The debt is too damn high

This week I was disappointed (and simultaneously a little relieved) to read that my home state of Oregon may ditch their innovative to plan for zero-tuition colleges. Relieved because, let’s face it, it would be a rocky and difficult task to implement over several generations. Oregon has been at the forefront of a lot of cool ideas (such as 100% vote-by-mail elections, a personal favorite), but it would take amazing leadership to pull off a complete redesign of higher education financing. Disappointed because I was excited to see a really new approach to the horrendous mounting debt that students are facing.

If you didn’t hear about it, the idea was to have students pay no tuition up front to attend college. Later, graduates would pay a certain percentage of their income for a given number of years. Nobody has debt that they can’t pay, and the market determines the real value of every degree.

Why does this matter? I’m afraid that a lot of Americans aren’t aware of how shockingly expensive higher education is becoming. Student debt (more than $1 trillion!) has been higher than credit card debt for several years now. The financial crisis of recent years exposed serious problems in a variety of types of debt, but what makes student loans special is that borrowers are on the hook even if they go bankrupt. You can walk away from a house, but you can’t walk away from an education.

I’ve been researching international education and higher education costs recently, and it’s really stunning how fast costs are rising. While the Upshot (the New York Times data-focused blog) seems to think it’s not a big deal, they recently published a graphic showing that at least 34% of young-adult households have between $10,000 and $50,000 in student loan debt. That’s a lot of money for people in their 20s, and it’s continuing to rise. The cost of college has increased by between 50% and 70% for public universities alone just since the 1990s.

At this rate, I’m worried that we won’t realize as a country how bad it is until we have unsustainable numbers of graduates who will never be able to pay off their loans. At that point, I don’t know if we’ll be able to fix the system.

So what are the solutions?

Admit defeat. Unfortunately, some American writers and pundits are now openly supporting the idea that education should be rationed more by wealth. Not everyone needs to go to college, the logic goes, so people who can’t afford it (or for whom it’s becoming an increasingly risky investment) should get training in a trade. Why the most powerful country on the planet would ration education by anything other than ability is beyond me.

Try something new. This is where the Oregon plan comes in. Even better might be to (gasp!) look at what Canada and other rich countries are doing. Our goal should be to continue to provide excellent education while expanding opportunities. We could approach it either by reducing costs or earning revenue in new ways, or both.

Try something newer. Obviously, as someone who writes a blog on technology and data in the social sector, I’m hoping that we’ll see cost-savings through tech. But I suspect that it won’t happen exactly how many are imagining. Universities are very slow to change, so I don’t believe we’ll see many of them jump on tools that could save their students debt.

What may happen, instead, is that colleges (and K-12 schools) will adopt more back-office technology that improves their bottom line. As I’ve mentioned previously, this sort of edtech isn’t getting as much press, but it will be hard for presidents and principals to say no to them when they could mean rapid savings. At the higher ed level, I believe that pressure to change their fundamental model will come later, as more and more workers are able to leapfrog the traditional college experience through online education. Once employers start accepting MOOC certificates (as Udacity is piloting) in place of diplomas, there will be people inside universities pushing to adopt a more flexible (and cheaper) approach. I doubt this will happen in less than ten years, but we’re entering uncharted territory with both costs and technology already.

For those of use who abhor the ration-by-wealth approach, we’re going to have to push for more effort and resources in the second two solutions. We can’t waste time wondering whether costs and debt will continue to rise – the trend is terrifying as it is. There will be no perfect solution, but that doesn’t mean that governments and private companies shouldn’t be trying.

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