Time to Fix Higher Education

Article excerpt

The cost of college is a significant burden on Americans today.

College student loan debt now surpasses $1 trillion, more than Americans owe on their credit cards and cars. The average college senior owes more than $25,000. Given that the unemployment rate among recent college graduates is at a record high of 9.1 percent, many new grads will have a tough time paying that back. Unsurprisingly, student loan default rates have been rising, from 7 percent in 2009 to nearly 9 percent in 2010. This translates into more than 320,000 defaults out of nearly 4 million student borrowers.

All this is bad news for both individual students and the national economy. Sadly, recent laws to make college affordable including the establishment of the U.S. government as the sole student loan provider and the 3.4 percent interest rate freeze ignore the real causes of rising college costs. In fact, because they allow colleges to capture these additional subsidies (rather than pass them on to students), these laws may actually make the problem worse.

Tuition generally increases at about twice the rate of inflation, yet most of this extra money doesnt trickle down to students. A recent analysis by Jay P. Greene indicates that over a 15-year period, postsecondary administration grew more than twice as much as instructional staff. This is significant, since dozens of midlevel and seniorlevel administrative positions command six-figure salaries, compared with the relative handful of faculty positions that do.

All this extra money being poured into colleges isnt leading to better outcomes for students. Six-year college completion rates at public four-year institutions have remained just below 55 percent for a decade. The four-year rate has been stuck around 30 percent.

Americans need a new strategy for making college less costly and more valuable for students. Instead of chasing costs upward with rising federal subsidies, policymakers should focus on reforms that will give potential students more information about the real benefits and costs of pursuing a degree. They should require educational institutions to become more efficient at providing students the skills they need for careers after college. …