While the president’s October announcement of a plan to expedite Congress’s reduction of required payments on student loans from 15 percent of annual discretionary income to 10 percent might prove useful to reelection efforts, the long-term utility of such a measure remains a question.
With college enrollment tripling in the last ten years, default rates through the roof, and graduate debt levels mounting, it is little wonder that the president is attempting to diffuse the “higher education bubble.”
Indeed, the recent “Occupy Wall Street” movements are a testament to these rising costs to diminishing payoffs. High on protestors’ lists of demands is forgiveness of college loans. And while the motivations of the “occupiers” may lack substance, it’s becoming harder and harder to ignore the millions of recent and not-so-recent graduates struggling to hoist themselves out of debt despite low-paying (and increasingly non-existent) jobs.
In a sense, the higher education bubble is very much like the dotcom and mortgage bubbles before it. Everyone wants a college degree because it’s widely seen as “necessary step” in “getting ahead” and therefore, tuitions are skyrocketing, taking advantage of the situation.
It is vital to note that these massive tuition hikes are far more than measures to keep up with advances in technology or inflation rates. In fact, when compared with the increase of the overall inflation rate since 1985 (115.06%) college tuition rates have risen 498.31%. The cause? Government subsidies.
In 1965, as part of President Johnson’s Higher Education Act, such programs as the Pell Grant and soon-to-be defunct Federal Stafford Loan were introduced. The flaws in the philosophy behind such plans are obvious. The government makes these programs available, essentially “free money” if need is demonstrated, and so colleges raise tuitions accordingly. Students then need more loans to compensate for the increase, when results in more government aid, and the cycle continues.
Even an analysis of the problems themselves reveals another instance of bureaucracy at its most bloated. Of students receiving Pell Grant money, for example, it is estimated that only 40 percent receive bachelor’s degrees. The grant costs the government more than $40 billion a year. Of course, these huge expenditures are not clearly outlined by the Department of Education (or really outlined at all) in the 2010 Digest of Education Statistics.
One is inclined to agree with The Chronicle of Higher Education’s Richard Vedder, who calls such a lack of transparency “a travesty packaged within a scandal wrapped with indifference and hypocrisy.” Indeed, though the reasons behind such a high failure rate are highly speculative, but one thing is for certain; the maximum Pell Grant award of $5,550 yearly does very little in combating skyrocketing tuition rates.
Though these Great Society remnants might seem attractive to students and their families, the reality is such subsidies are major contributing factors to the higher education bubble. At their core, these programs could very well be diminishing financial responsibility; students (and parents) today are less invested in education because of the illusion that the government is picking up the bill.
More students going to college does not necessarily mean that the overall intelligence level of students is increasing. In fact, since the 2004-2005 school year, the national averages on both mathematics and critical reading portions of the SAT dropped four and seven points respectively. But this is beside the point; financial, rather than scholastic ineptitude is at the base of the problem.
As universities raise tuition, student debt steadily continues to grow, surpassing even credit card debt, according to the Wall Street Journal:
Americans owe some $826.5 billion in revolving credit, according to June 2010 figures from the Federal Reserve. (Most of revolving credit is credit-card debt.) Student loans outstanding today — both federal and private — total some $829.785 billion, according to Mark Kantrowitz, publisher of FinAid.org and FastWeb.com.
Of course large amounts of debt invariably lead to a large default rate, as The Chronicle outlines:
…one in every five government loans that entered repayment in 1995 has gone into default. The default rate is higher for loans made to students from two-year colleges, and higher still, reaching 40 percent, for those who attended for-profit institutions.
The previous examples address problems with student aid and tuition rather the nature of higher education itself. University of Tennessee law professor Glenn Reynolds, however, disagrees. As he argues in the Portland Press Herald, the scarcity of jobs isn’t the main cause. The root of the problem lies with the system; the types of degrees and programs students choose:
…liberal arts degrees have relatively few takers in the job market, which is far more interested in graduates in “STEM” subjects (science, technology, engineering and mathematics).
