Higher Education Reform: What Students Expect Next

The verdict is in: the future will belong to those who seek as much education as they can get. Don’t believe us? Just check out this chart from the Bureau of Labor Statistics correlating various degree levels with unemployment rates and wages. It’s uncanny. Every additional educational attainment makes a noticeable difference (with one tiny exception at the very highest level: an academic doctorate is worth slightly less on the market than a terminal professional degree … but still, 39 out of 40 Ph.D.s have jobs, and they pay well). Pursuing this American dream, though, is expensive. Total student debt now totals over $1 trillion, and the average graduate owes $26,000 in student loans. That’s why Congress slipped a student loan reform package into the Affordable Care Act signed by President Obama in 2010. However, this bill only took incremental steps in terms of cutting out for-profit middlemen (saving both students and taxpayers money), increasing Pell Grants, and implementing income-based repayment. Here are some ideas for potential reforms that students would cheer, some blue-sky, some very doable:

  1. Make private student loans dischargeable in bankruptcy.

    Unlike nearly any other kind of debt, outstanding student loans are not forgiven even if you declare bankruptcy. Senator Dick Durbin is angling to change that, stating: “I have a bill, the Fairness for Struggling Students Act, that would once again permit private student loans to be discharged in bankruptcy as they were before 2005.” If such a bill should pass, it would be good for the economy. Bankrupt students who borrowed more for education than the available jobs could enable them to pay back would have a chance to rebuild their lives, instead of fighting a futile struggle to pay off the principal, and the extortionate interest, before retirement or death … or even after!

  2. Finish the job when it comes to cutting out profiteers.

    The 2010 provisions signed by Obama eliminate subsidized loans going forward, in favor of direct loans, but the reforms do not go far enough. For one thing, private lenders still get fat contracts to “service” these loans. For another, existing subsidized loans should be bought up by the government as they’re already doing the damage. Critics such as Senator Lamar Alexander howled about a “Soviet-style takeover” of federal student loans, which is a hilarious concept, akin to “keep the government out of my Medicare.” Interestingly, Republican critics have had little problem with the fact that these loans were guaranteed and subsidized by taxpayers all along … provided that the profits kept flowing to private bankers.

  3. Create a “public option” of tuition-free universities.

    If the problem is out-of-control tuition, why not take the idea of cutting out the middleman even further, and set up free schools instead of federally subsidizing privatized schools and lenders? Many colleges have functioned just fine without charging students an arm and a leg, or anything at all; indeed, countries like the UK have free higher education for all. Why our most prestigious private nonprofit schools need to extract money from attendees in addition to their billion-dollar endowments (though many of these rich top-tier schools have been pursuing aggressive need-based tuition remission) is fairly inexplicable.

  4. Impose price controls on tuition.

    The heads of free marketeers are undoubtedly exploding upon reading the phrase “price controls,” but it’s important to remember that as recently as the Nixon administration, the idea that government could set prices (and even wages!) was a bipartisan notion. While we’re certainly not suggesting a return to Nixon’s stagflation-fighting price controls on oil, meat, and other products, education is a different beast. As a society we all have a vested interest in providing affordable learning. The idea of education as a public good is hardly revolutionary, and hasn’t been since the 19th century. Especially when the money used to pay the tuition is rarely paid up front and ultimately backed by the government, laws should be set to limit this exorbitant “sticker shock.”

  5. Consolidate all existing student loans at the discount rate offered to bailed-out banks.

    Aren’t we the people Too Big To Fail as well? Why should we have to pay any more interest to banks than they paid the feds to keep them afloat? Refinancing all outstanding loans at about 5%, in addition to keeping them just above the prime rate going forward, say 3.5%, would create simultaneous booms in consumer spending and pursuit of advanced degrees, which in turn would improve Americans’ future employment prospects in aggregate. The fact that it’s such a no-brainer, combined with the profits the status quo reaps for powerful private interests, ensures this will never be done. But we’d love to be proven wrong.

  6. Throw a student-debt jubilee!The jubilee is an ancient Near Eastern custom that was adopted by first the Jewish and then the Christian tradition, and, in the most familiar use of the word, the British monarchy. A jubilee year celebrates the ostensible stability and prosperity provided by a long-ruling monarch, who demonstrates his or her beneficence to the people on this rare occasion by the forgiveness of all debts and the freeing of slaves. This relieves debtors who never had a chance of repaying, and shuffles the economic deck, so to speak. For that reason, it is not such a great deal for usurers and landlords, who are currently holding so many of the cards. In the absence of a unifying faith or an absolute monarch, we probably shouldn’t expect a revival of this admirable custom. However, several recent initiatives (the Student Debt Jubilee linked above, as well as the Jubilee Debt Coalition and Occupy Wall Street’s Rolling Jubilee) have adopted its ideals and its rather catchy moniker.

  • Expand and improve income-based repayment.

    Income-based repayment, or IBR, is just what it sounds like: a payment plan that pegs your monthlies to no more than a certain percentage of your income. Of course, your debts are still accumulating interest at the usual rate, but for those who won’t be able to make a large salary when they’re first out of school (i.e. anyone who’s not going to a top-flight law or business program), it can still be a lifesaver. However, even with Obama’s expansion of this program, it has some flaws. For example, it was not made available to current borrowers, private loans aren’t eligible, many borrowers don’t understand how to choose it, and enrollment can only be chosen once a year rather than on any given month. All of these problems are fixable if legislators grow spines.

  • Let community colleges offer four-year degrees.

    This is one bold proposal that has ruffled some feathers in higher education. Community colleges in most jurisdictions only offer two-year programs and typically partner with public four-year universities to transfer students for bachelor’s degrees. However, this is now being challenged. Legislation is being passed at the state level to allow community colleges to award four-year degrees, typically in vocational fields. The public, private nonprofit, and for-profit institutions have finally found something they all agree on: they don’t want this to happen and have banded together to fight these initiatives. You’ve got to wonder if that doesn’t mean it’s a pretty good idea.

  • Bring the for-profits to heel.

    In recent years, more and more students have been purchasing their education from corporations rather than traditional schools. Many of these for-profit entities offer degrees that are borderline worthless. When their students can’t find jobs, the companies still profit from the tuition—paid, remember, not by students themselves, but by third-party lenders, who in turn are ultimately backed by the government, i.e. all of us who pay taxes. The companies then spend this loan money on marketing, to convince more of the poor, ignorant, and vulnerable to enroll. (Legislation to prevent this use of federal money was shot down thanks to lobbying.) It’s the perfect pyramid scheme, and many people have gotten very rich off of it … but seldom the students this sector claims to serve. t’s time to return some integrity to higher education by demanding accountability from these entities, or else shutting the whole racket down entirely.

  • Redirect funding to more lucrative departments.

    A couple years ago, Microsoft founder Bill Gates gave a speech in which he suggested that governors might want to consider rerouting education dollar toward STEM fields (science/technology/engineering/mathematics), on the premise that those will be the skills required for high-paying jobs in the future. Speaking of jobs, the founder of Apple characteristically refused to let Gates have the last word, giving a speech a couple weeks later wherein he extolled the virtues of a liberal arts education. While both are right in a sense (generalists will always be needed, as will geeks), and as writers we’re inclined to side with the hippie, some matching of state subsidies to the demands of job vacancies is certainly worth examining.

Posted on 01/02/13 | by Staff Writers | in Resources | No Comments »

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