Stop the statists: reduce student loan debt

Students are increasingly taking on greater levels of debt in order to attend college.  College tuition and fees have inflated significantly in the past several decades due to the states involvement, forcing the majority of students attending post secondary educational institutions to take out ever larger federal student loans. This situation is pronounced at state supported schools but even more so at private institutions who also can feed their bloated institutions on students’ federal loans.

According to the College Board, inflation in college costs are significant and continuing to rise at rates well about the Consumer Price Index (CPI):

Between 2006-07 and 2016-17, published in-state tuition and fees at public four-year institutions increased at an average rate of 3.5% per year beyond inflation, compared to average annual increases of 3.9% and 4.2% over the two prior decades.

According to the Federal Student Aid Portfolio Summary from 2016, the US Department of Education states there is $1.1298 T of outstanding student loan debt.

If the current situation continues, the state will continue to grow their already very large class of indentured individuals who are at their beckoned call. However, the situation goes beyond individuals.

The problem of having over a trillion dollars in student loan debt is significant beyond the burden it places on individuals.  Many economists see this large overhang of debt negatively impacting GDP growth. Headlines like Student-Loan Debt Slows Recovery are common within the MSM and even on alternative news sites. The theory about the impact of student debt is based upon a rational assumption; payments to service student loan debt cannot not be used to: start a business, form a household, purchase a home or car, or even go out to eat; basically less money from younger Americans is flowing to our nation’s GDP and instead going to the student loan cartel.

Here are some market based proposals to slow the growth of student loan debt please let me know what you think of them.

  1. Stop sending the message that everyone should go to a four-year college. Obama advocated many times about college but he was wrong, there many professions and job opportunities for those without a four-year degree. Less demand for four-year college degrees means prices will fall for those who do obtain one.
  2. Local officials should revamp their high school curriculum and programs to meet the reality mentioned above. They can by offering a very rigorous and real college preparatory track as well as offer a serious vocational track which includes on the job training and apprenticeships. Beyond the educational value this offers to more students, this model will reduce demand at four-year colleges thus lowering costs.
  3. Stop federally guaranteed student loans – do not make the taxpayer the backstop for student loans as they eventually will be called on to do in the current system. Going back to free market principles which will force lenders to properly assess a student’s real ability to payback loans. For example, a student who did not fare well in high school will likely not do well at a four-year college and thus is a poor loan risk. For redemption, this student can go to a two-year program and prove they can handle a more rigorous course load before taking on significant levels of debt they will be unlikely to payback. This reduces the cost of bad loans to lenders those making loans more affordable.
  4. Raise admission standards at four-year institutions, this will force students to compete (scholarships) and it will also drive many marginal colleges and universities out of business. This action will likely assure those who take out students loans will pay them back.  Here lenders see the best return on their investments feeding their desire to continue to offer high performing students (those who really graduate) loans.
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Should the state monopoly in education consider change?

Education — especially in a world where academic knowledge, strong skills, and technical knowhow are required to obtain a ‘good paying’ job — is too important to have a near monopoly by the state given their dismal track record in progressing our students’ knowledge and capabilities.  While education’s value goes well beyond career training, obtaining a job its subsequent paycheck is critical to a person’s survival and their economic and social mobility in twenty-first century America. Obtaining superior education and training are paramount in the aforementioned endeavor.

According to a study co-authored by National Research Center for Career and Technical Education (NRCCTE) and the Georgetown University Center on Education and the Workforce  healthcare, community service, and STEM are projected to be the fastest growing career clusters in the next several years.1  For the most part, securing one of these careers will require having experienced very strong classroom instruction leading to real measurable learning of the fundamentals of reading, writing, and mathematics. Considering the sophisticated American economy that is being projected, can we expect students to become employed in these highly skilled jobs with the same quality of education and knowledge students of the nineteen-seventies possessed?

In terms of the states’ contribution to our students’ knowledge and skills, one can look at The National Assessment of Educational Progress (NAEP) which is a seemingly well accepted nationally representative assessment of how our state dominated educational system is performing. The results show their performance is not improving. Historical data highlights the fact American high school student achievement has stagnated for forty years the essential subjects of reading and math.2

The charts below show flat reading and math scores for America’s high school students going back to the nineteen-seventies.

Overall, the states’ educational system is not providing what students require to succeed in the twenty-first century when measured by the abysmal rates of obtaining career qualifying credentials such as an ‘earned’ high school diploma, apprenticeship completion, or a ‘legitimate’ college degree within a field meeting the needs of future employers.

Faced with stagnant performance for nearly forty years, most other fields outside of the state dominated educational system would look at themselves and likely embrace changes to their systems. For the future of our youth and nation, should not the state dominated educational system do the same?

 

neap-reading
Flat HS Reading Scores
neap-math
Flat HS Math Scores

Sources

 

  1. Carnevalle, Anthony, Nicole Smith, and Jeff Strohl. “Recovery: Job Growth and Education Requirements Through 2020.” CEW Georgetown. Georgetown University, June 2013. Web. 25 Feb. 2017.       
  2. “Summary of Major Findings.” NAEP – 2012 Long-Term Trend: Summary of Major Findings. US Department of Education, 2012. Web. 25 Feb. 2017.