To the teacher:
Going to college in the United States has become increasingly expensive, forcing millions of Americans to take out student loans to pay for higher education. But in today's economy, many college graduates are now having trouble paying back these loans.
Internationally, the United States stands out as having the most expensive higher education system in the world. Students in many other advanced industrialized nations go to college for free or almost free.
Would free higher education be possible in America? How did people in other parts of the world win and defend their right to affordable higher education?
This lesson is divided into three student readings. The first reading compares the scope of the present student debt crisis with the past and discusses what has changed. The second reading discusses congressional and presidential proposals for easing student debt, as well as proposals for a system of free higher education. The third reading looks at how other countries have maintained educational systems that are far more affordable for students.
Discussion questions aimed at getting students to think critically about the student debt problem and its possible solutions follow each reading.
Student Reading 1:
Student Debt—A Growing Problem
Stay in school and get good grades so that you can get into college. Go to college so you can get a good job. Get a good job and you will enjoy a life of economic security. For decades, some version of this narrative has been presented to almost all students in American high schools. Yet today, a burgeoning student debt crisis is calling these promises into question.
The cost of college tuition has climbed 130% over the past two decades. Most students must take out loans to afford it. In fact, as of June 10, 2014, the total amount of student loan debt owed by Americans reached an all-time high of $1.2 trillion, according to the Consumer Financial Protection Bureau
. This number has roughly tripled in the past decade. The average debt per borrower has climbed to about $25,000. Meanwhile, as a result of the global economic recession, many college grads haven't found the good jobs they expected after earning their college degree.
The combination of a steadily increasing debt burden with an already unstable economy and unusually high unemployment has resulted in a full-fledged student debt crisis.
This year, students are expected to take out more than $1 trillion in loans. As Heidi Moore of the Guardian
reported on June 9, 2014:
Student-loan debt is the fastest-growing category of debt for consumers... That has caused young adults to face a more difficult "on-ramp to adulthood" that Georgetown researchers called a "failure to launch."...
Student loan payments recently hit a record high compared to disposable income for many families. Student debt made up 63% of the $180 billion gain in total household debt between the end of 2012 and the end of 2013, according to economist Kristin Reynolds of IHS Global Insight.
Many borrowers, overwhelmed by debt, are simply defaulting on their loans. The delinquency rate for student loans is currently about 11%, and has been sharply rising since 2005, according to Bloomberg data.
Obama compared the burden of current students with his when he was younger, when he paid off his undergraduate education at Columbia in a year. "In the 1970s, the 1980s, when you went to college, you didn't anticipate you'd have this massive debt," Obama said.
The growing loan burden also reflects that tuition has grown by more than 250% over the past 30 years at public four-year colleges, treasury secretary Jack Lew is fond of pointing out, compared to a 16% rise in family incomes.
Another factor that has fueled the student debt crisis is that average family incomes have not kept up with the steadily increasing cost of college. As reporter Annalyn Censky wrote for CNN.com
on June 13, 2011:
The crux of the problem: Tuition and fees at public universities, according to the College Board, have surged almost 130% over the last 20 years--while middle class incomes have stagnated.
Tuition: In 1988, the average tuition and fees for a four-year public university rang in at about $2,800, adjusted for inflation. By 2008, that number had climbed about 130% to roughly $6,500 a year--and that doesn't include books or room and board.
Income: If incomes had kept up with surging college costs, the typical American would be earning $77,000 a year. But in reality, it's nowhere near that.
The trend of increasing costs is even more severe at private universities, which in some cases charge more than $50,000 per year.
Twenty years ago, it was conceivable that a student could pay off a large portion of his or her college tuition by working a part-time job while attending school. With current college costs, that is no longer a realistic option.
Nor does financial aid cover the gap for most students. The federal government offers need-based Pell grants that provide students with up to $5,550 in aid. However, conservative members of the House of Representatives have proposed cutting back on these grants as part of their push to reduce the federal budget.
Nobel Prize winning economist Joseph Stiglitz wrote an opinion piece in the New York Times
about how student debt hinders economic growth - which affects all Americans, not just young people. Stiglitz argued:
Student debt also is a drag on the slow recovery that began in 2009. By dampening consumption, it hinders economic growth. It is also holding back recovery in real estate, the sector where the Great Recession started.
