Debt and decadence
Shawn Klocek
Issue date: 2/4/10 Section: Opinions
Last update: 2/4/10 at 12:22 AM EST
Everybody knows the drill: when the economy sours, businesses start making cuts. Trips are shortened, small costs reined in. Unfortunately, the best way for companies to save money is to trim back their payrolls and lay off employees.
Thus the 10-percent unemployment rate that currently promises college graduates tough job searches. Mix in the $23,000 in debt that the Project on Student Debt estimates the average student graduates with, and you have a large demographic with little incentive to take financial risks. In fact, record numbers of students are going back to school hoping that the next few years will bring about some sweeping change in the job market.
We have all heard enough student sob stories to fill anthologies, but I'm not sure we all get the serious, systemic implications that student debt poses for the future economic strength of our country. In our consumer society, strength means spending. And with 10 percent of the population jobless and millions of college graduates seeking to tackle tens of thousands of dollars in debt, it is unlikely we'll see anytime soon the kind of consumption that bolstered the economy in the past.
Logically, the first way to address this problem would be to encourage institutions to make strategic decisions with the goal of lowering costs for students to attend college. Practically, this seems to be the last thing decision makers address.
In his State of the Union address last week, President Barack Obama called education the "best anti-poverty program around." He also proposed a loan repayment system that would only require students to pay 10 percent of their yearly income to their loans, and any outstanding debt would be forgiven after 20 years of repayment, or 10 if the student chooses a career in public service.
"And by the way," Obama said after a round of applause, "it's time for colleges and universities to get serious about cutting their own costs …"
Query: Does lessening the burden of student debt sound pleasant?
Answer: Yes.
Query: Does this solution do anything to offset the problems with college affordability or the emerging college graduates who are financially emasculated?
Answer: No.
Query: Won't the government eventually add onto their own debt significantly by absorbing the unpaid balances of student loans?
Answer: Most likely.
President Obama has consistently sympathized with college students, as his latest ideas show. But the "by the way" statement seems more like a paternal chiding of university practices than a real call for reform.
Sympathizing with and seeking to help financially strained college students is a smart thing to do (and an excellent way to captivate potential voters), but if that help comes only from federal programs, then the solutions will just be band-aids on a very large, very serious issue. Perhaps in light of financial reform, health care reform, an incomplete economic recovery, two wars and plenty of other lofty issues both domestic and international, approaching post-secondary education with real gusto is simply too ambitious. And with the Obama administration forecasting more than a decade of significant federal budget deficits, another couple of drops in the well might seem less than threatening.
But statistics show that an overhaul is desperately needed. In the last census in 2004, the U.S. Census Bureau found that the average cost of attending a public university had risen 87 percent since 1990. Private colleges saw a 93 percent increase.
Not surprisingly, debt has steadily increased since the census report. According to the Project on Student Debt, 1.4 million college students graduate with debt in 2008, a 27 percent increase from the 1.1 million who graduated with debt in 2004. Likewise, the amount of debt increased 24 percent to $23,000, an average that takes into account students at public, private nonprofit universities and private for-profit universities. For students at private nonprofit universities, the average was $27,650.
No Duquesne University student is a stranger to high tuition rates. But even looking back four years, it is hard to believe the change. In the 2004-2005 academic year, basic tuition was $20,360. Now, it is nearly 17 percent more expensive at $24,385.
Of course, it could be worse. In fact, the 3.9 percent tuition increase Duquesne implemented in the 2009-2010 year is the smallest in 30 years. Not surprisingly, no one is cheering. But no one is rallying, either. Students have become conditioned to accept ever-increasing tuition rates and a couple decades of debt as a part of life.
To revisit an earlier point - when businesses need money, they cut costs; when colleges need money, they bring in more students who take out additional loans.
Only an ardent disciple of Ayn Rand would believe that the value of knowledge has the potential to increase 93 percent in 14 years. Only an absolute idiot would say that the increase is relative to inflation. Only a president with too many issues to juggle would think forgiving debt after 20 years is a way out of this mess.
Luckily, it seems as though at least one school realizes the need to cut costs. With putting the license to a radio station up for sale, cutting back on a tuition remission policy, ending a partnership with a local college preparatory school and axing four sports programs from their athletics department, Duquesne should have at least a little cash lying around.
