Written by: Amy Auletto
Primary Source: Green & Write – May 2, 2016
As millions of students prepare to graduate from college in the coming weeks, the topic of student loan debt is undoubtedly on the minds of many. The average college graduate in 2015 left school more than $35,000 in debt and took out an average of four loans – up from less than three in 2008. As a nation, we rely heavily on loans to fund post-secondary education. Americans currently owe $1.32 trillion according to the Federal Reserve. And recently, some startling statistics were released by the U.S. Department of Education – 43% of those with student loans have stopped making payments (and in some cases, never started paying in the first place).
Is a Post-Secondary Education Worth It?
Americans owe $1.32 trillion in student loans.
Photo Courtesy of Paul Ritz.
Given the tremendous costs associated with attending college, it is easy to question whether a pursuing post-secondary education is really worth it. While the return on a college degree is not quite as high as it used to be due to rising costs and the recent economic recession, there is evidence that workers can expect to earn back much more than what they spent to attend college. A report released by Georgetown University found that over a lifetime, those with bachelor’s degrees will make approximately $2,268,000 over the course of a lifetime, while this figure is only $1,304,000 for those whose terminal degree is a high school diploma. There is also a positive relationship between college education and health outcomes. College graduates live approximately nine years longer, are less likely to smoke, and maintain healthier weights.
Based on these statistics, it certainly appears as though the cost of college is worth it. However, for some individuals, the pursuit of secondary education may not always make financial sense. For those who start college, take on loan debt, and then fail to finish school, the returns will not be as high. They will have the burden of debt without the benefit of a degree. Those who rely on private loans face unpredictable interest rates, lack consumer protections, and face harsher consequences for missed or late payments. Additionally, for all student loan consumers, failure to make payments can harm credit scores and lead to other financial consequences beyond student loan debt. Finally, 37.4% of college graduates work in positions that only require high school diplomas.
A Call for a Smarter System
We need a better way to pay for post-secondary education. While there are returns to a college degree that outweigh upfront costs, our current system prohibits some individuals from participating at all. There are countless barriers to college attendance that significantly impact low-income students and students of color. Despite financial aid offerings, college is just simply not feasible for some students. High schools attended by underserved students fail to prepare students for success in college and these students often don’t take the necessary steps to be eligible to apply for college. The opportunity cost of attending college plays a role as well. Students may not attend college because they do not want to forego income that may support their families.
There has been an abundance of recent media attention devoted to Sen. Bernie Sanders’ College for All Act and increased conversation around the topic of college accessibility. Many are skeptical about Sanders’ plan to make public colleges and universities tuition-free. While there is concern about how the nation can afford to offer college to all students, the greater issue is that simply offering free tuition does not eliminate the other barriers that low-income students and students of color face. While waiving tuition costs would certainly help, this plan does nothing to address deficient high schools, lacking information about the college application process, and the other opportunity costs associated with attending college.
We know that earning a college degree, despite its exorbitant costs, pays off both financially and in terms of improved quality of life. However, the current funding system isn’t working. The nation is $1.32 trillion in debt and more than 40% of those with loans are failing to make payments. High schools need to offer equitable learning opportunities and guidance through the college application process to all students, regardless of background. Post-secondary institutions need to work harder to ensure that students complete their degree programs and private student loans must be better regulated. College needs to be accessible to all students and the decision to attend should not be one that results in years of debt.
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– See more at: http://edwp.educ.msu.edu/green-and-write/2016/benefits-to-higher-education-come-at-a-steep-price/#sthash.7f64CvBy.dpuf
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