For a couple of weeks, the narrative of Occupy Wall Street coverage was that, beyond the opportunity to decry greed, no one could be clear what the protesters wanted. Then, of course, a list appeared.
Most of the demands were ridiculous –living wage everywhere, equal rights amendments for gays and women, $1 trillion for infrastructure, another $1 trillion for environmental projects, etc., ad absurdum. But one struck me as curious – that we forgive all college loans.
I don’t agree we should forgive college loans, but I do believe it’s time to rethink the whole premise of government aid and college.
College loans entrap young adults in thousands of dollars of debt from which there is no escape. Just as recent grads are trying to cut the cord from their parents and start their own lives, they find themselves crushed under payments that total hundreds or even thousands of dollars per month.
Their first jobs out of college usually are their lowest-paying, but many of their expenses – car note, car insurance, deposits on apartments, etc. – are the highest they’ll ever face. The result – years of the frustration of hand-to-mouth existence after earning a degree they were assured was a passport to financial security – has led thousands to Zuccotti Park and elsewhere.
What to do?
A helpful first step would be to phase out college loans. Start with the outright grants and proceed from there to the loan guarantees. End the entire program over a 5-year period or less. Others have suggested it will take as much as 10 years, but five is enough. Five years means nobody who has not signed up to rely on college loans or government grants to fund their higher education will be asked to abandon that plan.
We spend nearly $50 billion in direct federal aid to education in this country, and more than 90 percent of it goes to student grants and college loans. Congress cut the interest rates in 2007, then increased the borrowing limits the following year. Getting out from under those obligations alone could put us hundreds of billions of dollars closer to addressing our budget gap in a decade or less.
Academics who have studied this issue say this could yield a number of benefits.
It would reduce the cost of college. According to a study from the Cato Institute, for every dollar federal aid increased from 1977-2004, tuition at public four-year universities increased 97 cents. Correlation is not causation, but a link that strong is hard to deny.