today 40 million americans are indebtedfor their passage to the new economy. too poor to pay their way through college, they now owe lendersmore than one trillion us dollars. they do find what jobs they can get to pay off a debtthat is secured on their person. in america, even a bankrupt gamblergets a second chance. but it is nearly impossible for an american to get dischargedtheir student loan debts.
once upon a time in america, going to college did not meangraduating with debt. my friend paul's fathergraduated from colorado state university on the gi bill. for his generation, higher education was free or almost free, because it was thought ofas a public good. not anymore. when paul also graduatedfrom colorado state university,
he paid for his english degreeby working part-time. 30 years ago, higher education tuitionwas affordable, reasonable, and what debts you accumulated,you paid off by graduation date. paul's daughter followed in his footsteps, but with one difference: when she graduated five years ago, it was with a whopping debt. students like kate have to take on a loan
because the cost of higher educationhas become unaffordable for many if not most american families. but so what? getting into debt to buyan expensive education is not all bad if you could pay it off with the increased incomethat you earned from it. but that's where the rubbermeets the road. even a college gradearned 10 percent more in 2001 than she did in 2013.
so ... tuition costs up, public funding down, family incomes diminished, personal incomes weak. is it any wonder that morethan a quarter of those who must cannot make their student loan payments? the worst of timescan be the best of times, because certain truths flash upin ways that you can't ignore.
i want to speak of three of them today. 1.2 trillion dollars of debts for diplomas make it abundantly obvious that higher educationis a consumer product you can buy. all of us talk about educationjust as the economists do now, as an investment that you maketo improve the human stock by training them for work. as an investment you maketo sort and classify people so that employerscan hire them more easily.
the u.s. news & world reportranks colleges just as the consumer reportrates washing machines. the language is peppered with barbarisms. teachers are called "service providers," students are called "consumers." sociology and shakespeareand soccer and science, all of these are "content." student debt is profitable. only not on you.
your debt fattens the profitof the student loan industry. the two 800-pound gorillas of which -- sallie mae and navient -- posted last year a combined profitof 1.2 billion dollars. and just like home mortgages, student loans can be bundledand packaged and sliced and diced, and sold on wall street. and colleges and universities that invest in these securitized loans
profit twice. once from your tuition, and then again from the interest on debt. with all that money to be made, are we surprised that somein the higher education business have begun to engage in false advertising, in bait and switch ... in exploiting the very ignorancethat they pretend to educate? third:
diplomas are a brand. many years ago my teacher wrote, "when students are treated as consumers, they're made prisonersof addiction and envy." just as consumers can be sold and resoldupgraded versions of an iphone, so also people can be soldmore and more education. college is the new high school, we already say that. but why stop there?
people can be upsoldon certifications and recertifications, master's degrees, doctoral degrees. higher education is also marketedas a status object. buy a degree, much like you do a lexusof a louis vuitton bag, to distinguish yourself from others. so you can be the objectof envy of others. diplomas are a brand. but these truths are often timeshidden by a very noisy sales pitch.
there is not a day that goes by without some policy guyon television telling us, "a college degree is absolutely essential to get on that up escalatorto a middle-class life." and the usual evidence offeredis the college premium: a college grad who makes on average56 percent more than a high school grad. let's look at that number more carefully, because on the face of it, it seems to belie the stories we all hear
about college gradsworking as baristas and cashiers. of 100 people who enrollin any form of post-secondary education, 45 do not complete it in a timely fashion, for a number of reasons,including financial. of the 55 that do graduate, two will remain unemployed, and another 18 are underemployed. so, college grads earn morethan high school grads, but does it pay for the exorbitant tuition
and the lost wages while at college? now even economists admit going to college pays offfor only those who complete it. but that's only because high school wageshave been cut to the bone, for decades now. for decades, workers with a high school degree have been denied a fair shareof what they have produced. and had they received as they should have,
then going to college would have beena bad investment for many. college premium? i think it's a high school discount. two out of three people who enrollare not going to find an adequate job. and the future, for them,doesn't look particularly promising -- in fact, it's downright bleak. and it is they who are going to suffer the most punishing forms of student debt. and it is they,
curiously and sadly, who are marketed most loudlyabout this college premium thing. that's not just cynical marketing, that's cruel. so what do we do? what if students and parents treatedhigher education as a consumer product? everybody else seems to. then, like any other consumer product, you would demand to knowwhat you're paying for.
when you buy medicines, you get a list of side effects. when you buy a higher educational product, you should have a warning label that allows consumers to choose, make informed choices. when you buy a car, it tells you how manymiles per gallon to expect. who knows what to expect
from a degree say, in canadian studies. there is such a thing, by the way. what if there was an app for that? one that linked up the cost of a majorto the expected income. let's call it income-based tuition or ibt. one of you make this. (laughter) discover your reality. there are three advantages,
three benefits to income-based tuition. any user can figure out how much money he or she will makefrom a given college and major. such informed users are unlikely to fall victimto the huckster's ploy, to the sales pitch. but also to choose wisely. why would anybody pay more for college than let's say, 15 percentof the additional income they earn?
there's a second benefitto income-based tuition. by tying the cost to the income, college administrators would be forcedto manage costs better, to find innovative ways to do so. for instance, all of you students here pay roughlythe same tuition for every major. that is manifestly unfair,and should change. an engineering student uses more resources and facilities and labs and faculty
than a philosophy student. but the philosophy student,as a consequence, is subsidizing the engineering student. who then, by the way,goes on and earns more money. why should two peoplebuy the same product, pay the same, but one person receivehalf or a third of the service. in fact, college grads, some majors, pay 25 percent of their incomeservicing their student debt,
while others pay five percent. that kind if inequity would endwhen majors are priced more correctly. now of course, all this data -- and one of you is going to do this, right? all this data has to be well designed, maybe audited by public accounting firms to avoid statistical lies. we know about statistics, right? but be that as it may,
the third and biggest benefitof income-based tuition, is it would free americans from the fearand the fact of financial ruin because they bought a defective product. perhaps, in time, young and old americans may rediscover, as the gentleman said earlier, their curiosity, their love of learning -- begin to study what they love, love what they study,
follow their passion ... getting stimulated by their intelligence, follow paths of inquirythat they really want to. after all, it was eric and kevin, two years ago, just exactly these kinds of young men, who prompted me and worked with me, and still do, in the study of indebtedstudents in america.
thank you for your attention. (applause)
No comments:
Post a Comment