Knowledge for debt?
As we head towards the celebration of my nation’s birthday, July 4th, two news items just crossed my desk, which seem utterly at odds with the concept of freedom and liberty. First, in its efforts to constrain costs and increase consumer information, the U.S. Department of Education released the latest college costs lists on its College Affordability and Transparency Center. Next, a consulting group released a sobering infographic that analyzes of the parallels between current student lending and mortgage lending crisis of 2008.
According to the U.S. Department of Education, some of America’s elite universities and colleges have net prices reaching nearly $50,000 per year (£29,142). At the same time, student loan debt has exceeded more than $1.1 trillion. According to the Carlisle and Gallagher Consulting Group, student loan delinquency rates have doubled between 2004 and 2014, a curve far steeper than the mortgage crisis of 2008, which brought most of the world’s economies to their knees and ushered in the Great Recession.
Higher education is an expensive business to be sure. Here in the States, governments have reduced their direct contributions to their colleges and universities, effectively shifting the cost burden to students and their families, who borrow increasing as a means of financing education. This at the same time policymakers are decrying the decline in educational attainment rates in the United States.
But America is not alone. Britain started allowing universities to charge tuition fees in 1998, and then in 2004, allowed institutions to more than double those fees from £1,000 to £3,000. Despite contentious debate and student protests, the government to date has allowed fees to increase as high as £9,000. According to the Government’s Student Loans Company, outstanding student loan debt in the U.K. now totals £62.2 billion. So if my math is correct, America’s student loan debt equals $3,448 (£2016) per person, and Britain’s £980 ($1,680).
Clearly, both the U.S. and U.K. are committed to maintaining an educated citizenry. What’s troubling is the increasingly reliance on debt to finance education. It is the next mortgage crisis in waiting, and student loan debt could threaten our economies just as overly liberal mortgages did in 2008. This is because forcing students to borrow increasingly to pay for college or university is akin to floating capital to those with limited incomes and little to no equity.
If the goal is to invest in our people through higher education, are we constraining liberty and freedom by heaping debt on the next generation of problem-solvers, innovators, public servants, etc.? It seems terribly ironic that on the eve of the 238th Anniversary of American Independence we should recall the third American President Thomas Jefferson’s “an educated citizenry is a vital requisite for our survival as a free people,” and wonder how that might be possible in the future. If the cost of college and university education continues to increase and students and families more reliant upon borrowing, freedom surely must yield to constrained economic and occupational choices. That’s a price neither the U.S. nor Britain can afford to pay.
J. Noah Brown is the president and CEO of the Association of Community College Trustees and the author of First in the World: Community Colleges and America’s Future. He is based in Washington, D.C.