It's true that housing prices seem to be on the upswing, but home construction is far from the levels reached in the years before the bubble burst of 2007.
Those with huge debts are likely to be cautious before undertaking the additional burdens of a family. But even when they do, they will find it more difficult to get a mortgage. And if they do, it will be smaller, and the real estate recovery will consequently be weaker. (One study of recent Rutgers University graduates showed that 40 percent had delayed making a major home purchase, and for a quarter, the high level of debt had an effect on household formation or getting further education. Another recent study showed that homeownership among 30-year-olds with a history of student debt fell by more than 10 percentage points during the Great Recession and in its aftermath.)
It's a vicious cycle: lack of demand for housing contributes to a lack of jobs, which contributes to weak household formation, which contributes to a lack of demand for housing.
Some debt-burdened college graduates dub themselves "debt slaves": they fear they'll be paying off debt for decades. They - and many others - are calling on lawmakers to address the growing crisis of student debt.
1. Do students have any questions about the reading? How might they be answered?
2. How is student debt different now than in the past?
3. According to economist Joseph Stiglitz, what impact does student debt have on the wider economy? Why does this issue affect all Americans, not just young people?
4. Do you think it's fair to expect students to make financial sacrifices in exchange for the benefits of higher education? If so, how much sacrifice is reasonable? Explain your position.
The Huffington Post
published a series of blogposts from young people sharing their experiences with debt.
Break students into groups of 4-5. Ask students to read some of the blogposts, and then discuss these questions in their small groups:
What are some of the issues raised about student debt in these blogposts?
Do any of the students' stories relate to experiences among your family and friends?
Does the high cost of college affect your own future plans?
Reconvene the class and ask students to share their reflections on the blogposts or on how student debt and high college costs have affected them or their families and friends.
Student Reading 2:
Debating Solutions to the Student Debt Crisis
Lawmakers and advocates are now debating a variety of proposals to ease student debt burdens in the United States. Earlier in the year, Senator Elizabeth Warren (D-MA) introduced a bill that, if passed, would allow an estimated 25 million people to refinance their student loans at a much lower interest rate, something that would collectively save them millions of dollars. And on June 9, 2014, President Obama signed an executive order that would cap loan repayment for recent students at 10% of the borrower's income.
As reporter Heidi Moore wrote for the Guardian
Calling an education "the single best investment you can make in your future," Obama extended the four-year-old Pay As You Earn initiative, which has lowered monthly payments for student who borrowed federal student loans for the first time between 2008 and 2011.
The program lowered monthly payments to 10% of a borrower's after-tax income. Borrowers who graduated before 2008 or after 2012 had access to another program
, which limits student payments to 15% of income.
Monday's executive order will extend the initiative to anyone with a federal student loan.
It also adds another dimension: forgiveness of student loans. If borrowers make regular payments on the PAYE program, the government will forgive any unpaid portion of their loans after 20 years. Forgiveness comes even sooner for students who decide to take government or nonprofit jobs, who will find themselves released from their loans after 10 years of regular payments.
The Warren and Obama proposals represent moderate responses to the student debt crisis. However, others have argued that more far-reaching solutions are needed.
Civil rights activist Jesse Jackson has joined with other advocates
in arguing that current student debt burdens are akin to indentured servitude. In an op-ed for the Chicago Sun Times
, he wrote:
Historically, America prided itself on its public education. We were first to provide secondary school free for all. With the GI bill, 3 million veterans received tuition-free college or advanced training. For much of the post-war period, great public universities — from City College in New York to the fabled California schools — were free or close to it. Now, as college education becomes ever more necessary, it is becoming ever more unaffordable...
This can't go on. We need fair taxes to generate the income needed to make college affordable for all who merit it. We should put clear limits on the debt burden graduates must bear — and how long they must bear it. ... Sen. Elizabeth Warren suggests students should be given the same interest rate — 0.75 percent — that the Federal Reserves gives the biggest banks (that taxpayers had to bail out).
The only way this will change is if students, parents and indebted graduates make their voices heard. But all of us should demand action. It is unacceptable that the sons and daughters of America's working families must face indentured servitude simply to get the education they need.
Other activists have promoted not just outright debt cancellation, but a system of free higher education. New York University Professor Andrew Ross, who has been a part of movements such as Strike Debt, argued a Huffington Post
Because student debt is non-dischargeable, and there is no statute of limitations on federal loans, it has assumed the air of inescapability. Indeed, many borrowers speak about their student debt as if it were a kind of life sentence...
