Curbing college costs & student debt
By Peter Morici
Published: Saturday, Jan. 19, 2013, 9:00 p.m.
Universities charge too much, deliver too little and channel too many students into a lifetime of debt. Genuine reform must be brought to bear to curb those abuses.
College graduates still earn more and are unemployed less often. But with so many recent grads serving cappuccino and treading water in unpaid internships, a four-year diploma is not quite the solid investment it once was — and should not be so often viewed as a necessity by society.
Since 2007-08, the average pay for recent four-year graduates has fallen nearly 5 percent, while the average earnings of a typical American worker, as tracked by the Bureau of Labor Statistics, are up 10 percent.
Graduates in high-demand disciplines can still earn good starting salaries and expect rising earnings as experience grows. But in many majors, they increasingly face market conditions that have bedeviled skilled-manufacturing workers for decades: too many folks chasing too few jobs.
Over several decades, Americans have become convinced that too many jobs require college education. But fast-food restaurant managers and cellphone salespeople don't need an education in English, math and politics beyond a decent high school education.
And universities, enjoying such a captive market, have overexpanded, acceded to faculty demands for light teaching loads, layered on costly bureaucracies and unconscionably raised the cost of college beyond what it frequently is worth to students and society as a whole.
Outstanding student loans now exceed $1 trillion, but most significantly one in six is in default, and that ratio likely will grow.
Unlike loans taken to capitalize a small business or buy a house, student loans are not dischargeable in bankruptcy, and stories abound of folks in their 40s and 50s still saddled with onerous debt.
University presidents are like the bankers who wrote the bad mortgages during the housing boom — they admit students, facilitate lots of borrowing and pay themselves well but don't have much skin in the game.
For their students to qualify for both government-sponsored and private bank loans, universities should be compelled to provide audited information about the likely time required and cost of obtaining degrees in various majors, salaries graduates earn in the first years after graduation and the resulting repayment burdens. Like CEOs of corporations who must now attest to the accuracy of financial statements, university presidents should be required to do the same and be subject to similar legal penalties for failure.
Student loans should be dischargeable in bankruptcy when these investments don't work out. Otherwise, we will continue to create Dickens-era debtor lives for many victims of the higher education system. And universities should be on the hook for a significant share of defaulted loans — perhaps 25 percent to 50 percent.
Well-run institutions would then get their costs and tuitions under control and become transparent about the prospects of students finding decent-paying jobs after majoring in art history vs. mechanical engineering.
Schools that take students' money and deliver too little would go the way of Circuit City and the St. Louis Browns, and they will stop blighting the futures of young people.
Peter Morici is a professor at the Smith School of Business, University of Maryland, and former chief economist at the U.S. International Trade Commission.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Garden Q&A: Firecracker vine OK for trellis?
- Three ejected after Pirates, Brewers brawl
- Starkey: Penguins’ arrogance astounding
- Egg decorating turns to fight, charges in Brookline, police say
- Cool chemistry: Programs at Springdale library take inspiration from late science professor
- Plum man revels in Keystone hall of fame induction
- Six NA students finalists in Musical Kids competition
- Choral concerts planned in Dawson church
- Bridge work planned for Route 68 in Brady’s Bend
- Hillside repairs to cost $35K more than expected
- Photo Gallery: Marshall Township Easter egg hunt