This article was originally published in The Daily Pulp on October 27, 2014.
Over the last several years, the college debt crisis has emerged, time and time again, as a headline on virtually every major news outlet in America. Politicians on both sides of the aisle have pandered to young audiences on the issue, claiming that this a main priority of Congress. During a press release of several reports on the for-profit higher education sector, Senator Tom Harkin (D-Iowa) highlighted a number of his concerns on the emerging student debt bubble. “There are a lot of indications that this is a drag on our economy. In other words, students who have graduated from college, just starting work can’t afford to buy a new house, can’t afford to invest in other things.” Senator Marco Rubio (R-Florida) recounted his personal struggle with student debt during an interview with CNBC this past April, saying that student loans were at one point “the single-highest expenditure in [his] personal budget.”
One would expect, given the imperative tone and bipartisan agreement on the threat of our nation’s student debt, that Congress would be taking bold steps to solve this growing problem. Think again. Instead of confronting the fundamental flaws that continue to drive college prices up, Congress has chosen to bicker over student loan interest rates rather than pass comprehensive higher education reform. In my recent book, Breaking Point: The College Affordability Crisis and Our Next Financial Bubble, I outline a series of proposals that can correct the structural defects in our system of higher education that have led us down an unsustainable path.
To summarize, all of the flaws in higher education have led to a rise in two things: tuition and underemployment. To the former, excess spending on the construction and operation ofamenities projects, which span into the tens and even hundreds of millions of dollars, have accrued to over $1.2 trillion in national student loan debt. As to the latter, millions of students are leaving college with degrees that are not valued by the job market, resulting in an unprecedented level of unemployment and underemployment from college graduates. It is the combination of “country-clubizing” our colleges with lavish and unnecessary perks, along with the pursuit of “hobby degrees” by many graduates who study in fields with little to no demand from the job market that has proven to be the perfect recipe for disaster: a massive student debt with no realistic means to pay it off.
Consequently, my series of proposals begins with a very simple and fundamental concept: give colleges a stake in the game. My research suggests that colleges operate in the ways that they do (spending excessively and offering programs that lead to underemployment) because theirinstitutional accreditation and access to Federal higher education funds under Title IV of the Higher Education Act (HEA) depend in no part upon the post-graduation performance of their students. To change this, I propose to implement a program that first collects the results from the U.S. Department of Education’s “College Scorecard,” which houses data on “undergraduate enrollment, costs, graduation rate, loan default rate, median borrowing, and employment.” Of the factors currently included in the College Scorecard, I would include “loan default rate, and employment,” while omitting “undergraduate enrollment, graduation rate, costs, and median borrowing.” In addition to “loan default rate,” and “employment,” I would also add the “median salary” of graduates five years post-graduation. Applying these standards as an adequate gauge for institutional value and the individual capacity to pay off student debt, colleges should be assessed a credit rating, based upon their “scorecard” of factors, which would then determine the amount of Title IV aid that an institution is eligible for.
For example, institutions with the highest levels of “value,” based upon these three factors, would receive a AAA credit rating, and would therefore receive the maximum amount of Federal aid allotted. The rating system would then follow a regressive rewards system of Federal aid, in that as the institution’s credit rating diminishes, so does the amount of its Federal aid. This would extend even to the point of colleges with the lowest ratings relinquishing all aid eligibility. If this is coordinated alongside the reinstatement of bankruptcy options into the private student lending market, eliminating the widespread threat of high-interest private loans supplementing lost federal aid, colleges will be firmly dependent upon Title IV aid that is conditioned on student post-graduation performance. From this, I anticipate that institutions will fundamentally realign their priorities so that they are in harmony with the long term interests of students and taxpayers alike. With this new grading system, the primary focus of colleges will be to make sure that graduates are equipped with degrees and skill sets that will make them competitive in the labor force and able to personally benefit from the knowledge they acquired while in school as a result. Faced with the consequence of losing Title IV student aid if their graduates fail to perform well in the job market, colleges will be inclined to cut programs that are leading graduates to unemployment and underemployment, while expanding upon or even creating new programs that will foster student success long after they have graduated.
