(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab. Click on the Index Topic Name at the beginning of each post to see more posts on that topic on PC or Laptop.)
Public colleges and universities have been the foundation of our society opening new opportunities for better lives, careers and mobility for students at all income levels. Yet, for low income students the dream of a higher education degree and a better job is fading fast. A non- profit research organization, New America, just released a report noting how low income students continue to struggle with the rising cost of education. It is true that the cost of higher education for all students has accelerated, in particular since the Great Recession. However, for lower income families the price increases have been especially acute.
Sources: New America, U.S. Department of Education – 10/31/18
The cost for low income students rose by at least $1000 in four years from the 2010 – 2011 to 2015-2016 periods for about 50 % of the public universities in the study. The report further notes a disturbing trend:
“The number of public universities that charged in-state freshmen with family incomes of $30,000 or less at an average net price under $10,000, has fallen from 361, or 62 percent of the schools examined, to 279 or 48 percent.”
Students at all income levels now carry a debt load of over $1.5 trillion dollars – the highest debt load recorded over the past twenty years. This debt is keeping students from being hired if they have a poor credit record, purchasing a home or moving out from their parents’ home to an apartment. New household formations are continuing to decline over the past 5 years. Unlocking the potential of our students to ensure they can begin their careers and families with a good financial start is crucial to the long term economic growth of our country and the happiness of our young people.
We believe that education in the U.S. is actually the Fifth Estate after The Press, and the three major branches of federal government. We noted our concern about access to education in June post, “Funding Education to Common Good Levels Will Increase Prosperity and Reduce Civil Conflict.” The National Center for Children in Poverty estimates that 40 % of all children aged 12 – 17 years old in the U.S. or 9.7 million are living in low income families. This is a huge number of our young people not reaching their full potential while we miss their contributions and boost to our economy.
In that post we observed funding needs to be at magnitudes greater than today to make up for almost a 50 % reduction in state funding since 1975:
“The key factor in how well education is building the common good across all income levels is funding. Since 1975 funding by state and local governments for higher education has dropped from 60.3 % to to 34.1 % in 2010. The last eight years has seen this figure continue to drop close to 24 %. Public colleges and universities have coped with the unprecedented drop in state and local funding by raising tuition year after year to the point where students are now carrying the highest level of student loan debt ever at $1.5 trillion. Families can’t keep up with the tuition increases.”
We saw federal funding as necessary to balance the inequity across states:
“Total education US federal funding accounts for only 14 % of education spending vs OECD countries where national general funding is allocated across regions at 54 %. “
Or New America recommends that all federal higher education programs be combined together to support families and students based on a families’ ability to pay for their child’s higher education:
“At New America, we have also offered a much more ambitious approach. In our 2016 report Starting from Scratch, we proposed replacing the country’s federal financial aid system—Pell Grants, federal loans, and higher education tax credits—with a new federal-state partnership program that would eliminate unmet financial need for all students. Instead, the price students would pay would be limited to their Expected Family Contribution, the amount the government determines a household can afford to contribute toward the education of their children. Federal, state, and institutional funds would make up the difference between students’ EFC and the net price at the participating institution. “
We need high quality alternatives to a college education as well. A study by the National Center for Education Statistics showed that 46 % of low income students did not attend college, many for financial reasons but also due to lack of interest or to start working. From all income levels many high school graduates are not interested in a traditional college education, we need an empowering and certified apprenticeship program along the model that Germany has established to better meet the needs of corporations and give all non-college graduates opportunities for a well-paying job and career.
We as a society need to take responsibility for providing an education framework, access and funding so that all citizens can learn, progress and contribute fully to our society. Certainly this is the essence of a democracy our founding fathers envisioned of a well-educated citizenry building our country and economy that works for all.