Guest AuthorLest the public be confused with the rhetoric about higher education costs, it’s wise to take a closer look at some costs and why they are going up.
The news media attention about student loans also deserves a closer look. Some sensational stories are about exceptional cases, not the experience of most students.
There is a blatant amount of, dare I say, hypocrisy and doublespeak out of Washington D.C., when it comes to higher education. On the one hand, American higher education is lauded for providing a future that holds promise for those who pursue degrees. We hear how great the American higher education system is, and how productive we are in creating opportunities while also engaging in research and innovation. One might conclude that our universities are the envy of the world.
On the other hand, some political leaders and some in the news media describe a grim picture. Stories with headlines such as, “Is College Really Worth It?” or “College Graduates Find Jobs as Baristas” grab attention. These tend to feature the outliers, finding that one person who majored in Near Eastern political philosophy, then pursued a master’s in the anthropology of the indigenous tribes of sub-Saharan Africa. He got these degrees while living in Manhattan, N.Y., in a spacious loft and incurring $300,000 in loan debt. Then he couldn’t get a job.
Of course, the institutions granting the degrees get blamed for the loans, even while the lender is, more often than not, the federal government.
Hamilton Place Strategies just completed a study contrasting average student loans with about 100 of the most recent news stories about students with loans. I am shocked I tell ya’, shocked, to read that the average debt for graduates with loans (keeping in mind that about 40 percent of those receiving baccalaureate degrees graduate without debt) is $29,400. The average loan balance for students cited in news stories about student debt was $85,400.
The reality is that most graduates entering the workforce have made a manageable investment in their future. It is roughly the equivalent of buying a Ford Focus, fully equipped, but knowing that the value of the degree will grow with time. They have made the decision to incur debt so that in the future they have greater access to opportunities that come with holding a college diploma.
Families understand the value of education, too, which is why, once upon a time when homes across America had equity, people borrowed against their home values to support their children pursuing their dreams. The recession and housing value crash largely removed home equity as an option. Then Washington, D.C., decided that private lenders were problematic in the market so they took actions that left Uncle Sam as the primary lender in education now. The largest purveyor of student loans is now the federal government, a government that profits handsomely from this venture, with some estimating they earn over $60 billion a year off of student interest payments alone. Keep in mind that the interest rates, in part, doubled recently, moving for many loans from 3.4 percent to 6.8 percent. Thirty-year home loans hover around 4 percent and car loans are even lower. Students borrowing to try to move ahead in life can pay double in interest. That is what serves as positive public policy from our federal government these days.
I have also written before about the high costs of federal regulations on higher education. Schools must hire people to comply with the regulations and doing so drives up costs, for which students borrow. Yet it is the institution that is criticized for rising costs. As an example, the U.S. Department of Education announced a list of universities targeted for review under Title IX. Florida State University was among them. Subsequently, FSU announced that it was hiring three people to help the school comply with Title IX requirements. These are costs not being spent in the classroom or the laboratory, but in administrative and service functions. Collectively these kinds of positions, all required to assist universities in regulatory compliance issues, drive up costs. They are not free, however worthy, yet they are never mentioned when an institution, public or private, gets criticized for costs.
We all have heard the adage, “There is no such thing as a free lunch.” It is equally relevant that a quality education is not free and it becomes more costly to students and families forced to borrow with every new federal law or regulation. There is always more to any story than first glance. Costs are relative and driven by many factors, yet the value of education is transcendent.
Dr. Ed H. Moore resides in Tallahassee and continues to search for truth, justice and the American way. Column courtesy of Context Florida.
