Paying for College



Paying for College

Brother can you spare a trillion dollars? 

That's the estimated college student loan debt, the next bubble to burst, some say. No jobs, no money to pay the debt. Most  of it is government loaned, some private. Interest rates on these loans are set to jump from around three to six per cent shortly (part of the bill to fund Obamacare) and at the moment, both political parties want to stop the hike and are arguing how to cover the lost anticipated revenue. Tax the rich vs. program cuts. Keep in mind that many of these loans guaranteed by the government have long term payouts at subsidized interest rates.

  The long term agenda, however, is to forgive those debts. President Obama's past rhetoric about affordable college, opportunity for everyone to get a college education, and his current demonizing of the burden students face (he's campaigning on college campuses), is indicative of this. It's certainly popular with students and probably with their parents. Who doesn't want free college? Except, those who didn't and aren't going to college who have to pay for it. And, just maybe, we can't afford it.

  Besides that, part of the  issue is the cost of a college education. The "scandal" is that college costs have risen nearly twice as fast as inflation and 30 per cent faster than medical care. Specifically, the Consumer Products Index (used to measure inflation) has averaged 3.8 per cent per year over the past decade; college tuition has risen 7.5 per cent; medical care, 5.7; and new homes 4.2 per cent. That's while federal aid to colleges have risen $100 billion in those 10 years. I don't have any figures for state aid, even though dropping in the last couple of years, is significant. The irony is that the more education is subsidized the faster tuition has risen.

  Public school tuitions have risen at a faster rate than private schools, but, because of subsidies, public schools cost less, roughly half. It stacks up like this (tuition and fees and room and board): two year college $15,286 a year; public four year, $21,447; private, $42,224. Of course, that's not what everyone pays. Scholarships and grants lower the cost for public schoolers by 50 per cent and private schools by 88 per cent (endowments) and community college students by as much as 100 per cent. Obviously those who pay full rate, no assistance from the college, subsidize the others.

  Why have college costs gone up? Some of it has been because they can. Easy student loans, taxpayer subsidies, and big demand. Faculty costs, including health and pension costs, have risen and competition for quality has forced prices up. Then there are the extras: counseling (mental and physical health and general support as well as career development), tutoring, sports and recreation and leisure time facilities, more complex administrative duties (regulation compliance, i.e.), broad course offering (some say too broad and too inconsequential), and demand for high quality facilities.

  Lots of issues here, but the public, private, and political issue is paying for higher education. Not everyone needs or wants a college education although a college degree demands a higher salary in the market place. Others can be competitive with a vocational approach to education, though more and more jobs require more technical training some of which could be achieved with a more competitive K-12 education system. Nor does a college degree mean happiness and satisfaction. Nor can some handle the rigors of a strong academic program.

  At a minimum (or maybe maximum) an education (whether college or not) is about learning to learn. Jobs and careers and conditions change. The person who is mentally agile and adaptive and disciplined, ready and equipped to learn, is going to survive and stay ahead of the game of life. Most of this is individual responsibility. Some is public interest. No one has been forced to sign loan papers and no one should sign, or be encouraged to sign, documents they don't understand. There shouldn't be an expectation that someone else will pay for another person's individual choices.

  Count on a move for another big bailout, maybe not until after the election, and depending on who wins or which party dominates. Opposing it will earn a label of being heartless and worse: working against the public good and what "the people" want.