Elected officials have not been able to provide debt relief... and so people must take debt relief for themselves, by any means necessary, but primarily in the form of economic disobedience.
Importantly, student loan forgiveness, while readily understandable to many, is not the pathway advocated by Strike Debt. "Forgiveness" implies that the debtor has done something wrong -- the notion of forgiveness belongs to the charity, and not the justice, tradition. Besides, even in the event of a mass debt jubilee, the immoral system of debt-financed education would still remain the same -- debt would simply accumulate again. Strike Debt advocates instead for a free system of higher education...
Student activists pushing for free higher education point to the example of other industrialized countries, which ensure a much more affordable university education.
1. Do students have any questions about the reading? How might they be answered?
2. What are some of the proposals that politicians have currently put forward to address the student debt crisis?
3. Activists in campaigns such as strike debt believe that the politicians' initiatives do too little. How do their proposals differ? Do you agree that the proposals currently under consideration don't go far enough?
4. Rev. Jesse Jackson likens student debt to indentured servitude. What do you think of this comparison?
Student Reading 3:
Should Higher Education Be Free? A Global Debate
In many different parts of the world, higher education is far more affordable than in the United States. While it may seem inconceivable to many Americans, free universities have been the norm in numerous industrialized nations.
Average tuition and fees at public colleges and universities in the U.S. was close to $8,400 in 2013-2014 for students studying in their home state and nearly $19,100 for those paying out-of-state tuition, according to data reported to U.S. News in an annual survey. At private colleges, the average sticker price is nearly $30,500
"It is quite unfathomable for most Europeans that you would start your adult life tens of thousands of dollars in debt," says [Karen] Oberle, who researched higher education systems in countries such as the U.K., Hungary, Argentina and Turkmenistan for her book "College Abroad."
"People always seem stunned that the American system even sustains itself under the current conditions," she says.
Even with much lower tuition, European students often still incur some debt to cover the cost of living expenses and books. Nevertheless, their debt burden is far lighter than that of most US students.
Although free universities in the United States might seem unrealistic, it would be within the power of elected officials to enact if there was the political will to do so. According to Jordan Weissman at The Atlantic
magazine, it would cost the United States $62.6 billion dollars per year to make all public institutions free for undergraduates. Weissman argues that most, if not all, of that amount could be covered by redirecting money currently spent on Pell Grants, education-based tax breaks, and work study programs into a more efficient free system.
Even if it required additional spending, the $62 billion dollar figure represents only a small fraction of the money spent by the government in other areas. Currently, the US military budget is at roughly $756 billion per year
, meaning that a 9% cut in defense spending would be sufficient to cover the cost of a free public university system.
What's more, argue advocates, free higher education would provide long-term economic benefits for the country. Ultimately, they say, the cost of providing it would more than pay for itself. A congressional study found that the original GI bill, which provided free college education for veterans returning from WWII, was one of the best investments the U.S. government ever made, returning $7 to the economy for every $1 spent.
The U.S. isn't the only country where people are debating government spending priorities. In the wake of the recent economic crisis, the European Commission, the executive body of the European Union, has mandated steep cuts to public spending to reduce budget deficits. This policy, known as austerity, has put low-cost higher education at risk in many European countries. In response to proposed cuts to university budgets, students in countries including the UK, France, Portugal, Sweden, and Bulgaria have protested austerity measures with marches, walkouts, strikes, and occupations.
In other parts of the world too, people are protesting rising tuition fees. In Chile, a street artist named "Papas Fritas" burned the student debt papers
worth roughly $500 million in protest of for-profit universities that trick students into shouldering excessive loans.
Free higher education is possible in the United States and elsewhere—if citizens demand it.
1. Do students have any questions about the reading? How might they be answered?
2. How does the United States compare with other industrialized countries in terms of funding higher education? What values and priorities do these social policies reflect?
3. According to the reading, systems of free and low-cost higher education in other parts of the world are under attack. Why? How have students responded?
4. Do you think that the U.S. should make public college education free? Why or why not?
5. Do you think that free higher education could become a reality in the United States? What do you think it would take for this to happen?
-- Research assistance provided by Meghna Chandra.