debt, it is unlikely that we will become one of the world’s civilized nations.
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So Canada is uncivilized? Australia is uncivilized?
The only thing you get from full government support is poor schools, over-crowded classrooms and horrible placement rates.
You want a classic case of destroying a university system by making it 'free' see France's universities
2
Why do liberals think that only the things they stand for are civilized and you don't agree with them than they must be uncivilized or even fascist
Given that no one has paid taxes based on the most recent change in the tax rates then we do not know that the country is being driven into debt.
You want to know what will do that.
Free college for all like Sanders wants.
Not everyone should go to college.
When you make it free many people who shouldn't be there will go.
there must be at least 10 million college students in the USA
If the average cost to the government was ten thousand that would be at least 100 billion and probably much more as the number of students and how much it would cost per student would be a lot more.
It's very easy to say schools should be free when the guy who pays is not you especially when you demonize that guy you think should pay for it.
Let's get it into the open.
What you really want is wealth redistribution or what I call making it legal to steal from the rich.
Trump will win again if the Democrats do what you think they should.
I know I will not vote for a Democrat even if Trump is running for President.
I attended college and graduate school ( State Schools) from 1972 through 1978. My student loan debt was $7,500. My student loan payment was about $75. a month and my first years salary was $16,000. This article states that today's student accrues about $22,000. debt over four years. I am having a hard time comprehending the current "crisis" from these numbers. Can someone enlighten me? There appears to be complexity that some of the summary stats do not recon with.
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Here's how it works today. Tuition is way higher than when you went to school. So is room and board. States and colleges have figured out that they can sell student loans to their students as part of a financial aid package and raise those rates. What those loans are actually is a form of debt servitude that lasts for years and years. For an 18 year old, four years is a long way off. Parents can breathe a sigh of relief and close their eyes to that same reality that is four years off. But the students who go to state schools are still way ahead of those who fall for the for profit schools. Way too many of those only pretend to offer an education. Listen to their ads and their descriptions of the "conveniences" they offer. Most of those amount to making entry and continuance easy. Those things are easy because little is actually offered in the way of skills and knowledge and evaluation. Easy is not good in education. It should be a challenge and provide growth not ease.
$16,000 in 1978 would be approximately $60,000 according to the inflation calculator I used just now. I think the problem is with income. Very few people start at $60,000 straight out of school today.
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Jim,
Lots has changed sine the 70’s. The current loans have much higher interest rates than you were paying and the interest accrual was probably deferred back then until you completed your degree. Those benefits don’t necessarily apply now. Once a borrower goes into default, the costs just rise faster.
Also, salaries have not necessarily kept up with the rest of the cost of living, and those figures of $22K per student don’t reflect what I have seen on a state-by-state basis. Some of the states that fund their colleges poorly have much higher levels of borrowing.
The real offenders are the shoddy private colleges that Devos shills for. If these places are so great, let the lenders share some of the risk of their lousy educational programs by taking part of the loss on the student borrowers who get ripped off. Get the government out of the loan snarking business.
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In the 70's after graduation I was unable to make the full monthly payments on my student loan at a big state college. I had been a self supporting work-study and Pell Grant honor student and worked two or more jobs while going to school full time. After graduation I had been unable to find a good paying job in my area.
The loan officer called me into his office and said if you pay the interest you'll not be defaulting and can pay on schedule once your work situation improves.
Despite working all the while at several jobs and paying the interest on time, the loan officer called me in again after 3 years of paying the interest only. I said I had finally found a better paying job in my field, so could start repayments at the regular rate. He said OK, but now your interest rate will be 9%, it had been 3%. I think I said - is there any other way? The answer was NO. I was in my mid 20's, so just signed the paper. I had a sinking feeling as I walked out the door.
I paid on time, ever month, on that student loan for 23 years. In the end I paying $23,000 on the $10,000 loan.
I don't know if this was loan sharking, but was pretty close.
I suspect that the interest on the defaulted loans in the article was jacked up in a similar scenario, but at an even higher rate, as interest rates on student loans have probably gone up since the 70's. The loans are larger even at state schools as tuition has skyrocket in the past 10 years.
