Fixing the Student Loan Problem: Of Tuition Increases and Administrators’ Salaries
An author on Gather.com has posted one of the best articles I’ve seen outlining the student loan problem and possible solutions. On the college education Catch-22:
That’s the dilemma that faces most kids who are graduating from high school these days. Like the parents that work to avoid [pay for]* daycare, or the kid who works to pay off the car he uses to get to his job, high school graduates are confronted with the need to go to college in order to get a job to pay for the college they attended.
On the rise in private lending:
Why have those lenders sprung up? Because there is a need for them, and there is a need for them because college tuitions have been rising faster than the federal Stafford loan limits– even though the federal government has been trying to keep up. In 2005, the federal Stafford Loan limits were $2,625 for dependent freshman, up to $5,500 for dependent juniors and seniors. Those limits were raised, for 2007, to $3500 and $4500, respectively, and now are at the $5,500/$7500 limits.
That means, in 2005, an entering UW (University of Wisconsin) Freshman faced tuition and fees of $5,672, and could borrow only $2,625 per year, a shortfall of $3,000. In 2008, a UW Freshman can borrow up to $5,500 for his first year of college, but will pay, on average, $7,568.56 — falling short nearly $2200 even though she is borrowing more than double what she would have if she had been lucky enough to start school just three years ago.
And on the affect of student loans on career choices and how that harms the country:
Now do you see the problem? Why would anyone go to college and spend all that money to get a job helping the poor when doing so would put them in the position of becoming the poor they are helping? More than one-third of the starting salary of Legal Action lawyers would go to service their debt. Who could afford to choose that route, especially when median starting salaries for big-firm lawyers are more than $60,000 per year?
I’ll put it simply, again: high-cost college educations force students who want to be educated to choose careers based on what is best for their debt rather than what is best for them, their family, or their country.
The author then goes on to offer multiple solutions that, taken together, could go a long way towards solving the problem: 1. Force schools that take any form of federal money, including loans from students, to keep tuition costs from exceeding inflation rates; 2. Cap college administrators’ salaries at local median income levels; 3. Set maximum interest rate to Prime minus 1% on government-backed loans; and 4. Offer tax credits for families helping with education costs, including not just tuition but room and board as well.
Now if only that Gather author, listed simply as Briane P., could be Obama’s next Secretary of Education – then we might see some real change!