Sunday, July 14, 2013

The Higher Cost of Higher Education

I've been sitting here noodling for some time over how to write a post about what
I see as the undermining of education, public education in particular, without taking sides politically.

All too often, once you declare belief or support for one solution or another espoused by a particular party or "faction" as the Founding Fathers used to call them, anyone on "the other side" stops listening to anything you have to say on the subject.

As I twisted and turned the logic, trying to find a non-partisan path through the various issues to bring the reader to a conclusion that, as a nation, we need to invest in education if we are to have a future -- I realized that is the problem.

There is no non-partisan path, or if there is, I can't find it.

Nonetheless, I will give it a try here.

What got me started on this was the news that (surprise!) Congress can't agree on a way to keep down interest rates on college loans.

Full disclosure, I've got some skin in this game.

My son enters high school next year and despite what some of you might think, a reporter's salary is not something which allows for either a lot of savings for a college fund, or for paying up front the ever-increasing, ridiculously obscene tuition at all but a few schools.

So, there weren't many scenarios for funding his college education in which the words "student loan" were not present.

Sadly, the more I looked into it, the darker the picture became.

The latest news I could find Saturday was from July 11, when the Minnesota Daily reported that the Senate is going "back to the drawing board," to try to come up with some way to keep the rates from staying at the 6.8 percent rate they jumped to July 1 due to Congressional inaction.

Previously, the rates had been at 3.4 percent, for subsidized loans from the government.

These fixed-rate loans are aimed at undergraduates who attend schools that cost more than their families can pay, according to the Cleveland Plain Dealer.

"If Congress doesn’t act soon, Congress’ Joint Economic Committee says it could cost an extra $2,600 per student for those taking subsidized Stafford loans this fall," the Minnesota Daily reported.

The 6.8 percent rate has been the same for un-subsidized loans, which CNN says are used much more, since 2007.

CNN also says:
Student loan debt has skyrocketed in recent years, as have delinquencies, making it a pressing political and financial issue for millions of Americans. Many young graduates are deep in debt and without jobs.
Student loan debt is second only to mortgages as the largest debt that
consumers carry.
For the class of 2013, much of the debt is in government loans with graduates owing an average of $26,000, according to a Fidelity survey of 750 college graduates.
According to BuzzFeed, student loan debt in America has reached $1 trillion, $85 billion of which is past due.

With the rise of rates, 10 million students nationwide will lose $1,000 per year from the higher rates, which would cover a semester of text books, or six months of a college meal plan.

The fact that 60 percent of all college students take on some kind of loan debt, one has to ask why students, the future leaders of the nation, are facing an 8 percent interest rate when banks are only paying three-quarters of one percent, their reward, apparently, for trashing the nation's economy in 2009?

But this debate about loans is a sideshow to the real problem -- college costs too much, at least for a country that hopes to stay in the lead in producing the nation's top scientists, economists, business experts and teachers.
The increase has become even worse in the last 20 years.

The cost of attending a four-year public institution has gone up by 5.2 percent each year in the last decade - far more than the inflation rate and costs for other basics, according to the Consumer Financial Protection Bureau.

The rise has occurred as university administrative costs have steadily climbed and as cash-strapped states cut funding to public colleges. That has pushed more of the cost burden on students, Brookings Institution economist Barry Bosworth told Reuters in this June 27 article.

Reuters also reported:
Analysts say neither lower interest rates or repayment systems address the major problem: the lump sum of debt students leave school with and the toll it takes on their finances.
So far, the federal government has had limited success in pressuring states to control the cost of public university tuition.
Obama in January 2012 laid out a plan to withhold federal funds from public colleges that do not keep tuition costs in check. Despite his efforts, the average tuition cost at public colleges rose by a record 8.3 percent in 2012.
As for private schools, those costs have jumped even higher, making the best schools accessible not to the best students, but to the best-funded students.

In fact tuition has becoming so onerous that it is worrisome, even to the upper-middle class, as The Wall Street Journal reported in their series "The Price of Admission."

Is this a recipe for future success in America?

Or, if you're not of a philosophical bent, consider this: students who cannot afford college, will earn less money, pay less taxes and be more likely to end up requiring public assistance, or in jail -- both of which are more expensive then subsidizing college costs.

Is this really what we want for the next generation?

Can't we at least agree that the more of our children who go to college, the better off they and the nation will be 20 years from now?

Another Congressional deadline for resolving the loan rate issue looms in August.

But given that Congress failed to meet both the deadline that was to prevent the sequester from happening, and the July 1 student loan deadline, my hopes for agreement are not high -- especially not when it requires that Congress work during the summer, the time they are usually engaged in their primary jobs: raising campaign cash.

And if they can't solve the sideshow, let's see a show of hands for how many can solve the larger issue of how much college costs...

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