A few days ago, I met a woman who had just moved her daughter into her freshman dorm. She was proud and excited for her, but shared with me a story all too familiar to families across the country, and especially here in Pennsylvania: the cost of a college degree has become a debt sentence. Her daughter, Emily, was accepted at every school she applied to, but the family couldn’t afford her first choice because her parents are still paying off their student loans.
Right now, Pennsylvania ranks #2 among states where students graduate with the most student debt. A broken federal student loan system, predatory lending and collection practices, double-digit interest rates, ruinous monthly payments and complicated regulations have become a crippling cocktail for the middle-class, leaving many college graduates with little buying power in today’s economy.
In the past few months, I have heard from dozens of graduates who have had to postpone buying a car, or a house, or starting a family due to student loan debt. Many speak of foregoing a career that they want, in teaching or social work, legal aid or family medicine, because those careers will not allow them to pay off their student loans. In Emily’s case, and others like her’s, student loan debt is limiting opportunities for a second generation.
Policy makers have not made accessibility and affordability of higher education a priority - I will.
Today, 44 million people shoulder $1.5 trillion in student loan debt, a price tag that is a burden on not only the middle class, but our entire economy. This crisis is beginning to rival the seriousness of the housing market collapse, which forced nearly 1.6 million homeowners into foreclosure. But while housing values declined during the recession, the cost of a college degree and student loans increased. For example, in 2007 student loans accounted for 4% of a typical household’s overall debt. Fast forward a decade, student loan debt now accounts for 30% of household debt.
And while sending a kid to college is the ultimate goal for many families, it is also now a predictor for foreclosure. An August 2018 study shows that nationwide, a one percent increase in college attendance is associated with over 11,000 additional foreclosures. Student loans, and the inability to pay them back, have far reaching implications on the housing stability and economic mobility of American families.
How did we get here?
The cost of college tuition has nearly doubled since 1980, pricing students out of the opportunity to continue their education and forcing too many into insurmountable debt. Over 1 million student loan borrowers default every year, a growing threat to our economy that policy makers have thus far ignored. A college degree has become the entry standard for many careers, creating a “catch-22” for students: you need the degree to get the job, but there is no guarantee of 1) getting the job, and 2) making enough money at the job to pay for the degree. While unemployment is at a low, wages have barely budged in decades. After adjusting for inflation, today’s average hourly wage has just about the same purchasing power as it did in 1978.
And, that problem is not solved with increased student loan debt, which contributes to the growing wealth gap and prevents families from participating in our economy, owning homes and getting ahead. Other issues are created by for-profit universities: they lure students into taking out loans to attend schools of questionable merit, leaving those students with the obligation to go into debt for worthless degrees.
We need to recalibrate our expectations for post secondary education. College need not, and should not, be the default goal after high school. Many students are equally or better served by a career, technical or trades education, and we need to harness their talents. These paths need to be made available and affordable, too.
What Can Be Done?
We need to make college more affordable and change how we prepare students for their next steps after high school. We can do this by re-evaluating federal education funding, reforming the student loan process and reinstating protections for student loan borrowers.
Prepare students for jobs in the 21st century, not the 19th
Our education spending should look ahead, not back. We need to invest in students so that they are prepared for the 21st century job market, not a 19th century manufacturing world. Students need opportunities to learn critical thinking that prepares them for jobs that have not yet been imagined, and skills that allow them to create and operate technology in the modern workforce.
Student Loan Reform & Protection
We need to significantly reform the student loan system, removing profit motives, reducing penalties, and streamlining systems, so that more students can be served with less debt and better results. Student loan interest rates have skyrocketed, and opportunities to refinance are limited, despite the reality that swelling student debt is an anchor dragging down our economy.
In addition to making loans more affordable and simpler to repay, we need to protect student loan holders from predatory lenders and collection practices. We also need to shield them from for-profit colleges that take students’ loan money and then fail to deliver degrees, or training, that will enable students to repay those loans. Under Betsy DeVos, the Trump administration has engaged in an unprecedented reversal of protections for student loan borrowers. Just this week, the chief student loan watchdog at the CFPB resigned, citing this administration’s failure to protect student loan borrowers from predatory practices as a reason for departure.
And finally, we need to expand education grants and student debt forgiveness for public service.
Prioritize Career and Technical Education
We need to expand opportunities for career, technical and trades education. In the Philadelphia region, employers bemoan the lack of skilled workers, and workers without the necessary skills cannot find jobs to sustain themselves and their families. As a result, many businesses outsource such jobs to foreign markets. We can close that gap by providing educational and work opportunities to people living in our communities so that they are prepared for long term, sustainable employment. We also need to reverse the cuts to Pell Grants implemented by the Trump Administration, which many students relied on to pay for trade schools. These cuts drastically impact skilled labor, unions, the middle class, and our economy.
Expand Educational Opportunities
Upward mobility in the 21st century economy almost always requires post-high school education. We’ve made an additional degree or training a necessity without making it one the average American could afford. The federal government needs to work with state and community colleges, and technical training institutions, to expand opportunities for debt free education.
Just as no parents’ student debt should form a barrier to their children’s education, no family should lose a home because they sent a kid to college -- and no student should be taken advantage of because they tried to obtain a degree to start a career. We need to prioritize overhauling our student loan system, and funding higher and career education; our economy and the middle class depend upon it.