Regardless of what colleges choose to do, it will be entirely upon them to make the adjustments to their programs. This means that while the Federal government will hold a post-graduation performance standard for the receipt of Title IV aid, the college market will be free to naturally adjust with no specific curriculum mandates. I suspect that this will work to create a college system that naturally reflects and supplies the demands of our economy. In order to assist colleges to meet these demands, I propose that the Bureau of Labor Statistics, which generates 10-year employment projections by sector, should partner with the Department of Education to ensure that every college is aware of projected employment trends with enough time to adapt.
In the end, elite liberal arts institutions are likely to be insulated from any significant cuts, given that there is still enough demand for such degrees to perpetuate these fields in this small community of top-tier universities. However, much of our higher education system is likely to undergo a fundamental reorganization, leading many to become highly specialized in a limited number of studies. This closely resembles a higher education model that has been recently proposed by William Patrick Leonard, known as the “Lean College.” Most colleges will evolve into “ultra-low operating costs institutions” that “will be guided by a narrowly-focused mission statement.” Under the philosophy that “consumers need a no-frills university,” colleges will be incentivized to “abandon the generic view-book pap that pervades the traditional higher education sectors. Rather, it will work with employers and graduate/professional schools in isolating the core knowledge and soft skills” that are necessary to compete in the job market. This not only eliminates many of the unnecessary costs that continue to increase college prices at a rapid pace, but it fosters a system that promotes the long term financial security of the student and leads to a return on taxpayer subsidies to the higher education system.
Although I feel that the general ideas offered in Breaking Point can lead us to a sustainable and prosperous system of higher education, some critics claim that my proposals are too market-oriented, citing that college is a place to create well-rounded individuals and preserve the cultural arts. To the dismay of my critics, I agree that society benefits from the arts and can speak to this point on well-roundedness from personal experience. My own cultural enrichment ranges from walking along the Freedom Trail in the historical districts of Boston, to viewing masterpieces of painting and sculpture in Washington D.C.’s National Art Gallery, to riding the trademark trollies along San Francisco’s Market Street Railway. Throughout most of my life, I have been involved in the performing arts, whether as a musician on stage or as an audience member at venues ranging from Carnegie Hall to Eastman Theatre. I am second to no one in the amount of value that I place in the arts and the cultural enrichment that comes with them.
However, there is an important part to my story that many of my critics ignore. If my parents had not earned degrees that led them to well-paying jobs as professionals in their fields, they could have afforded neither the time nor money that enabled us to experience the cultural arts in the ways that we did. Under the status quo, millions of college graduates will never have the opportunities that I had as a child, even decades after their entrance into the job market. This is largely the consequence of systemic underemployment and crushing student loan bills. Shackled to their student debt obligations and limited in their job opportunities and earnings potential with degrees that are not widely valued by the job market, countless individuals will never be able to afford, enjoy, or invest in the arts. From my research, I have come to understand that the best way to support the arts is to grow the middle class. This comes from the very basic premise that no matter what we do, the arts have and always will be a privilege. As the number of people who have enough money and time to spend on the arts grows, the better off the arts will be. Saddling students with degrees that are not valued by the job market and burying them under a mountain of student loan bills is detrimental to such an end. Only with the revival of our middle class through comprehensive higher education reform, can we ensure the health and long term security of the arts.
Ultimately, what is best for the economy is best for the arts. My research suggests that the quickest way to restore stability to our economy is to ensure the sustainability of our higher education system. To do so, tough decisions will have to be made. However, our road to a sustainable system of higher education is imperative to both the preservation of the arts and the financial security of our students. By working to safeguard both of these interests simultaneously, we will ultimately ensure the lasting prosperity of this nation.
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