The Star’s editorial
January 15, 2011
For-profit colleges are fighting a proposed rule that would cut off their pipeline to federal student loans if too many students default on those loans.
At the other end of the higher education spectrum, law schools are fending off accusations that they, too, entice students to take on mountainous debt, knowing many graduates won’t be able to find jobs at salaries high enough to pay off their loans.
Public and private colleges and universities are facing related problems. Overall, students and schools are tacking into a perfect storm.
Students are told their lifelong earning potential hinges on getting a college degree. But state support for public universities has tanked, as have endowments at private colleges. Meanwhile, the average cost of tuition and fees has increased by 466 percent over the last 25 years, more than four times the rate of inflation.
For most families, money to finance college isn’t readily available. But student aid is, especially federally backed loans. The average college senior in 2009 graduated $24,000 in debt — and facing the bleakest job market in more than a decade.
Experts warn that higher education is the next bubble about to burst. More than $800 billion in public and private student loan debt is outstanding, but only 40 percent is actively being repaid.
Graduates who default on federally backed loans eventually will find their paychecks garnisheed. Some will spend entire lifetimes paying for their post-high-school education.
Obviously, reforms are needed.
Despite their well-financed protests, for-profit colleges and technical schools are the place to start. This booming sector accounts for 43 percent of all federal student loan defaults, even though it makes up only 12 percent of total post-high-school enrollment.
The U.S. Department of Education has proposed a rule that would cut off federal student aid to for-profit schools if their students earn too little to repay their loans. Students’ overall debt in their first three years of employment could not exceed 8 percent of their income.
The for-profit sector, which has doubled its lobbying firepower and increased contributions to members of Congress in an effort to head off the rules, protests that its default rate is high because it serves high-risk students.
But the Education Trust, a nonprofit group that promotes equality in education, rebutted that claim nicely in a recent report: “Access without success — without graduation, without employment — is something the nation cannot afford.”
Corrective action can’t end with the for-profit sector. All schools should be looking at return on investment, or the ability of graduates to find jobs that pay enough to make the cost of college worthwhile.
This already takes place at some levels. In Missouri, career and community colleges that receive state funds must meet a threshold ensuring that job demand and wages are high enough to justify their programs.
The Metropolitan Community College system has so far declined to offer training for medical assistants, for instance, because the demand and pay levels for that profession don’t meet the threshold.
By contrast, medical assistants’ training is a popular offering at some career colleges, whose tuition rates are many times higher than those of area community colleges.
Demand and pay thresholds are harder to impose at four-year colleges, which offer more intrinsic benefits than technical schools.
But four-year colleges, be they public or private, must take drastic steps to ratchet down their costs.
The race to build five-star dormitories and luxury recreation facilities might attract students, but it won’t help them pay their bills upon graduation.
And, even with endowments plummeting and philanthropic giving at low levels, schools must find ways to provide aid to low-income students who otherwise would fall into the debt trap.