Truly a SAD situation.
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that's exactly it, until the real fact is public knowledge, that the banks use this to make enormous profits on these loans, it's never explained that all the money will go to interest so you will never pay it off. I ended up over a 20 year period as well, paying $46,000 on a $30,000 in loans and when i last looked, they had my 'debt' at $98,000. It's computer driven finances, legal and immoral. Until the banks are brought to account we'll get nowhere. the defaults are blamed on the students but when students realize that not only are they not earning enough, but that the bank has cheated them and they are stuck for the rest of their lives because they signed the form, they default. It's an incredible scam. I've spoken to lawyers and they say the only thing that will work is a political solution. Yeah....that'll happen...
Instead of loosening the rules on for-profit schools intended to keep them from fleecing the taxpayer, the Education Department should have applied those rules to ALL colleges and universities. There is no benefit to enrolling in general-purpose college studies someone with a middle-school level of proficiency and a below-average level of aptitude. Such people are only capable of benefiting from focused vocational training with large amounts of practice and reinforcement of what has been learned. It is time to crack down on the college-for-all scam that pretends to cultivate the intellect of the large part of the population that has none. Even "nonprofit" institutions pay large salaries (really, profit) for powerful insiders who know how to fleece the system.
6
Here's a modest proposal (with apologies to Jonathan Swift): reinstitute debtor's prisons, run by the private prison industry. Former students who default can work off their debt at the average daily wage for the incarcerated, which ranges from $0.86 to $3.45 per day. They can be rented out to chicken processing plants, thus increasing profits for the plant owners, or used to fight forest fires, thus performing a public service. Meanwhile they will be fed and have roofs over their heads. They won't be able to breed, thus alleviating the population problem, and they won't be putting pressure on a very tight housing market.
Of course at that rate of pay they'll never work off their student loans, and we will have another problem when they're too old to perform any useful tasks. However, that is way off in the future and we can kick the can down the road for another administration to deal with...
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Paying for education is NOT sustainable.
2
- You don't take the above seriously? -
Do the math.
A family with three children in homeland USA will have to spend over 600 000$ for education.
Average Americans can't afford that anymore.
Moving to a European Country where education is for free will become the only option.
Average Americans with children can't afford to live in their homeland anymore.
4
Moving to Europe where “it’s free” is not an option. Unlike here, not everyone in Europe goes to University. Many go to trade school. Many also cease after their version of high school because a lot of jobs do not require a degree. It’s insane in this country that you need a degree for EVERY white collar job.
It is because of this that their universities can be choosy as to who gets in. You don’t get in just because you want to.
Our education system is broken here from the beginnning. I genuinely doubt that the average American could get into European universities.
By keeping our younger adults straddled to college debt, at the beginning of their lives, is keeping our entire country behind. Other nations that provide free or low cost university educations become more enriched and progressive. Our kids can not possibly compete with those coming here for higher education from other nations who contribute or pay their ways. This will bite us hard in the future.
No wonder we hardly have any doctors or specialists from the US anymore. Mostly all are imported from India, China or where ever.
13
Start limiting or reducing Federally guaranteed student loans for private colleges and universities. Doesn't matter if it's a for profit or non profit school. Once the money tree starts drying up watch how quick these schools tuition's stabilize and probably even come down to earth. These are PRIVATE Colleges and Universities and have absolutely no skin in the tuition game. And million dollar salaries for some college football coaches?? Really?
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DonS, I agree heartily with one part of your post: coaches' salaries and other benefits are beyond reason. Administrators like to believe this is repaid by alumni contributions, but as a rule that is untrue.
4
The athletic departments of large schools are primarily funded by television revenue. Tuition does not figure into coaching salaries at all. Do your homework - this is common knowledge.
1
Million dollar salaries for some college football coaches occur at plenty of public universities.
1
Don't forget parents' loans. I have a Parent Plus loan that I'm paying 8% interest on to the Feds...
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I hope that works out for you. Some thoughts, not trying to be negative.
