The United States currently has one of the most under talked about economic crises in the world: crippling college tuition and astronomical student debt. Current and former college and university students now hold a collective $1.3 trillion in student loan debt. And with rising costs, that number is only expected to increase at exacerbating rates.
In 2006, the student debt number sat at around $480 billion. It has since more than doubled in just 10 years in 2016 to almost 7.5% of our nations GDP. A whopping 44 million people hold the loans with an average of over $37,000 per borrower. This simply is not sustainable to have a flourishing middle class. Which now begs the question, what happened and how do we fix it?
Back in as early as 1940 a college degree was not worth nearly what it is now as far as job prospects. In that year only 186,500 (about 5% of adults) students attended college of which the vast majority were men. After the second world war, the United States government instituted what is known as the ‘GI Bill’ which allowed veterans and service members attend college as a part of their benefits package. This helped nearly double college participation to nearly 8% of adults. But college back then was far less costly for middle class family. For example, in 1950 during the post World War economic boom one could send their child to Yale University, one of the most prestigious and expensive schools in the nation for $1,300 per year ($13,000 in 2015).
Today that cost has skyrocketed fourfold to $62,000 in 2017 dollars. That is a mind boggling increase. To help understand how that effects a middle class family it makes sense to compare median incomes of the two separate years. In 1950 the median family income stood at $4,237 per year unadjusted for inflation. Yale yearly tuition would represent only 30% of a family’s income at one of the most expensive institutions in the nation. In 2017? Tuition at Yale for a median income family has increased more than three times over to represent almost 92% of their income. In a nation full of wealth like our own that once prided itself on its ability to educate its citizens by being one of the first to make a High School degree cost free, it is nothing short of maddening.
A child in high school today who does his homework, achieves high marks, and may be a fabulous student simply can no longer attend a college or university on his merits and hard work alone. His fate hangs nearly entirely upon his parent’s ability to pay for it. And the economic situation for families has only become more dire. According to a 2016 study, 69% of Americans have less than $1000 in savings. 34% have exactly zero. Student loans are usually the go-to financing option for college but with astronomical rates of 6, 7, 8, or even 9% interest most students end up paying double or triple what they actually borrowed; that is, if they end up paying it back at all. How can anyone expect struggling families to foot enormous college tuition bills? More and more bright young children have been turned away from the idea of college simply for financial issues at home. And its effect on America’s educational ranking across the globe has taken a massive hit because of it.
The United States once the pinnacle of math and science during World War II and the Space Race against the Soviets has now fallen far and fast behind the rest of the industrialized world. According to the 2015 PISA study which measures educational ranking in major subject areas, the United States ranks 35th in Math and 25th in Science. All far behind large western nations like Germany, The Netherlands, Canada, and France, whose newly elected President, Emmanuel Macron, has offered refuge to American scientists and engineers in the battle of curbing climate change. What do these countries have in common? Every one of them have free or heavily subsidized higher education programs. Germany grants students including international 100% tuition free college. The Netherlands costs justo over $3000. Canada only $5000. In France its a microscopic $585 per year. Norway $596. This list of countries who grant free or low cost higher education is lengthy and every single one of them rank ahead of the United States in at least one category in the PISA examination.
The solution to both student loan debt and the cost of college tuition is rather simple. Students currently paying off their loans must be given the option to refinance their loans at far more reasonable rates closer to 2, 3, or 4%. The fact that one can get a car with a lower interest rate than an education makes little sense considering the nature of student loans and their ineligibility for bankruptcy.
The next step is to make all public colleges and universities tuition free. In a country which holds $80 trillion in wealth and whose military budget exceeds $600 billion, there is no reason to skip on investing in the bright young minds of tomorrow. The estimated costs of such a program would be a meager $62.6 billion, of which roughly one third is already spent on higher education as it is via the Pell Grant program.
This policy, championed by Senator Bernie Sanders in the 2016 Democratic Primary, is a no brainer and the increased financial flexibility for middle class families would without question spur the economy. The time for predatory college lending and burdening of the middle class must end. It is long overdue for The United States, the richest country in the history of the world, to end the bloated and wasteful contracts for the military industrial complex and to begin investing in the education of its bright young students right here at home.