The Student Loan Debacle
Author’s Note: I know this one is longer than most. I did the best I could to cut as much fat as possible. It’s an important issue that deserves a full airing.
Yesterday, social media was all abuzz when Joe Biden announced his plan for student loan forgiveness. The upshot is that most borrowers can qualify for up to $10,000 in total forgiveness. There was a ton of rhetoric and a ton of snark yesterday on both sides. The crisis has three underlying causes.
College Costs have Exploded over the last 20 years
Nationally, the average cost for a public college was over 20,000 a year. That ballooned to over 30,000 for private colleges. The average cost in 2000 was just over 8000. I’m not good at math, but that’s close to a 150 percent increase over 20 years. That obviously is well beyond the rate of inflation for that time period.
Now, we could go into the whys this has happened, but if we dive down that rabbit hole we may never make it out. The question is one of responsibility. For instance, had I known that I was going to become a teacher I probably wouldn’t have gone to a private college. Students should choose an institution that’s as cost effective as possible. Yet, it cannot all be on them.
College Degrees aren’t worth what they used to be
One commenter yesterday made reference to “Mesoamerican Lesbian Studies”. Yeah, we all know it’s an exaggeration, but still we need to define our terms. As much as people might laugh at liberal arts degrees in general, they are not necessarily coming from a genuine place. Back in the 1960s and 1970s you could get a college degree in anything and still get a good job. That was less true in the 1980s and 1990s, but it is far more true than it is today. Somewhere along the way the rules of the game changed. It’s not students’ fault they changed. Sure, we can expect them to adapt, but they aren’t unique in getting liberal arts degrees that might not sync directly with the job market.
The issue is more acute for those without the means to pay for college or support at home. My wife and I can advise our daughter on college. We can coach her into choosing a major that makes sense. Some kids don’t have that at home. Buyer beware goes only so far.
The Nature of the Loans Themselves
Someone on social media showed their loan expenditures for their undergraduate and graduate degrees. The totals ended up being well over 150,000 with total monthly payments coming in at over 1000. That by itself is bad enough. Then you throw in the fact that those 1000 payments barely touched the principal at all. So, they are in effect stuck with those payments for the rest of their natural life.
Those of us that are older objected to the idea of forgiveness. They were responsible. They repaid their loans. It is not fair that the current generation is “too lazy” to take care of their own loans. Again, it’s not that simple. At some point we have to realize how ridiculous it is to pay twice as much as what was loaned to you because of the nature of the loan. Mortgages don’t work that way. Car loans don’t work that way. Why should student loans work that way?
Putting it all together
As I said in an earlier post, monies spent by the government are an investment of sorts. It is fair to ask whether that is the wisest way we could spend our tax dollars. I would argue for a measured approach that addresses these issues from multiple angles. The first question we should ask is how many kids are majoring in something we might consider frivolous? I imagine it is lower than people think. However, it wouldn’t be difficult to target certain careers and subsidize students studying those things. It wouldn’t be difficult to require graduates to work in certain fields for a fixed period of time in exchange for forgiving their loans. We already do that in limited circumstances.
Finally, we have to admit that college is just too damn expensive. We educate students in public schools for around 9000 a year. That includes people like me that are support staff. Colleges don’t have nearly as many of those. They aren’t serving students with severe disabilities in the same way we are. Yet, they cost more than twice as much. That money isn’t going to the professors. So, where is it going?
When I first started school (nevermind how long ago) as a single mom, I had so many helping programs to turn to, and the one student loan I had was wonderful. Stay and work in your field in Alaska for five years after graduation, and each year 10% was forgiven, up to half of the loan. Either low or no interest either…I don’t recall. It’s criminal what former students have to go through now.
1There was a time not long ago here in Pennsylvania that the government funded the schools in the state university system to the tune of 75%. This figure is now at around 25%. Our Republican legislature sees little value in an educated populous.
2We’ve shown the selfishness of our society, but to hear about it from our GOP comrades?!? Keith Olbermann had a good commentary on his pod cast today. He listed some of the GOP pols complaining with their PPP loans forgiven. Or you could go to the White House Twitter account for the complete list. It’s the usual suspects but some of the amounts might surprise you.
3Where is it going? How about the multi-million dollar salaries for college coaches? Admittedly football programs bring in money for the university, but who or what does that income benefit? Professors and/or tuition reduction? Don’t make me laugh.
4“where is the money going?”
Good question Nick!
No proof but I suspect the $$$ is going to people at the top 1%.
I retired as a gardener at one of the University of California colleges and management (the UC Regents have more power then god) kept cutting services, while admitting and jamming in an overflow of students. Many Faculty, staff, and employees were overworked and underplayed so I would assume the money somehow went to sweeten their $$$ bottom line profit. It seemed they were running more and more like a profit driven corporation then on their otherwise admirable ‘devotion to the education, benefit and well being of the students.’ Very sad to see.
