Student Loan Debt and Indifference in Higher Education
Perhaps the worst thing that ever happened to parents trying to help their children attend college was the government's Stafford Loan Program. That program was intended to provide students and their families with low-interest loans to help with college expenses. It also assured colleges and universities that they'd receive payment for tuition and other fees. And, at around that same time, it seems that many colleges simply stopped trying to control costs.
According to U.S. News and other sources, the cost of higher education is among the fastest-rising costs in America today. Since 1980, tuition charges at U.S. colleges and universities have risen 757 percent. Over the same period of time, food and electricity costs have risen about 150 percent. Families can no longer save enough money to pay their children's college expenses. Students can no longer work for a few years after high school and earn enough money to cover the expense of a bachelor's degree. The only alternative for a lot of students is to incur debt.
In just the past 10 years, student loan debt has soared from $260 billion to $1.3 trillion; average debt jumped from $18,650 to $33,000 per student; and the number of people over age 60 with student loan debt tripled to 2.1 million. According to Mitch Daniels, president of Purdue University and former governor of Indiana, college graduates burdened with student loan debts "are postponing marriage, childbearing and home purchases, and... limiting the percentage of young people who start a business or try to do something entrepreneurial. Every citizen and taxpayer should be concerned about it."
With the outstanding balance of student loans growing by over $2,700 per second, some analysts believe that student loan debt will prove to be the next bubble in our economy. Graduates are carrying anywhere from thousands to tens of thousands to hundreds of thousands of dollars in student loan obligations. When it gets difficult to make payments, there's no declaring bankruptcy; there's no ignoring bills if one can't pay them; there's no getting rid of it.
Not long ago, I taught my Introduction to Design of Experiments (DOE) seminar at a large manufacturing company. One of the attendees was an entry-level engineer who had just graduated with a BSME from a highly respected engineering school. He told me that his student loan balance is over $110,000. I wondered, how does one get married, start a family, or buy a house when they're over a hundred thousand dollars in debt at the age of 22? Didn't someone in the financial aid office warn him about the danger of incurring such a heavy financial liability at such a young age?
Unfortunately, too many people in higher education just don't seem to care that their students graduate mired in debt. I was recently invited to meet with the provost of a prestigious university. A week before our meeting, he mailed me a parking pass for the main administration building. When I arrived, I parked next to the university president's reserved parking spot.
In that space was a dazzling red luxury sedan.
Many students and their families are making financial sacrifices and/or incurring debt to attend that school; and the university president is tooling around the campus in an $80,000 land yacht. Is the president (1) stupid or (2) indifferent? There's no door number three; it's either incredible ignorance or inexcusable indifference. I don't care if the president is personally wealthy; I don't care if the car is a rental or a lease. You don't drive around in a flashy luxury automobile in the face of the student loan crisis that's confronting your students, alumni and the nation at large.
Drop the indifference. Drive a Focus. Then provide some leadership to get the university's budget under control, eliminate wasteful spending, and reduce costs.
_________________, “2014 Graduates had highest student loan debt ever,” www.usnews.com.
Kelly Holland, “The High Economic and social costs of student loan debt," www.cnbc.com.
Travis Mitchell, “20 Years of Tuition Growth at National Universities,” www.usnews.com.
Claire Murdough, “What Really Happens If You Default on Your Student Loans?”, www.lifehacker.com.
John Schoen, "State budget squeeze pushes college students deeper into debt," www.cnbc.com.
Doug Short, “Median Household Income Growth: Deflating the American Dream,” www.advisorperspectives.com.
© 2015 James F. Leonard. All rights reserved.