Student loan forgiveness and the cost of higher education. (Opinion)

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Pedro Noguera, the dean of the Rossier School of Education at the University of Southern California, and I have a podcast (Common Ground: Conversations on Schooling) in which we dig into our disagreements and seek to identify common ground on some of the thorniest issues in education. I thought readers might enjoy reading excerpts from these conversations from time to time. Recently, Pedro and I had a conversation about Biden’s loan forgiveness plan (currently on hold due to a legal challenge) and the cost and value of higher education.

-grinding wheel

Pedro: So my first reaction to the plan was that it wouldn’t do much. The college loan debt of so many young Americans is so high that 10K is more of a token gesture. But then I talked to people who deal with these loans, and they all said, “It’s a help…a step in the right direction. So, I have mixed feelings. I don’t think loan relief solves the biggest problem, the cost of college, which is rising every year. It’s something we have to deal with, and this plan doesn’t address that. This is a very temporary measure to help people who are currently burdened with university loans. What about the people who will have to take out loans next year? And the year after?

grinding wheel: My feelings are not too mixed. I think that’s misguided. First of all, I totally agree with you on the cost of the college question. What’s particularly frustrating to me is that it sends a signal to future borrowers that they might as well borrow some money, because it might be free in the long run. You’re right that $10,000 for people who might owe large sums isn’t a huge amount to them, but the total cost of this thing is almost half a trillion dollars to American taxpayers, including our children and our grandchildren, who didn’t borrow some of that money. That’s more than double all the COVID relief money provided to K-12 education. That would be enough to double the size of the Pell Grant for decades. And instead, it is given willy-nilly to almost everyone who has borrowed money. I view any government loan program as a handshake between borrower and taxpayer. If people have borrowed money and are unemployed, going through a tough time, or haven’t graduated, well, I understand the merit of targeted help for those in those particular circumstances. . But using a provision of the Post-9/11 HEROES Act, aimed at military families, to give hundreds of billions to people who have borrowed money for law school or whatever, I don’t think that’s responsible or constructive.

Pedro: I want to put it into perspective. We give all kinds of relief to landlords and tax relief to business owners. If you think about who gets government grants of all kinds, a lot of people do. There’s not much to complain about when some of the biggest corporations in the country don’t pay their share of taxes. At the same time, what concerns me the most is that it gives the impression that we are solving the problem, and we are not. The question we need to grapple with is why states have stopped funding their public colleges. If public colleges were cheaper, it might force some of the private colleges to lower their tuition. When I went to college at Brown, it was about $7,000 a year. I ended up in debt of about $5,000 after four years because I had Pell grants and scholarships that covered that. I always thought that was a lot of money. Currently, the cost of an education at Brown is nearly $80,000 per year. And it’s hard to say if you’re getting anything more or better now than when I was a student.

grinding wheel: I hear you. This is a reasonable point. But we already have policies and laws that provide grants for university loans. There is the Pell Grant. There is civil service loan forgiveness and income-based repayment options. Direct loans are already given at a rate above the market rate, since they are provided by the government. And then there is the public funding of public institutions, work-study, etc. So I would say that students and colleges are already getting a lot of public support. And I’m particularly troubled by the idea that taxpayers should give money to these students so that Harvard or Stanford can squat its endowment – ​​that just seems morally wrong. It seems to me that a policy response here is that those deep-pocketed institutions that have a certain size endowment take some of that away from the taxpayers. Washington should clarify that if endowed institutions want to continue to be eligible for federal student loans, research funds, or other aid, they must enter into an agreement with the government under which they must reimburse taxpayers for the money used. for their former students as a condition of continued eligibility. Think of it as a version of what General Motors had to do when taxpayers bailed out GM in 2009, under the Obama administration. This type of arrangement would at least make a distinction for those extremely resource-rich institutions that could have used their endowments to reduce student borrowing — and chose to hoard it instead.

Pedro: I like this. The average amount of debt for a college graduate is $28,000, so $10,000 is a significant amount, which means that many of these people will be able to buy houses, cars and other things that will help them. as well as the economy. So if you think about debt relief this way, it will be a real benefit, even for people who don’t qualify. But if the cost of college continues to rise, many people might say that college isn’t worth it, and that’s not good for this country. We need an educated population.

grinding wheel: You noted that the rise in tuition fees, in some cases, can be partially attributed to the reduction in state aid. But let’s put that aside for now. This is obviously not a factor when it comes to private institutions like Stanford, Oberlin or Yale. What do you think is driving the huge growth in college costs in these places?

Pedro: You know the cost of operations. Including teacher salaries. There are certain academic fields where professors have been able to command very high salaries, including economics, commerce, law, and medicine. At the same time, parents want their kids to be in nice dorms, they want them to have the luxury of middle-class life while they’re in college, and so they expect s pay high tuition, the school will meet their needs. or cravings.

grinding wheel: When we end up asking the government to step in and bail out an industry, we usually say, “Well, let’s make sure this crazy behavior doesn’t continue.” That was certainly the case with GM or the home mortgage lenders in 2009. So it seems to me that we should be saying to colleges, “If you want to be eligible for federal government student tuition assistance, you need to keep tuition under control. We’re not just going to keep writing checks so that 19-year-olds can go into debt without knowing what they’re getting into. In the end, by simply mailing money to adults who have chosen to borrow that money for a BA or to attend graduate school, are we teaching the wrong lesson? Do we teach people that if you complain long enough and loud enough, someone will give you stuff?

Pedro: I don’t think that’s true. You can compare it to health care, where people often find themselves in a lot of debt and even going bankrupt. As you know, I was sick a year ago, and when I saw the cost of some procedures, it was outrageous. Who pays for this? The health insurance company. It’s out of control, and I don’t know what we’re doing to contain the cost of higher education. or health care. But that’s a lot of what’s distorted in this whole economy. We have to understand it because we need health care and we need education. Our society benefits from having well-educated people, but we have to figure out how to do it effectively, like Canada.

This interview has been edited and condensed for clarity.

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