It wasn’t the pay or the pensions ( pension is deferred payment as I took a pay decrease to work there but the benefits like medical, were life saving) so much as the I believe the money was going to people at the top.
5While trying to get our much needed annual cost of living 3% Union pay raise they actually lied and got busted, due to a court induced financial audit, about their profits and worth. Glad we got our much deserved raise!
I attended college back in the 70’s. My parents didn’t have resources to contribute, but I received grants, scholarships, work study and worked during school and the summers. I graduated with a science degree and only owed $1000 in loans when I graduated. I was able to work in a career that brought a lot of meaning to my life. I could not have done it without the generous assistance I received from state and federal programs. The investment society made in me has allowed me to pay it back many times over with taxes I pay to assist the next generations.
I know I am lucky to have the advantages that may not have been available to others back then or especially in the present. But I do think that collectively as a society, we all benefit from a well educated populace. We pay school taxes at the local level for this purpose, even those who do not have children. The same principle should apply for college, but there would need to be some accountability of those attending. A program AK Lynne referenced seems like a good building block.
6When I started college in CA in 1964, tuition at the University of California system was FREE for CA residents (with a $300 or so registration fee.) The vast majority of the cost of running the UC system was paid for by the state. When Reagan became governor in 1966, he began a push to charge tuition for residents as well as non-residents, and to cut the state’s contribution. The current tuition and fees for a resident total almost $10,000. Tuition now accounts for more than half of the core revenue for general expenses. The UC system also generates revenue from federal grants, private foundations, its 5 major medical centers, but that mostly doesn’t go toward teaching. You can see more here: https://lao.ca.gov/Publications/Report/4511
7While I was in 5th through 11th grade, my mom got her entire college education and masters degree in speech pathology essentially for just the cost of fees and books at San Jose City College (2-year community) and San Jose State College. She gave back to California by working until retirement as a public school speech pathologist. I think it was a good investment by the state!
As it happens, I went to Pomona College, a private liberal arts school. Annual costs for tuition, fees, books, room and board were about $3000. I had some family support for about a third of that, scholarships for perhaps half, and the rest I earned by working full-time in the summer and part-time at least the last two years as a baby programmer, which paid pretty well considering (about 2x the minimum wage.)
I was lucky, and so was my mom (and my dad, who got his doctorate via the GI Bill.) And I think it’s about time that good fortune was shared with the next generations.
We were fortunate enough to be able to pay for our kids undergrad educations. But grad school was on their own (one, to be a teacher in a low paying school). Grad student interest has approached 7% – who would even consider paying that for a mortgage?
I taught at a community college, many first generation college students. 18 year olds don’t really understand the implications of a compound interest loan and parents can’t explain and financial aid is reassuring that with a “good job” it’ll be no problem. Fortunately, CT now has free CC- first come, first served. As it should be- education is an investment in all our futures.
8Nick —
higher ed economics have WAY too many parts to address quickly. But let me make a top level response to your first point: College Costs have Exploded over the last 20 years
Actually, costs have gone up slightly more than inflation. The main measurement of “cost” you are using is the amount that students are paying. Or, more accurately, the price of tuition that is listed in the catalog.
In Colorado. I saw a discussion today that included a tweet saying
saw this amazing tweet about Colorado:
Charlotte Alter Aug 24, 2022@CharlotteAlter
GenX/millennials/GenZ are carrying the financial burden for educational costs that the state carried for earlier generations. In Colorado, state funding for education dropped 70% btwn 1980-2011.
Colorado Public Radio offered an estimate that brought things up to 2018:
9“In 2000, Colorado taxpayers footed 68 percent of the costs of a college degree, with students chipping in about one-third. Two decades and two recessions later, that ratio has nearly flipped as state funding has been cut and tuition has steadily risen to replace it…. In Colorado, tuition today covers 65 percent of college costs.”
I’ve been teaching in Higher Ed since 1989. I have seen the salaries rise for administrators and sports coaches. I have also seen the proliferation of administrators—so many Vice Presidents, Associate Vice Presidents, Assistant Vice Presidents—when the jobs they do can be done by staff. The corporatization of academe has come at the expense of students and woefully underpaid instructors. But I will add that the state contribution to universities in support of Higher Ed has dropped immensely since I was in college.
10The whole idea of the state contributing less also applies to public schools. I wish more voters would be wise to this fact when going to the polls. Abbot and Patrick can brag all they want about lifting the tax burden on Texans, but they really haven’t. They just shifted it to local school districts. Most districts around Houston are at or near the $1.25 max. The cap has been raised at least once since the state shucks on its responsibility.