Who wants to bet students won't see any of it?
Shawn Klocek is a senior English and journalism major and can be reached at kloceks@duq.edu
Thus the 10-percent unemployment rate that currently promises college graduates tough job searches. Mix in the $23,000 in debt that the Project on Student Debt estimates the average student graduates with, and you have a large demographic with little incentive to take financial risks. In fact, record numbers of students are going back to school hoping that the next few years will bring about some sweeping change in the job market.
We have all heard enough student sob stories to fill anthologies, but I'm not sure we all get the serious, systemic implications that student debt poses for the future economic strength of our country. In our consumer society, strength means spending. And with 10 percent of the population jobless and millions of college graduates seeking to tackle tens of thousands of dollars in debt, it is unlikely we'll see anytime soon the kind of consumption that bolstered the economy in the past.
Logically, the first way to address this problem would be to encourage institutions to make strategic decisions with the goal of lowering costs for students to attend college. Practically, this seems to be the last thing decision makers address.
In his State of the Union address last week, President Barack Obama called education the "best anti-poverty program around." He also proposed a loan repayment system that would only require students to pay 10 percent of their yearly income to their loans, and any outstanding debt would be forgiven after 20 years of repayment, or 10 if the student chooses a career in public service.
"And by the way," Obama said after a round of applause, "it's time for colleges and universities to get serious about cutting their own costs …"
Query: Does lessening the burden of student debt sound pleasant?
Answer: Yes.
Query: Does this solution do anything to offset the problems with college affordability or the emerging college graduates who are financially emasculated?
Answer: No.
Query: Won't the government eventually add onto their own debt significantly by absorbing the unpaid balances of student loans?
Answer: Most likely.
President Obama has consistently sympathized with college students, as his latest ideas show. But the "by the way" statement seems more like a paternal chiding of university practices than a real call for reform.
Sympathizing with and seeking to help financially strained college students is a smart thing to do (and an excellent way to captivate potential voters), but if that help comes only from federal programs, then the solutions will just be band-aids on a very large, very serious issue. Perhaps in light of financial reform, health care reform, an incomplete economic recovery, two wars and plenty of other lofty issues both domestic and international, approaching post-secondary education with real gusto is simply too ambitious. And with the Obama administration forecasting more than a decade of significant federal budget deficits, another couple of drops in the well might seem less than threatening.
But statistics show that an overhaul is desperately needed. In the last census in 2004, the U.S. Census Bureau found that the average cost of attending a public university had risen 87 percent since 1990. Private colleges saw a 93 percent increase.
Not surprisingly, debt has steadily increased since the census report. According to the Project on Student Debt, 1.4 million college students graduate with debt in 2008, a 27 percent increase from the 1.1 million who graduated with debt in 2004. Likewise, the amount of debt increased 24 percent to $23,000, an average that takes into account students at public, private nonprofit universities and private for-profit universities. For students at private nonprofit universities, the average was $27,650.
No Duquesne University student is a stranger to high tuition rates. But even looking back four years, it is hard to believe the change. In the 2004-2005 academic year, basic tuition was $20,360. Now, it is nearly 17 percent more expensive at $24,385.
Of course, it could be worse. In fact, the 3.9 percent tuition increase Duquesne implemented in the 2009-2010 year is the smallest in 30 years. Not surprisingly, no one is cheering. But no one is rallying, either. Students have become conditioned to accept ever-increasing tuition rates and a couple decades of debt as a part of life.
To revisit an earlier point - when businesses need money, they cut costs; when colleges need money, they bring in more students who take out additional loans.
Only an ardent disciple of Ayn Rand would believe that the value of knowledge has the potential to increase 93 percent in 14 years. Only an absolute idiot would say that the increase is relative to inflation. Only a president with too many issues to juggle would think forgiving debt after 20 years is a way out of this mess.
Luckily, it seems as though at least one school realizes the need to cut costs. With putting the license to a radio station up for sale, cutting back on a tuition remission policy, ending a partnership with a local college preparatory school and axing four sports programs from their athletics department, Duquesne should have at least a little cash lying around.
Who wants to bet students won't see any of it?
Shawn Klocek is a senior English and journalism major and can be reached at kloceks@duq.edu
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