Making my slow way through the joys of rehab, I was pleased to be offered the following guest column from a friend and reader, Doug Marsh.
In a recent New York Times column David Leonhardt pooh-poohed Elizabeth Warren’s ideas about forgiving college debt. Why, he asked, should all taxpayers subsidize someone else’s education when the student gains such earning power?
Answer: Acting to relieve some of the accumulated college debt would stimulate the economy and help maintain the competitiveness of American enterprise. Doing so would accrue to the benefit of all and restore to those now burdened the same economic options I had two generations ago—career choice, walking out of a job that was a bad fit, furnishing my own place in something other than college make-dos, buying a car, getting married when I (and my love) wanted to, buying a home, having a family before the age of 35, actually saving for the future, to cite a few.
The numbers are consequential. Note that 44 million people owe college loans with an average obligation of $38,000; repaying over 20 years at 5% results in a $250/month payment, or $3000/year. Every year. That represents real purchasing power that translates into jobs and taxes.
Leonhardt does not mention how, how much, or why the costs of education have escalated over the years, or how impossible it is for today’s generation—or even that of my own kids in the 1990s—to do what I did: graduate in four years with no debt by working jobs that allowed me to pay nearly 80% of my own way.
Costs for my undergraduate years at a state university in the Midwest 1965-69 totaled less than $7500, all in. That’s about $52,000 in 2019 dollars. Yet today four years at that same university costs $100,000, reflecting increases at double the rate of inflation over 50 years.
Both of my kids earned scholarships, had jobs through semesters and summers, and completed degrees in four years. My wife and I contributed significantly. Yet both had about $15,000 in debt upon graduation. They went on to grad schools, financed by work and loans with a little help from us. Like so many now in their 40s, they still have debt that weighs on their life choices.
A number of news sources this spring project rates of college cost increase for 2019 at greater than 8%, four times the current rate of inflation. That’s unconscionable and unsustainable.
What changed? What drives college costs?
Investment in technology? Sure. Building academic facilities and research capabilities? Sure. Exploding administrative costs? Right. Galloping health care and other benefits costs that face all employers? Undoubtedly. Competition for enrollments necessitating greater marketing expenses, building and maintaining living quarters my generation could only imagine, along with more and better recreation facilities? Lobbying? Yes, yes, yes, and yes. College administration inertia that fails to pare outdated programs or to add new ones with their administrative burdens? That, too. (Ironically, schools have slashed instructional costs, their fundamental “product”—AAUP says more than half of all faculty are adjunct or part-time at lower pay and no benefits.)
Federal policy has expanded eligibility and funds for financial assistance for college significantly over the last 50 years. So there is also something to be said for the argument that easier student access to funds make it easier for colleges and universities to pass along higher costs. Absent the ability to get paid, costs don’t go up as quickly.
Another major driver is that in relative terms state legislatures have dramatically cut funding to post-secondary education since 1980, shifting the burden from all taxpayers to students and fund-raising, mostly to students. In an August, 2017 study, the Center on Budget and Priorities reported state funding for community colleges and state universities was down by $9 billion inflation-adjusted dollars between 2007 and 2017, a period during which cumulative inflation was 18.2%. In contrast, DOL reports that average wages rose by 18% during that period; GDP grew, even with the Great Recession, by 16% during those ten years.
My daughters are fortunate to have gone to college. Indeed, their education is reflected in their earning ability. But going to school wasn’t easy; it required effort and sacrifice and a constant awareness of money. And still they have debt twenty years later.
Society benefits from their skills and learning, as it does from most college grads. Look at the evidence—society bankrolled college for returning GIs from WWII and Korea, an investment that fueled the broadest, greatest gains in economic prosperity in the history of humankind.
It’s in our own best interest to make post-secondary education more affordable. Employers can’t find enough American graduates to fill their high-skill jobs to maintain competitiveness in a world economy. They utilize H-1B visas to fill some of the gap. The Trump administration’s crack down on these is hampering America’s competitiveness. It’s smart to do a better job of “growing our own.”
Conclusions: Relieve some of the burden of college debt. Rein in escalating college costs. Make going to college less financially formidable. The return on investment is enormous.
Doug Marsh is CEO, Organization Dynamics, LLC. Founded 1986. It advises 501(c)(6) and 501(c)(3) nonprofits engaged in community and economic development and related public policy advocacy. He also served as a director of a regional water utility.