Is a Parents Plus loan dischargeable in bankruptcy? A quick Google search says it is very difficult, as is a student loan.
Also 8% is large for a loan, but less than Credit Cards. Perhaps your local credit union would be more competitive?
Long-term planning is better, maybe if there are future grand-children and you have the liquidity, consider the state-run 529 plans.
3
Bernie Sanders has it right on this one. Attendance at colleges and universities should be tuition-free for all who qualify academically.
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" .. Attendance at colleges and universities should be tuition-free for all who qualify academically .."
To what standards? Oxford? Great, you've just eliminated <60% of USA academia.
That's the more serious question -- are there too many USA colleges? Why? What political party do their employees belong to?
2
If you have ever taught at the University level you would know that the students who take their classes most seriously are those who have invested their own money in their education.
2
I support that as long as you are going to be paying for it.
2
stop loaning money to youths who have shown in high school to not be good high achieving students. if they are smart enough to get into college, they must show that they are getting good grades plus paying a part of the tuition. of course, the government must grade the colleges so they simply do not give good grades to everyone. this is particularly true with the for profit schools.
11
For-profit colleges should not have access to federal student loans. Student loans should not be used for profit.
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Uhmm.... There is no such things as not-for-profit, that is a tax classification.
1
What's the difference between a for profit and a not for profit?
great idea!!!
"For-profit institutions have particularly awful results. Five years into repayment, 44 percent of borrowers at these schools faced some type of loan distress, including 25 percent who defaulted. Most students who defaulted between three and five years in repayment attended a for-profit college."
These for-profit education rip-off institutions are the very institutions that Amway Scam Queen Education Secretary is trying to deregulate and make unaccountable so they can continue to rip off the poorest, most vulnerable and ill-informed Americans among us.
Greed Over Profit is a terrible way to run a country, a society and an education system.
November 6 2018
D for decency; R for Reverse Robin Hood sociopaths.
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How many millions did the president default on? Wasn't Trump University a for profit institution? I'm glad I moved to Canada 25 years ago. I don't recognize the states anymore.
2
As the comedian says - Here's your sign.
Many millions of Americans will always be taken by scammers. Knowledge is power, and most Americans are totally defenseless.
It falls to the educated Americans to look out for their children and grand-children, even when they are grown adults. I give advice to my daughter and sometimes I am pleased that she actually follows the advice. I hope that I am able to influence my grand-child more effectively.
Hope that the D option works out for you in Nov. But more likely, the massive voting bloc of people under 40 cannot detach themselves from their phones, on-line games and on-line porn long enough to register and actually vote.
Martin - I hope that your ex-pat odyssey has worked out for you. I'm not being snarky, but do you view your past 25 years as an advantage for yourself and (hopefully) your children and grand-children?
Democracy is a rocky road. If the USA does not like President Trump he will not be reelected. The damage is really in the divisiveness that infects our Country.
A new Party should emerge and encourage the voting population to adopt a firm set of beliefs which does not contribute to a more divisive chasm.
This is my hope. This is what Democracy should consist of.
Ban for-profit higher ed, and ban for-profit higher ed loans. Education is a public good and the public should pay for it.
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With 2 graduate degrees from selective private Institutions (not a scintilla of regret) and experience teaching in public and for profit schools I can state the following with absolute confidence:
Universities, both public and private research, are modern day abbies. As Mont St. Michel grew from a monastic outpost to a self contained town, our major universities are engaged in multiple endeavors, of which direct education is only one- and not even the principal one. And perhaps that is ok, our modern life is inconceivable without the research contributions of academe. But what is not ok is the flocking of birds of an administrative feather. Not truly academics, they are comfortable bureaucrats and apparatchiks. These nesting fowl devour resources and create “higher” priorities that conflict with real education.
For profit schools are not infested with these superfluous educrats because they have a relentless profit model that dispenses with polite custom and sanctimonious good works. However, that business model is based on the amortization of fixed costs (largely on-line education systems) over a greater and greater number of students. Classes run online when 20 or 30 students enroll ( $1500 revenue per student), and the for profit then hires an adjunct to “teach” for perhaps $2000 in variable cost. The contribution margin towards fixed expenses, marketing, and profit can easily be $30,000/ course.