In terms of college, someone has to foot the bill. The “pick yourself up by your bootstraps” crowd have never understood that the burden of paying for college in the 20th century was never really on us. When the state chipped in more it meant that tax payers WERE subsidizing our educations. So, it’s rich for them to balk now.
11When I started college in 1964, tuition was $151/semester, a cafeteria meal ticket was $173 and total expenses (except for travel to and from home) were about $1,500/year.
Minimum wage was $1.25, so by working about half-time, I could cover all my expenses.
Four years later, I left school with no debt and $4.25 in cash.
At the same cow college now, it would require 3,400 hours (or about a year and three-quarters) to cover one year’s school expenses at minimum wage.
So all the rightwingers who are bragging that THEY paid off their loans — no, they didn’t. Most of their costs were picked up by the gummint.
* * *
That’s a post from my FB page. After I put it up, a friend commented that he was 4 years older and had been able to go through the same state system for $900/year. But at that time, minimum age was 75 vents, so measured in terms of unskilled labor, the cost was about the same.
12I have a brother who teaches at an elite and very expensive school. However, it is also heavily endowed.
When my children were finishing high school, 30 years ago, he encourage them to apply to elite schools, although I was then unemployed. He told them that as the children of a poor, they would be offered support that would get the cost down to what it would be to go to a state school.
My daughter visited a Seven Sisters school and was turned off by the preppy atmosphere.
Although she was a National Merit Scholar, she was rejected by Chicago and Northwestern. (Northwestern that year had 9,000 applicants for 1,800 openings.)
I encouraged her to apply to Grinnell, since we lived in Iowa, and I knew (from contacts at the school) that Grinnell was frustrated that it could never attract top local students, despite its very high reputation.
She resisted but finally agreed to send in an application the middle of August. On a Friday. Grinnell responded on Monday with a full ride.
I tell all this because it is not only money — or public money. Knowing the ins and outs counts for as much, or more. (And, of course if you are rich you can bribe your way in.)
As it turned out, my girl did not like Grinnell and preferred to earn her own way through U of Iowa for 2 degrees.
13I have still more to say about how the privileged get into college. Despite our lack of money, we had other kinds of privilege.)
My son was working nearly fill-time in high school. so I quit claiming him as dependent on my taxes.
When his girlfriend finished high school, they got married and she matriculated at Sarah Lawrence, at that time the most expensive school in the country. My son enrolled at SUNY-Purchase and requested in-state tuition.
Sure, kid, they said: Show us your father’s tax returns. So he did. Result: in-state tuition, which saved him $60,000.
Until we have a fair and sensible education system, I sometimes think that the way to help less privileged kids get to college would be to have canny privileged adults show them how to game the system.
14As someone who really is a professor (hey, quit laughing), I’ll back up what Dene @ 10 says. It’s the bloat of administration that accounts for a large part of the cost increases. Part is an obscene increase in salaries of vice-presidents, associate deans for whatever, etc. But I have also seen a vast number of staff hired on unnecessarily, mostly to help inflate the already bloated ego of the potentates.
As for state contributions, those have been decreasing but beware that the numbers given by the universities are usually percentages. The absolute amounts are also decreasing but not as drastically. If the state contribution remains fixed but the cost of tuition doubles, then higher ed backers can say that the state has reduced its contribution by 50%.
Finally, athletics does cost big-time. It brings in buckets of money, but the money goes to the athletics departments, not the general university fund. It has its own not-so-little world, with its special courses that shield the “student-athletes” from having to actually learn anything, or to have their practice time cut into by pesky things like homework, exams, or even reading.
Not-so-amusing story: at a big-ten university in the 1980s, the state required salaries be made available publically. So the university put a hand-bound list at its main library, in a room with no photocopy machines. Tracking down how much the head football coach was paid was not easy. He was paid from (as I recall) at least four different units in the University, and you had to go through the whole damn book to find everywhere his name appeared. And that did not include his endorsements, outside revenue, freebies from the Athletic Association, and other goodies. Plus, as was found out years later, the bribes and outright gifts from “boosters”.
15While I appreciate the “back in my day” lens on this issue, it’s basically that the people who are kvetching about student loan forgiveness are the same ones who scorn someone in the grocery checkout line buying steak with food stamps. They just cannot stand the idea that something good might happen to someone who “doesn’t deserve it.”
16Since there’s no solution to the cost of higher education on the horizon, the choice for now rests with the students and parents about where to go. While this happened to us with our daughter 20 years ago, it’s still true now. Our daughter was an excellent student (top of her high school class) and we/she decided on probably the best public University in the NW- the U of Wa. One year later for a variety of reasons (still straight A’s), she decided to transfer closer to home (still away from home). The difference in cost between out of state UW and instate OSU basically paid for her last 3 years. She got scholastic scholarships to both schools. That doesn’t mean many students and families won’t need to get college loans, but it is a lot more cost effective.
