The debate over President Biden’s student loan forgiveness is just what we needed: yet another divisive issue. It’s the largest unilateral spending decision by a U.S. president. I’m waiting for the pundits to praise it as a triumph of democracy.
There’s no question that former college students need a break. They were unfairly conned into taking on big loans for degrees that may not equip them to make the payments.
It’s equally unfair to shift that debt to taxpayers who did not go to college, or who paid off their loans. And no, this is not at all comparable to the Congress-approved Paycheck Protection Program loans that allowed businesses that were shut down by the government to pay their employees during the pandemic.
While college grads and working stiffs point fingers at each other, the big winners are colleges and universities. They remain free to raise prices with impunity because the taxpayers will continue to foot the bill and future graduating classes will expect further bailouts.
It does not help when members of my generation huff that we paid off our student loans, by golly. When I graduated in 1964 tuition at Northwestern (an expensive school then and now) was $1600 a year, about 26% of the U.S. median household income of $6,000. Today’s tuition at NU is $62,391, only slightly less than the median household income of around $77,000.
I was lucky enough to get through college with scholarships, part-time work and help from my parents, and did not take out a loan until tuition went up in my senior year. In those days student loans came through the National Defense Student Loan Program, an outgrowth of the post-Sputnik push to compete with the Soviet Union. When I was in the Navy off the coast of Vietnam I began receiving collection letters from Northwestern demanding loan payments. I appreciated the perverse logic of using my combat pay for National Defense Student Loan payments.
The problem runs deeper than footing the bill for college costs. For decades we’ve promoted the idea throughout American society that everyone ought to go to college and have lavishly funded higher education. School systems have focused on college preparation at the expense of vocational education. Other countries have not done this: The U.S. is the only advanced nation that does not have a national system of trade schools.
More than 60 percent of high school graduates now start college but many need remedial courses because high school has not prepared them for college work. Fewer than half of college students complete a degree within six years. The percentage of Americans with college degrees has risen from about 20% in 1990 to more than 30% today, but about 40% of recent college graduates are employed in jobs that do not require a degree.
A report from the American Compass think tank summarizes it this way:
Put it all together, and the college pipeline proves incredibly leaky. Out of 100 high school students, 13 won’t complete high school, another 29 will complete high school but not enroll in college, and 27 will enroll in college but fail to complete a degree. Of the 31 who do earn a college degree, 13 will end up in jobs that don’t require one. That leaves just 18 of 100 young Americans—call them the Fortunate Fifth—actually moving smoothly from high school to college to career.
Forgiving student debt won’t fix the inequality of our higher education system. In the short term, one alternative to shifting student debt to taxpayers may be to give colleges some skin in the game: require schools whose students default on loans to reimburse the federal government through a tax on endowment funds. Another approach would allow people to discharge student loan debt through bankruptcy as we do with other debts.
Even though the government has insulated higher education from market forces, we’re seeing some pushback against the high cost and chancy benefit of a traditional college education. College enrollments already were declining, and more colleges are closing or merging. The pandemic accelerated the growth of online degree and technical certificate programs. The Mike Rowe Works Foundation offers scholarships to pursue trade careers.
The student debt crisis is an opportunity for lawmakers to re-evaluate higher education to make college a better value and develop a strategy for vocational education. This is unlikely, of course, but student loan bailouts should increase the pressure for reform from consumers and voters.
Student loans: Now we’re all in debt
The debate over President Biden’s student loan forgiveness is just what we needed: yet another divisive issue. It’s the largest unilateral spending decision by a U.S. president. I’m waiting for the pundits to praise it as a triumph of democracy.
There’s no question that former college students need a break. They were unfairly conned into taking on big loans for degrees that may not equip them to make the payments.
It’s equally unfair to shift that debt to taxpayers who did not go to college, or who paid off their loans. And no, this is not at all comparable to the Congress-approved Paycheck Protection Program loans that allowed businesses that were shut down by the government to pay their employees during the pandemic.
While college grads and working stiffs point fingers at each other, the big winners are colleges and universities. They remain free to raise prices with impunity because the taxpayers will continue to foot the bill and future graduating classes will expect further bailouts.
It does not help when members of my generation huff that we paid off our student loans, by golly. When I graduated in 1964 tuition at Northwestern (an expensive school then and now) was $1600 a year, about 26% of the U.S. median household income of $6,000. Today’s tuition at NU is $62,391, only slightly less than the median household income of around $77,000.
I was lucky enough to get through college with scholarships, part-time work and help from my parents, and did not take out a loan until tuition went up in my senior year. In those days student loans came through the National Defense Student Loan Program, an outgrowth of the post-Sputnik push to compete with the Soviet Union. When I was in the Navy off the coast of Vietnam I began receiving collection letters from Northwestern demanding loan payments. I appreciated the perverse logic of using my combat pay for National Defense Student Loan payments.
The problem runs deeper than footing the bill for college costs. For decades we’ve promoted the idea throughout American society that everyone ought to go to college and have lavishly funded higher education. School systems have focused on college preparation at the expense of vocational education. Other countries have not done this: The U.S. is the only advanced nation that does not have a national system of trade schools.
More than 60 percent of high school graduates now start college but many need remedial courses because high school has not prepared them for college work. Fewer than half of college students complete a degree within six years. The percentage of Americans with college degrees has risen from about 20% in 1990 to more than 30% today, but about 40% of recent college graduates are employed in jobs that do not require a degree.
A report from the American Compass think tank summarizes it this way:
Put it all together, and the college pipeline proves incredibly leaky. Out of 100 high school students, 13 won’t complete high school, another 29 will complete high school but not enroll in college, and 27 will enroll in college but fail to complete a degree. Of the 31 who do earn a college degree, 13 will end up in jobs that don’t require one. That leaves just 18 of 100 young Americans—call them the Fortunate Fifth—actually moving smoothly from high school to college to career.
Forgiving student debt won’t fix the inequality of our higher education system. In the short term, one alternative to shifting student debt to taxpayers may be to give colleges some skin in the game: require schools whose students default on loans to reimburse the federal government through a tax on endowment funds. Another approach would allow people to discharge student loan debt through bankruptcy as we do with other debts.
Even though the government has insulated higher education from market forces, we’re seeing some pushback against the high cost and chancy benefit of a traditional college education. College enrollments already were declining, and more colleges are closing or merging. The pandemic accelerated the growth of online degree and technical certificate programs. The Mike Rowe Works Foundation offers scholarships to pursue trade careers.
The student debt crisis is an opportunity for lawmakers to re-evaluate higher education to make college a better value and develop a strategy for vocational education. This is unlikely, of course, but student loan bailouts should increase the pressure for reform from consumers and voters.
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