No body says No to “Cheeks in the Seats”.
1
AJ, while I agree with "Education is a public good and the public should pay for it," I disagree that for-profit higher ed and loans should be banned. If we educate our citizens throughout their degree programs, for-profits will undergo changes. The one requirement that I believe should be in place with post-secondary free education is a grade requirement, a letter grade of B or better in all coursework. Free programs and online programs offer a wide scope of guidance and help for students to learn; eclecticity for teaching and learning styles is helpful. The burden of loan stress extends beyond the due dates and can and does (in some folks) lead to extraordinary healthcare needs. Banning is not a good choice for many things, though not all. For-profit ban is definitely not a good choice and, frankly, not part of our national sense of being an American. Thanks for your comment.
I'd like to know what it is about college that has made it more expensive. What is it about education itself that has caused its expenses to rise much faster than inflation? Where is that money going?
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Expansion, runaway administrative salaries, and colossal marketing budgets. (And adjunct professors are still working at the equivalent of temp worker wages, so don't blame them.)
30
What makes it more expensive? Well, you have stadiums and coach salaries. You have the top heavy admin. You have deans and president salaries. You also have new buildings. Where the expenses are not going are into faculty salaries. More and more colleges are using adjunct professors as a way to get out of paying benefits for teachers.
12
I have only a partial answer. A lot of the money is going to administrators rather than to hiring more teachers and giving salary increases to those who are there already.
5
Just another chapter in the "you can have your cake and eat it too mentality" that permeates this country. No one in Washington is going to risk their "careers" by telling the electorate NO. This is why term limits are critical.
4
a big cyclic ripoff; college employees from the lowest teacher to the president all overpaid; but that's ok, the students can just get another loan. Students and their parents need to start refusing expensive schools; a good education can be had in smaller, cheaper schools. You will certainly get no help from De Vos or the owner of that ex-ripoff university, what is his name again, Tramp, Tromp, Trump?
4
Teachers are generally not overpaid, since they represent an investment in the country's future. Executive educators are overpaid, but less so than executives in business.
Education should be a public right with public financial support based on need. Just think what that relatively small investment in civics and government classes in the 1970's would have done for this country in 2016.
12
Jean Louis Lonne,
I must respond to your error about "the lowest teacher" being overpaid. Colleges/University now use anywhere from 50-80% adjunct instructors, who are not allowed to teach more than 2 classes on any given campus (or the college would be required to provide healthcare), and who are paid only for the hours spent in the actual classroom, which averages to about 3 hours per week per class. It may surprise you to learn that these adjuncts make less than the landscapers on campus, and less than many of their students. I have taught a full load as an adjunct for 15 years, and I have never made more than $37,000. I teach the exact same load as full-timers, who in their cushy positions make 3-5 times as much money. Oh, and I have no health care, laughable retirement, and I work from semester to semester with an "agreement" not a contract, which means sometimes a full-timer whose class enrollment doesn't meet quotas will just take one of my classes, and I am left scrambling for an income.
The truth about higher education is a real eye opener for most people. No college administrator wants you to know the truth.
11
Sorry, did you say that the "lowest teacher" in a college is overpaid? In our city, teachers qualify for aid for day care and rent, but adjunct professors are paid even less than that, many of them living near the poverty line.
And even well-paid college presidents are paid less than managers at local firms to manage much more.
If you are referring to private schools, those have much lower default rates, presumably due to endowments that provide many of their students with scholarships in lieu of loans. This is not a question of students over-spending on private education, but all that money going to for-profit schools with no admissions policies.
I agree that the system is broken but blaming teachers for what, eating? What an absurd claim.
6
Get rid of interest rates on Federal student loans to ease the burden, provide more scholarships and work study monies, and develop more reasonable payment plans.
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Students with student loan problems threaten the viability of our Nation's work force AND these students are subject to fall into the hands of the Dark Side, thus costing our Nation valuable resources in addition to taking away from productivity. DJM
4