Everyone seems to agree (though there are conflicting theories on why) that attaining a college education is crucial for landing the job you want. More and more students are enrolling at 4-year universities, and the racial and ethnic makeup of college graduates is getting decidedly more diverse. In 2012, a record one third of 25-29 year olds in the United States have completed a bachelor’s degree. Between 2009 and 2019, enrollment in postsecondary institutions is expected to increase by 15%, despite the rising cost of tuition. This means that more students will be in more debt upon graduation.
However, that coveted diploma is no longer the golden ticket to a higher-paying job and financial stability.The rising cost of education, accompanied by recent cuts in student aid, make for some very depressing math. As of December 31, 2012, student loan debt was $966 billion. It has now surpassed 1 trillion.One could argue that the increasing cost of education is correlated with inflation — the rising cost of everything — but a simple look at the numbers will tell you otherwise. Tuition inflation has been consistently almost 1.5 to 2 times greater than general inflation. Students are now graduating with an average debt of $24,301, and since wage growth is lagging far behind the soaring costs of education, students are finding it harder and harder to pay off their debt. 54% of those under 25 who hold degrees are jobless or underemployed. Students with advanced degrees are frequently taking jobs for which no degree is required. 10% of graduates are using more than 25% of their income to pay back their student loans.
It’s only going to get worse. In 2001, the average cost of attendance at a 4-year public institution was $8.6K. In 2016, it is projected to be $22K. And in 2030, it is projected to be a startling $41K. If the students of today wish to send their children to a private school in 2030, they need to embrace the possibility of handing over an astounding $130K per year.
It’s hard to lay the blame in one direction. Tighter state budgets which resulted in higher tuitions (which could be raised with little to no repercussions), the gradual shift from responsibility of payment from government to families as federal programs were slashed and cut — are all contributing factors. Though President Obama stressed the need for affordability in education in his January 2012 State of Union address, he has done little to push the cause. In fact, ten months later, he cut access to Pell Grants by 33%.
In 2012, the Student Loan Forgiveness Act (H.R. 4170) offered a solution — a 10 for 10 deal, 10 years of timely payments of 10% of one's discretionary income, and then the remainder of your loans would be forgiven. The bill died. Fortunately, lawmakers haven't quit trying. Five days ago, Representative Karen Bass reintroduced the 10 for 10 plan in H.R. 1330, The Student Loan Fairness Act. The bill also includes caps on federal interest rates and refinancing for private borrowers.
Unfortunately, the bill was referred to committee, which means it has very little chance of being passed. Sadly, it seems that the Obama administration is just not prioritizing education.