How do we tackle the higher education problem in the U.S.?
I’m referring to the student loan crisis that has resulted from higher education costs that have rapidly inflated. More and more students are competing to get into American colleges and universities, and many of them are taking on massive debt to finance their educations. More and more people continue to become part of the student debt crisis each day, and this won’t stop until policymakers get at the root of the problem.
President Joe Biden’s student loan forgiveness loss before the U.S. Supreme Court and his pivot to targeting legacy admissions at elite universities like Harvard are a distraction from the real problem. The current system is broken and has been broken for a long time because there has been little effort to control higher education costs. Also, the K-12 system has failed to prepare students who are taking on debt to go to college for success.
Since 1980, college costs have increased 1,200% while the Consumer Price Index has risen more than 200%. This has in large part been a primary driver of increases in student debt. Between 1995 and 2017, federal student loan debt “increased from $187 billion to almost $1.4 trillion (in 2017 dollars),” according to the Congressional Budget Office. That’s almost a 750% increase in debt in just 22 years. The cost of colleges is a critical part of the college debt issue that Congress and the president need to address. It has a back-breaking impact on the economy.
Today, collective student debt stands at $1.75 trillion in the U.S. According to a January 2022 census data analysis, this debt is owed by 45 million people across all demographics. Women account for 66% of undergraduates nationwide and are saddled with almost two-thirds of all student debt
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. Two-thirds of all college dropouts leave because of the high cost of higher education.College loan debt is having a significant impact on purchasing power and standard of living. While college graduates will have lifetime earnings that far exceed those who have not graduated, much of those earnings will be offset by that very student debt, affecting their ability to save, buy homes and invest in their own children’s future. The loans are an increasing drag on the nation’s economy and are reducing the transfer of generational wealth that is so critical to progress from generation to generation.
Another problem being ignored is that our schools are not adequately preparing students for college in the first place. If critics of the Supreme Court’s decisions on student loans and affirmative action are driven by the desire to achieve equity through expanded higher education opportunities, you wouldn’t know it from the same critics’ opposition to K-12 school choice, even when it specifically targets low-income families. Yet the higher education system is the epitome of government-supported school choice as 57% of students from four-year private nonprofit institutions have student debt. The sheer hypocrisy.
This absence of quality K-12 school choice only adds to the challenges and obstacles poor and minority students face to fully benefit from expanded higher education opportunities through college loans and affirmative action admissions. It expands the arena of failure. Look no further than college graduation rates. The six-year college graduation rate for Black people is 40% compared with 64% for white people and 54% for Hispanics. The graduation rate for Black men is 34% compared with 61% for white men and 50% for Hispanic men.
It’s clear that too many students are not getting the preparation they need to complete a university degree. It’s not the colleges’ fault; it is the responsibility of our elementary and secondary schools. The denial of quality education choices at the K-12 level undermines college preparedness. While there’s a tendency to think of college debt as law or medical school loans, the crisis is largely driven by people with smaller debt and no degree who have dropped out. The college loan program, combined with a lack of preparedness, has widened the opportunity for failure.
The college loan program is orchestrated debt addiction that has effectively taxed college graduates far beyond the legitimate costs of their college education. The immediate problem can be addressed by limiting loan repayment to a fixed percentage of income, capping interest on federal student loans and canceling debt after a fixed number of years. However, these are only temporary fixes.
Solving the college debt problem long term requires serious higher education cost containment and the ability for families to select the best public or private K-12 schools, regardless of income or ZIP code, to prepare them for college success.
Paul Vallas is an adviser for the Illinois Policy Institute. He ran for Chicago mayor this year and in 2019 and was previously budget director for the city and CEO of Chicago Public Schools.
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