Moorad Alexanian, a physics professor at the University of North Carolina, agrees.
Accordingly, students do not seek truly academic knowledge and skills but are just satisfied with a diploma, which is used by potential employees as a selection tool. Students are thus shackled with bogus degrees that lead nowhere.
Though opportunities may abound for STEM graduates, those with liberal arts degrees are constricted in the fields they can work in. Those with degrees in history, English, psychology, anthropology, journalism, political science, music, theatre and scores of others who want to use their major are hard pressed to find employment outside the realm of education. Because those with STEM degrees have higher paying job opportunities elsewhere, many liberal arts graduates end up teaching STEM subjects at the elementary and secondary levels. Their students pay the price.
But shifting the focus to STEM subjects would prove difficult for many small liberal arts schools, who have long touted the liberal arts education as essential to “learning how to learn.” Indeed, it would be naïve to strive to eliminate the liberal arts education, but going forward, students and institutions may seriously consider making the liberal arts a little less liberal.
It is not uncommon for STEM students to pick up a liberal arts minor or certificate, but the number of students pursuing technical majors has faced a steady decline. Though the overall number of college graduates increased approximately 29% from 2001 to 2009, those graduating with engineering degrees only increased 19%, while computer and information science degree numbers plummeted 14%.
According to the Journal, high schools aren’t sufficiently preparing students for the rigors of STEM courses.
Overall, only 45% of 2011 U.S. high-school graduates who took the ACT test were prepared for college-level math and only 30% of ACT-tested high-school graduates were ready for college-level science, according to a 2011 report by ACT Inc.
Part of the problem also lies with the increased time commitment that STEM classes require. In “Academically Adrift: Limited Learning on College Campuses” Professors Richard Arum of New York University and Josipa Roksa of the University of Virginia found that on average, U.S. students spend between 12 and 13 hours studying, engineering students spending three to four additional hours each week, still roughly half the average time spent by students in the 1960s.
Similarly, “Into the Eye of the Storm: Assessing the Evidence on Science and Engineering Education, Quality, and Workforce Demand” a study by B. Lindsay Lowell of Georgetown University and Hal Salzman of The Urban Institute points to another interesting trend: of those who graduate with technical degrees, only one third go into technical fields. The rest are lured into managerial positions because of higher starting salaries, according to the study.
But those faced with such a choice are very few; because of the masses of liberal arts degrees flooding the market, many take salaries below their expectations. Some turn to law school as a means of “getting ahead” but instead sink deeper and deeper into debt.
Another solution lies in the oft-discussed realm of teacher accountability. At all levels of education specific efforts should be taken to increase the emphasis on and quality of STEM curricula. Teacher tenure should be abolished, as well as the belief that “all teachers are created equal” in that across all subjects, advanced degrees and seniority mean a certain pay grade.
A system of responsibility needs to be created, one in which students are tracked from elementary school to college to determine the impact and quality of STEM education. Schools would be given sufficient funding to offer salaries that would draw top STEM teachers. Then, based on the eventual career choices of students, teachers and curricula could be changed and adapted.
For years we’ve heard our political leaders stress the need to increase the focus on math and science in the U.S. education system, yet these words carry little weight unless supported by an all-out effort, with incentives and accountability, to navigate that system to a measurable outcome.
Though reducing required payments on loans or changing forgiveness periods from 25 to 20 years may excite young voters in the short term, it does little more than treat the symptoms of a larger syndrome, that of inherent flaws in our educational system from the first day of kindergarten to the upper echelons of graduate school.
In short, regardless of governmental actions on education debt, students’ indebtedness will only grow as long as they continue to graduate in large numbers with degrees ill-suited for the competitive, technology-centered world – a world offering fewer and fewer well-paying jobs to those with a purely liberal arts background.