Lots of students, costly education, and huge debt – California may be creating yet another model for the nation

          We recently learned that student debt in the United States has surpassed $1 trillion. What is a trillion anyway? Well, if you don’t know, it’s the same as a million people each owing a million dollars, or a billion people each owing a thousand bucks. In short, the people who owe this enormous sum are folks who attended an institution of “higher learning” (more on the quotes in a moment) and are now stuck with the bill.

          How did this happen? Regular readers of this blog know that we have discussed one major reason in our posts and in our book Enough of Us. If parents have kids and hope that their kids will one day go to college, they have to start planning for that eventuality. It makes our blood boil when parents of modest means don’t scrimp and save from the moment they become aware of the pregnancy. No smart phones, cable TV, or expensive gadgets. Forget the plans for upscale vacations or cars for the teens. That money belongs to the college-bound.

          We live in the Bay Area — San Jose, to be exact. While the state is in terrible financial condition, it’s still a great place to live (ah, the weather!). But many educators, experts, and other Golden State residents worry about the future of California’s two great state university systems.

          The education powers-that-be, including the governor and state legislature, are working desperately on higher education problems. The Cal Grant program helps low- and middle-income students pay for college. The state has formulated performance standards by which schools are eligible to receive funds that students borrow only if a quarter of the students they graduate are able to pay off their loans in a reasonable amount of time.  This standard is an indicator that the schools are graduating young adults with usable skills that lead to jobs.

          Unfortunately, not all so-called institutions of higher learning are what they purport to be. There is a spate of schools that promise advanced education and good jobs in fields where openings go begging. They advertise heavily on the Internet and TV. The problem is that they frequently draw their potential students from families that can’t afford to pay the tuition. Those students usually have to borrow from a variety of government-sponsored sources. According to California Assemblymember Bob Wieckowski, about 90 percent of these schools’ funding comes from Stafford Loans, Pell Grants, G.I. Bill Grants, and the state’s Cal Grants.

University of Phoenix Spokane Campus

          The companies that run these schools netted $3.5 billion in 2009 and paid executive salaries of $41 million. Wall Street ain’t the only place where the governments get played for suckers. So while the execs rake in the bucks, most of the students gain few useful skills, have trouble – if any luck at all – finding relevant jobs, and are now burdened with heavy debt. As Wieckowski puts it, “We can’t continue to shovel taxpayer money into shareholder pockets, instead of adequately preparing students for their careers.”

California Assemblymember

California Member of the Assembly Bob Wieckowski

          When Assemblyman Wieckowski introduced legislation this year requiring the schools to meet more stringent criteria in order to receive state grants,  the schools stepped up their lobbying efforts and managed to kill the bill in committee. The legislature never even got to vote on it. However, a coalition of reformers was able to make changes in the budget process when they cut grants for high-priced schools, raised graduation-rate requirements, “and cracked down on schools with high loan default rates.”

          In the meantime, both California State University and University of California systems, as well as the state’s community colleges, need more bucks. Perhaps with the reforms, there will be more state and federal financial benefits available.

          This brings us back to the opening dilemma. Why aren’t parents providing for their kids’ higher education? If it’s because they can’t afford the costs, how can they afford the kids? This raises questions like:

  • Did they have more children than they could provide for?
  • Did they overspend on indulgences while the kids were growing up?
  • Would it be more realistic for their kids to attend junior colleges and after graduating look for higher education opportunities?
  • Should the kids work part time to help foot the bill while attending school?

          And finally, when people who can afford to pay their share of taxes get significant tax deductions and a free K-12 scholarship for each kid, are we encouraging a system that is forever going to have trouble funding higher education? We go into this in some detail in Enough of Us. We need to consider whether or not we can afford to lower taxes for those families that will be asking the most help funding their children’s higher education.

          Think about it and weigh in with your opinion.

Comments

  1. Christopher Wachlin says:

    Great questions. And for that matter, great article. Thanks for writing about this.

  2. Dinamani will wait for opportunity to blame Govt soochls and teachers at the drop of hat.But it will not talk about lack of toilets in Govt soochls.The so called elite private soochls where they are minting money by making swimming compulsory even for a third std student,are also not having enough toilets for girl students.Parents who give blank cheques to these soochls are also not bothered.

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