17Don’t get me wrong (and don’t want to sound like a repugnantican), it is a travesty what has happened to the cost of education in this day and age and what Biden did with student loan forgiveness was a drop in the bucket. However, as usual, he’s in a no win situation.
Not that anyone cares, I went to school in state near home ‘68-74 to get my BBA. I worked full time, got married (‘71) and took classes part time (luckily I had a high draft number, otherwise everything could have been different!). That degree was well worth the time and effort. That’s also an option now, but could still require a student loan.
Dane is absolutely correct! Underpaid adjunct faculty now make up the majority of faculty- my former college’s full-time math faculty has dropped from a dozen down to three. And nearly every one of the 3000 students is required to take some math. (Also a -retired- professor, spouse of an adjunct.)
18My brother the prof would certainly back Surly up on the more or less useless $400,000-a-year vice presidents.
And I’m with Steve on state schools.
A journalist friend of mine took a job teaching at Stanford. What he wanted to teach them, he told me, was that it was silly to spend $50,000 a year to train for a job that pays $25,000.
19I totally agree with the move to pay down on college debt but I need to point out a glaring error in your post; mortgages absolutely work exactly like that. You will pay 2-1/2 to 3 times the amount you borrow for your home. In the beginning of the loan repayment you hardly pay down the principle at all.
20Would you believe . . . back in the day – the late 50’s, early sixties – it was possible to get an eduation at a stat school by working only one part-timer job? The first cr4dit course was $150 but the other courses for that semester were whittled down to the point where I paid $300 for a semester. I graduate4d from a “street car” urban school that catered to the kids of blue collar families. At one point I did ask my dad if he would sign a paper that would getme a government supported loan. He refused. Per his thinking, no young college educated man from the urban sfchool would consider marrying a classmate who also had such a loan. The payoffs would be just to arduous to maintain, especially if he were setting up his own business and/or buying a home. So I did it all my way and graduated debt free. That pretty much cannot be dfone nowadays, peraps only if you have the kind of scholarship that is a totally free ride. By the time my daughtr bercame a collegian, state sfhools were on their way to matching the private sfhools, as she herself has discovered educating her own daughter. I do not have any sort of nasty feelings towards the students who got some help. After all, I’m not MAGA material. Frankly, that alone makes me downright “rich”. And I worked my way through grad school. An education is something no one can ever take away from you.
21Yes and no. A mortgage has a date where it will be paid off. This makes it fundamentally different than these loans. These loans more closely resemble payday loans or car title loans. Many will literally be paid off for the rest of their natural life. If you told a student that they would be signing a loan that worked like a mortgage they would at least know the loan would be discharged within ten, 15, or 20 years.
22I looked up the American colleges with the biggest endowments and — surprise! — they’re also the most expensive: Harvard, Yale, University of Texas, Stanford and Princeton. (Not sure about UT.) Clearly they’re not plowing their billions into operating costs.
I truly believe that forcing graduates to begin their working lives with thousands of dollars in debt was cooked up in the 1970s to prevent them from going into things like the Peace Corps, SPLC, VISTA, political organizing and other fields that were associated with the “troublemakers” of the 1960s. It’s a form of peonage that makes them seek high-paying jobs on Wall Street and corporate America to pay the loans, not to mention ever-rising housing, medical costs, etc. Am I becoming a conspiracist?
23Buttermilk Sky: UT is on the list because of PUF the magic dragon. Or rather, magic Permanent University Fund. The short form of the story is that it was a land grant university, with the funding coming from the federal government handing over lotsa good land (= farm land) to states, which in turn had to start a college/university supported by that land. This was shortly after the Civil War.
That lasted a few decades, until the Texas legislature decided it was a waste of good land to fund education when it instead could fund them and their friends. They could not just take the land, but they could swap it for worthless desert land in west Texas. Land that later turned out to be on top of the Permian Basin.
UT-Austin and Texas A&M were the two lucky universities, and by the time the mistake was realized they had lots of graduates emplaced in the state government … so another swap was blocked. In the 1970s there were many battles fought over using PUF to also fund the little UTs like UT-Arlington and UT-Waxahatie (OK, I made up that last one). But UT-Austin and Texas A&M fought off the barbarians, and oil prices eventually put them into the Big (Ivy) League.
As for your conspiracy theory, I think that takes too much long-range thinking, which no quarterly-profit driven corporate drone is capable of. Instead it was just another way of getting money from lots of little people without taxing the big guys. It was just a happy coincidence that it also suppressed any social organization that could threaten their position.
24Aside from just not liking to pay taxes, I think it was a conscious program of the monied classes to keep the proles as uneducated as possible. My evidence: that’s how they operate everywhere in the world.
You can say a lot of bad things about Stalin, but he and the bolshies did teach a large country to read. That sort of backfired on them. But the American equivalent of the Russian landlords never did.
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