Higher Education
The Politics
America’s colleges and universities have long been a cornerstone of America’s vibrant economy. In recent years, higher education has become even more important to compete in the global economy. But college has become less and less affordable, partly because of skyrocketing costs and partly due to a shortage of scholarships, grants, and low-cost loans. We must solve this problem because our nation’s future hangs in the balance.
The Argument
Support for higher education is an investment in America’s future. To compete in today’s global and increasingly high-tech economy, we need a highly educated workforce.
America cannot promise equal opportunity for all without ensuring that everyone who works hard is able to pursue a higher education. A first-class, affordable college education—and the social mobility that becomes possible with such education—is an essential part of the American Dream.
When conservatives controlled Congress, they cut aid to both students and colleges, forcing young Americans to accept crushing debt as the price for education. Bush and his allies in Congress made the largest cut to federal student aid in history—funding that was restored and enhanced only after Democrats took over Congress in 2007.
Federal direct student loans are much more cost-efficient than student loan subsidies to giant banks. Ending the program that subsidizes banks for student loans will save $47 billion over five years. [Congressional Budget Office] Further, students will no longer be compelled to borrow at higher interest rates from private lenders.
The Right is Wrong
Opponents argue against more federal aid to higher education saying it’s just liberal spending that we cannot afford. But in fact, the future success of America in the global economy depends on a highly-educated workforce. We can’t afford to shirk our responsibility to invest wisely in America’s future.
Opponents argue that we shouldn’t end subsidies to banks that make private student loans because the banks give more students the opportunity to go to college. But in fact, a report by the Government Accountability Office found that it costs the federal government $9.20 for every $100 loaned through subsidized private student loans compared to only $1.70 for every $100 loaned directly. So by shifting federal support from bank subsidies to direct loans, far more students will be able to get college loans—at lower interest rates. In other words, $7.50 was saved for every $100 loaned.
Progressive Solution
Tuition rates, grant aid, and loan conditions should be readjusted to make college affordable. The solution includes:
- Ending subsidies to banks for student loans. The federal government should take the billions of dollars that are supporting banks and redirect that money to support worthy students.
- Increasing aid based on financial need. Following President Obama’s leadership, Congress increased the amount of financial aid available as well as the maximum Pell Grant that can be awarded. Both should be increased further to match historic levels.
- Offering more grants and scholarships to students who engage in national service programs.
- Increasing aid to post-secondary educational institutions with the understanding that the schools will hold down tuition rates.
- Reinvesting in our community colleges, ensuring that these local institutions remain an affordable, accessible, competitive option.
- Continuing unemployment benefits for out-of-work Americans who seek retraining through college and vocational programs.
Fast Facts
Higher education is essential to individual students. College graduates earn 80 percent more than high school graduates. [Bureau of Labor Statistics] That’s one reason why 69 percent of 2008 high school graduates enrolled in colleges or universities last fall. [U.S. Bureau of Labor Statistics]
Higher education is essential to our nation’s economy. Ninety percent of the fastest growing job categories, 60 percent of all new jobs, and 40 percent of manufacturing jobs now require some form of post-secondary education. [Inside Higher Ed] At current rates, the U.S. will fall 16 million college degrees short of meeting workforce needs in 2025. [National Center for Higher Education Management Systems] At the same time, other countries are increasing their rates of college degree attainment much faster than the United States. [National Center for Public Policy and Higher Education]
College costs rose dramatically during the conservative era. Tuition costs have increased 439 percent since 1982, a rate four times faster than inflation. [CNN Money] Just between 2000 and 2007, tuition and fees at a public four-year college increased from $3,500 to nearly $6,200—an increase of 46 percent in inflation-adjusted dollars. [College Board] Tuition at private colleges also became more expensive, increasing on average from $16,000 in 2000 to $23,700 in 2007. [College Board]
The value and availability of Pell Grants declined. The Pell Grant program originally covered 77 percent of the cost of attending a four-year public college, but today’s maximum grant covers only 35 percent of that cost. [New America Foundation]
Conservatives enacted the largest student loan cuts in history. In 2006, conservatives passed a law that cut $12.7 billion from student loan programs. That law also imposed higher fees on students and increased the interest rate on loans to parents. When Democrats recovered Congress the following year, they passed the College Cost Reduction Act, which restored funding cuts, lowered interest rates on subsidized student loans by half over five years, increased Pell Grants, and banned unscrupulous tactics by private student loan companies. [Democratic Caucus]
Conservatives cut direct federal aid to college students while increasing subsidies for banks that issued private student loans. While Republicans controlled both the White House and Congress, federal funding for Pell Grants and Direct Student Loans remained flat and federal work-study funds and Byrd Honors Scholarships declined. Conversely, funding for the Family Education Loan Program, which subsidizes private student loan companies, more than doubled from $25 billion in 2001 to $51 billion in 2007. [U.S. Department of Education]
At least two-thirds of college students graduate with some debt; the average debt among graduates exceeds $19,000. [National Center for Education Statistics] One-fourth of all students borrow $25,000 or more. [Public Interest Research Group] These statistics were last published by the U.S. Department of Education in 2004, so they understate current student debt. And they don’t reflect that more students work part time or take five years to earn a traditional four-year degree.
President Obama made substantial down payments for higher education in the Recovery Act by increasing the maximum Pell Grant while expanding adult education and work-study programs. However, greater investment is needed to put higher education on a strong footing.
Public Pulse
Parents and the Public Voice Concern About Higher Education Access and Affordability
- The number of Americans who believe that higher education is essential for a decent job and place in American society has jumped from 31% in 2000 to 50% in 2007.
- The majority of Americans (59%) believe college prices are rising as fast or faster than prices for health care.
- Seventy-eight percent of Americans believe that students have to borrow too much money to pay for college.
- Although 86% say that someone willing to make enough sacrifices can go to college, most (62%) also believe that many qualified individuals don’t have access to higher education.
- Concern about access is much higher among minority parents. While 62% of them believe that a college degree is necessary, 74% think that many qualified and motivated students don’t have the opportunity for a college education.
- Higher education still gets good marks from the public: 51% give it a grade of good or excellent, compared to 37% for secondary schools.
- Regardless of this generally positive view of higher education, more than half of people surveyed (52%) think colleges are like a business, focusing more on the bottom line than on education, and almost half (48%) say they want to overhaul public colleges.
Resources
Campaign for America’s Future: Quality Education
EPI Policy Center's The Bush Legacy: Higher Education
Campaign for College Affordability
The Project on Student Debt: Quick Facts
The College Board: Trends in Student Aid
USPIRG: Cutting Interest Rates, Lowering Student Debt
Stories
Kristin Cole, 30, who graduated from Michigan State University's law school and lives in Grand Rapids, Mich., owes $150,000 in private and government-backed student loans. Her monthly payment of $660, which consumes a quarter of her take-home pay, is scheduled to jump to $800 in a year or so, confronting her with stark financial choices.
"I could never buy a house. I can't travel; I can't do anything," she said. "I feel like a prisoner."
