Student Debt and Higher Education

College enrollment peaked in 2010 with over 21 million students, but it fell to 20.2 million students in 2014. As the economy improves, more people go to back to work which signifies while the enrollment numbers dropped. College education has started to change over the past decade with more access to online education while some states have even started to offer free education. There is a massive student debt problem that remains to be solved as well.

Sixty-eight percent of students who graduated from public and nonprofit colleges in 2015 had student loan debt, with an average of $30,100 per borrower. The total balance of student loan debt has nearly tripled in the past decade to $1.3 trillion. How did the students get that far in debt?

Tuition at public four-year colleges rose 73 percent on average between 1999 and 2009 while median family income fell by around 7 percent. Colleges have raised tuition to pay for new facilities for athletics, academics, and housing. Faculty also want higher salaries, and all of these cost money. The costs are then passed on to the students. The extra spending does increase to more publicity and better applicants which then leads to a higher academic reputation.

Student debt should not be this high regardless. Students saw that they were taking out larger loans to pay for school but went full steam ahead. They should have gone to schools that they could have afforded more easily. Why would you pay so much for required core courses that had nothing to do with your major?Why would you get $10,000 in debt to take a Spanish course that had nothing to do with your major? Community college should have been an option for these courses, and the student could have then matriculated to a university. Some students were also not qualified to go to a university in the first place and subsequently failed out. If you could not maintain a 2.5 GPA in high school, what would make you think to go to college? Basic scholarships are available, but some students did not qualify for these basic scholarships which should have been a red flag. People can always be overlooked like an undrafted pick becoming a Pro Bowler or All Star. These players started off with a small contract but exceeded expectations and got paid on the next contract. A high school student could also be overlooked due to poor high school performance, but after getting a 3.0 GPA freshman year of college, there are many scholarships to obtain for the following year.

A student obviously should have to pay for college that can’t maintain satisfactory grades. Why should a student with a 2.0 GPA get free tuition when they don’t use the available resources in the first place? Not succeeding and getting compensated for it does not happen in the real world. Failing to live up to standards results in being fired or demoted. If Tom Brady throws 25 interceptions in his first eight games year, he won’t start the rest of the year unless the new starter gets injured. If a student goes to class regularly and studies, then a B should be attainable in most cases. If you complain about having a job takes away from your learning, then take fewer courses. These problems have simple solutions. Rising costs have contributed to rising student debts, but it should be mostly attributed to irrational thoughts and behavior.

With that being said, measures are now coming into existence to make college more affordable for students. Some of these will be more impactful than others, and I will look at a few.

Ninety-one colleges and universities reported endowments of over $1 billion which make up 74.3% of total endowments of the 805 schools in the survey. These endowments are tax-exempt, so the endowments continue to rise for the most part. These endowments should have a certain percentage spent on students to reduce costs, and if the endowments do not comply, then they should lose their tax-exempt status as proposed by U.S. Representative Tom Reed. Endowments usually aim to spend 5% a year which is way too low for the financial elites like Harvard and Stanford. The endowments just grow instead of helping students or even other universities. The endowments pay no taxes, and taxpayers have to subsidize for the endowments. If society is subsidizing the endowments, then society should reap rewards from this.

The Industrial Revolution in Britain is often credited to inventors and geniuses like James Watt that invented the steam engine, but it should also be attributed to craftsmen and mechanics that helped to further the Industrial Revolution. The richest universities help the elite students, but there are many universities that lack funding that can’t help the average students. Wealthy universities are almost always the beneficiaries of donations since donors believe the money will have an impact on the university. If a school like Stanford is looking to raise one billion dollars in a year while a public school was looking to raise ten million dollars, where do you think $100 million dollars would have a bigger impact?

Picking Stanford would be strong link spending which is similar to the NBA where the best player has the most impact on a team. Weak link theory is prevalent in soccer where the team is only as good as the eleventh best player on the pitch. In basketball, the best player can go into isolation and score, but there will be many passes that lead up to a Messi goal. Henry Rowan donated $100 million to Glassboro State in New Jersey in 1992 which was a use of weak link theory. It is renamed Rowan University in his name. The university built an engineering school and was ranked third in social mobility index in 2016.

The top ten schools are all public universities which shows how public schools can improve the weak link of the United States and improve our nation. Henry Rowan’s donation was the largest single sum ever donated to a public institution. Donations to the richest universities are great, but they are not as impactful as a donation to a public university.

Ivy League schools like Princeton and Harvard decided to give free tuition to students came from a household with less $40,000 in 2004, but this only ended up only bringing in fifteen new students out of Harvard’s 1,600 freshmen enrollees. This obviously had little impact because the admissions programs could not successfully locate the students that met the requirements. There are about 35,000 students each year that score in the 90th percentile or above on the SAT and ACT and live in a household with an income less than $40,000. Only eight percent of that group actually applies to the selective schools which is far too low even though the cost at elite private schools would be free and cost less than a public university.

Wealthy schools also have a bigger budget where money can be spent freely while universities that operate on a tighter budget subsidize the poor students by having students that pay full tuition. Schools with larger endowments can offer luxuries that other schools cannot. From food to dorms, there are plenty of ways to spend money instead of on financial aid. The full-pay students will naturally gravitate to the schools with more amenities since it will be more more reminiscent of upbringing. The smaller endowment schools will not be able to subsidize the poor students if more full-pay students start going to the more luxurious schools.

Colleges should aim for more socioeconomic diversity because it will allow students of all types to interact with each other. A white student from a wealthy family will have more in common with an African American student from a wealthy family than a white student from a poor family. This is why some professional athletes that were raised in poverty don’t know how to raise a kid in the suburbs because even the parent and sibling have vastly different experiences.

Most public universities have resorted to accepting out-of-state students to help supply undergraduate funding. Out-of-state tuition is more expensive which helps to subsidize the in-state students. The University of California Board of Regents has proposed a 20% systemwide limit on nonresident undergraduate enrollment. The proportion of nonresident undergraduates at the top three UC is astounding: 22.4% at UC Berkeley, 22.9% at UC San Diego, and 22.8% at UCLA. Nonresidents pay about $27,000 more in annual tuition than Californians which allow campuses to get better faculty, lower class sizes, and purchase new technology for classrooms. The University of California System is regarded as the best public university in the world with 238,000 students compared to Stanford with 16,000 students. The UC System has an endowment of $14 billion while Stanford has an endowment of $22 billion. The UC System would be able to make a bigger impact by aiding a lot more students instead of helping one school with a lot fewer students.

New York has approved a 2018 budget which would allow SUNY and CUNY to be tuition-free for families that make less than $100,000 in 2017, $110,000 in 2018, and $125,000 by 2019. Students will have to maintain a necessary GPA and average thirty credits per year. Tennessee became the first state to offer free community college to graduating high school seniors in 2015 which was followed by Oregon. Governor Haslam of Tennessee is now planning to expand free community college to all while Oregon public universities are complaining of their freshmen enrollment rate dropping. More than 60% of Cal State students and 50% of University of California and community college students have their tuition fully covered by existing California aid programs. These programs make it more affordable for students to get an education which will help society later down the road. Graduated students will have less loans, and the education level of the United States will improve. The people will have more income to spend from a better job in addition to lower loans, so the economy will receive a boost. It could also lead to a better workforce which would help according to the weak link theory.

Student loan debt should decrease in the future with these programs and programs that will come in the future; however, it remains to be seen how the debt will be erased for past students. The albatross for past students would have been significantly smaller with the new programs in place, so should they be given retroactive money? Past student loan debts were avoidable, but it will be interesting to see how legislature combats this problem.