Policy Feature: Student Loans and the Cost of College
by Adrienne Edwards | University of Pennsylvania
The 2012 election is heating up, and the issues at stake are more relevant than ever. A number of them are incredibly important to our generation- youth unemployment, deficits, education, student loan debt, foreign policy, and more. We’re breaking them down, giving them context, discussing possible solutions, interviewing experts, and- above all- showcasing the takes of students nationwide. Welcome to ‘NextGen Policy’- a NGJ special series. In the arena today: the cost of college.
National student debt is expected to surpass $1 trillion dollars in 2012. This comes as no surprise to the average student; student loans are heavily intertwined in financing education, seen as the norm and not the exception, and practically expected rather than provided. There are countless horror stories across the nation about the almighty villain – the student loan. For current college students, it is a looming ghost that never escapes us.
As our economy continues to falter and stumble, student loans become more burdensome. Loans are often not an option; education is still the main key to success in this society and going into a field one doesn’t enjoy is not worth paying for. Not only do loans drive college students to look for jobs that are just not there, they force a lifestyle of “catch-up” upon the arguably most ambitious and enthusiastic population entering the workforce. The country cannot lead in innovation if we continue to stunt development and deter the newest minds.
The cost of college has skyrocketed out of control. Universities should investigate their balance sheets more thoroughly and attempt to do what they can with financial aid, as many institutions have done throughout this crisis. Schools could do more to make the tuition more transparent by explaining how they arrived to the amount they charge. Yet as much as tuition is swelling, that is not the root of the student loan problem. The problem is the return on the investment of education is much lower than it has ever been.
The student loan model, in theory, should work. It is fair to expect students to take personal and financial responsibility for an education that ultimately benefits them in the future. That model is now broken. Getting a degree, even at the undergraduate level, no longer guarantees or even suggests the same returns it once did. Therein lies the question – is it now fair to force students to take out such large loans without a high probability, much less a guarantee, that they will be able to pay back these debts? Is the system setting students up to fail?
To solve this problem, we need to create a model that can generate returns. If the government can make it so education is not only affordable but also advantageous, student loans won’t be as burdensome and there will be significant benefits for everyone.
So far, the Obama administration has been on the right path. This administration has enacted several policies specifically aimed at making college more affordable, including more stable funding for larger Pell grants, investments in community colleges, increased support for minority serving institutions, and an expanded income based repayment program. The administration has also taken action to curb some of the predatory lending practices that student-loan companies have used in the past.
As much as those policies are a start, we must protect them throughout the next round of cuts to preserve their benefits. In addition, they do nothing to change the model of student loans in the first place. Regardless of whether you have found a job or not, or whether you have a found a job you wanted or a job that can pay your bills, some loan companies expect students to start paying back their loans 6 months after they have graduated from college. In this economy, that is often not feasible.
The entire conversation about loans needs to be reframed. Many other financial contracts or exchanges are focused on the future benefits, and a similar mindset should apply to student loans as well. The question should not be what a student is willing to do for an education, but instead what are the potential benefits of such an education and how can we as a country ensure these benefits. In concrete policy terms, that could mean making sure graduates are being put to work in their respective fields, making sure that young people looking into these fields are given a truthful notion about their job prospects and settings before they even matriculate, and making sure programs are properly equipping students for their potential tasks. In essence, universities, with the government’s help, need to start giving students more viable options.
Nevertheless, getting to this new conversation about the future benefits of education will not be an easy process, and enacting new legislation to help students will not pass through Congress smoothly. But education is an area where we as a nation cannot afford to move in only baby steps. Riddling young people with debt and poor educational outcomes inhibits future innovation and development too greatly to be taken lightly.
We, as a nation, need to roll up our sleeves and work towards creating a world of choices for graduates rather than trapping them in a mountain of debt.Adrienne Edwards is a voices contributor for Next Gen Journal. She is currently studying Philosophy, Politics, and Economics at the University of Pennsylvania.