Should colleges have ‘skin in the game’?

Defaults are increasing, burdening the government, and graduates

In a report from the Wall Street Journal, Tanya Rivero and Andrea Fuller shared that in over 1,000 colleges at least half of students have defaulted or failed to pay down debt over 7 years. That figure represents more than 21% of degree granting institutions, according to the National Center for Education Statistics.

What does this mean for the average individual? Students are not paying back their loans. Consumer reports covered a story in 2016 on the Student Debt Crisis revealing an increasing number of students are burdened by loans, and 45% of students regret the decision of going to college all together.

Trump touted his position back in May of 2016 that he believed colleges should have some “skin in the game” — a position supported across party lines. This means that if students did not pay back loans, the government will not be the only party footing the bill, the college would own a portion of that debt. This will have positive and negative consequences. Colleges will be more selective and take less ‘risky students’ which tend to be lower income, but will also be pressured to be more focused on teaching toward professions where students have increased earnings potential.

Our startup, Caila, is focused on decreasing risk and debt for students by letting them to take one course at a time, as they can afford it and as it aligned with their career. For ‘riskier’ students we would be a method of enabling them to take individual courses — allowing time to acclimate to college. This allows students to ‘try out’ the experience without taking on the debt burden of a full-program until they are ready. Our partnership with universities may be what is needed to bridge the gap, allowing students to engage with universities before committing to full programs, while increasing success for students.

Whether policy changes take place or not, with $1.4 trillion in student debt, and many students defaulting across schools — more needs to be done to address the student debt crisis in our country.

By Sergio Marrero

Co-Founder, Caila