More and more college students are being pushed to the breaking point when it comes to debt. Faced with the prospect of entering a job market with few jobs and increasing competition, they are going deeper and deeper into hock to get their degrees, with many trying and dropping out before they get the benefits theyve paid for.
Consider these numbers from a February report by Education Sector, a nonpartisan think tank based in Washington: The percentage of students who borrowed for college increased from 47% in 2001 to 53% in 2009 and a majority of freshmen at all institutions now borrow to pay for their education.
As the percentage students in debt has risen, so has the drop-out rate for borrowers the percentage of students who borrowed and dropped out between 2003 and 2009 was larger than the percentage of students who dropped out between 1995 and 2001.
Part of the problem is that college costs have been rising. According to the National Center for Education Statistics, the average bill for tuition, room and board for four-year schools increased from $13,709 to $17,464 - or 27.3%. During the same time, wages have stagnated (at best) and grants have dried up.
If colleges werent so expensive, they wouldnt have as many working students with some combination of debt and work-related risk factors for dropping out, the report says. If college prices continue to rise, and family income and grant aid remain stagnant, students reliance on loans will only continue to grow.
That means, as the report notes, that more students are going to need to do the kind of things that tend to suppress graduation rates delay enrollment to work and save for school, enroll part time, or work full time while taking as many credit hours as possible.
Two of the driving imperatives of college attendance minimizing debt and maximizing the likelihood of graduating with a high-quality degree are therefore in tension with one another, the report says. As the overall cost of higher education has risen, these tensions have become more acute. Students are being forced to adopt debt-reducing strategies like full-time work that put them at greater risk of dropping out.
This has created a dangerous situation though you wouldnt know it by listening to Mitt Romney. The Republican candidate was infamously dismissive a while back when asked how he would address the dangerous explosion in student debt. It would be popular for me to stand up and say Im going to give you government money to pay for your college, but Im not going to promise that, he said, to sustained applause from the crowd at a high-tech metals assembly factory here (quoted by Talking Points Memo).
Dont just go to one that has the highest price. Go to one that has a little lower price where you can get a good education. And hopefully youll find that. And dont expect the government to forgive the debt that you take on.
The message was simple: college is a good thing, but know your place. Whats striking is the failure of a candidate who has staked his election prospects on his economic expertise to see that access to school and the explosion of school debt are two of the central economic issues of our times.
College has been the entry ticket for many to the middle class, and access to better schools has helped create some of the (admittedly limited) class mobility that had been a hallmark of our economy in the past. The reality is that we are looking at a massive debt bubble that is going to explode and do far more damage to the younger generations than the national deficit, saddling an entire generation with debt that will smother their economic potential. There is an estimated $1 trillion in student debt out there, and given the drop-out rate for borrowers, we are looking at a potential debt bubble that could have devastating personal consequences for the students involved and act as a huge drag on the economy.
Its not just that debt repayment is likely to take up much of the future earnings of American workers. It is that students who dropped out of college had higher unemployment rates and made less money than those who graduated, according to the Education Sector report. Borrowers who dropped out were more than four times more likely to default on their loans.
Thats what places this squarely on governments plate. Only the government has the resources to step in and ensure that a) college tuition remains somewhat affordable by subsidizing public college budgets, and b) providing a much larger quantity of grant money and low-interest, federally backed loans. If we dont step in, the consequences will be disastrous.
Hank Kalet writes in New Jersey. Email email@example.com; blog kaletblog.com.
From The Progressive Populist, July 1-15, 2012
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