The Fight To Bring Down College Tuition

As the expense of college increases, with a seemingly less significant return on investment, students and parents have started to question if it’s really worth it.

 

After a huge surge in tuition prices over the last 30 years, higher education costs are slowing very slightly (Quartz)

After a huge surge in tuition prices over the last 30 years, higher education costs are slowing very slightly (Quartz)

Graduates still earn more than those with only a high-school diploma. Former college students aged 25-32 who are working full-time still earn about $17,500 more than their counterparts without degrees, according to the Economist. But still, 42% of graduates are in jobs that require less than a four-year degree, and 41% of graduates from the nation’s top universities could not find jobs in their field. These are shaky outcomes for an investment that will set students back as much as $60,000 a year.

In some ways, the college bubble is similar to the housing bubble, which came crashing down in 2007. Poor risk assessment played a role in both situations. Homebuyers were able to obtain a loan that they had no way to repay. And students’ parents are co-signers for their loans, which makes it hard to determine the ability of the actual borrower to repay the debt. Also, both big houses and a college education exist as part of the American Dream to the national collective: everyone has a right to a home, and an education is an investment one cannot afford to pass up.

Companies such as Upstart, Pave and Lumni have developed a plan to reduce student debt: they are giving future scholars the option to sell “stock” in themselves rather than obtaining a traditional loan. Two congressmen, Marco Rubio (R-FL) and Tom Petri (R-WI) have introduced legislation that could make this process more legitimate by setting out its terms, according to Slate Magazine. Their Investing in Student Success Act defines the maximum length a contract can last (30 years) and puts a limit on the future income a student can owe (15 percent). The debt is paid off each month in proportion to students’ earnings, so the amount they owe for a particular month depends on their salary at the time. Their ‘worth’ as an investment package depends on factors such as standardized test scores, job prospects and credit history. But although this method was designed to breach the inequality gap, the students that look like the best investments are usually the ones who grew up with more opportunities. To take this into consideration may result in another conflict about affirmative action, which would mirror the debate going on in colleges today.

Alan Collinge founded nonprofit StudentJustice.org after struggling with his own loans.

Alan Collinge founded nonprofit StudentJustice.org after struggling with his own loans.

Although this method addresses a way to avoid future debt, new graduates are already facing loans that they don’t have a way to repay. To help this group, the nonprofit organization Student Loan Justice is pushing to have the bankruptcy law changed to put restrictions on how and for how long lenders can chase debtors. Currently, student loans are more difficult to expunge in bankruptcy proceedings than credit card debt. Since it was founded in 2005, the nonprofit has gained a large social media presence with chapters in all 50 states up on Facebook.

 

 

 

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