Despite its efforts, the government has failed to protect college students from heavy levels of debt.
For low-income students, it was even worse, as they had difficulty finding a job after graduation to pay their loans, Kevin Carey wrote for The New York Times.
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For many students, efforts by the federal government to make student loans more accessible has made them worse off. Some take on loans but don’t graduate, which compounds the problem.
As Carey noted:
The push to make college accessible to all students has pushed students toward less-reputable schools such as for-profit schools. In 2012, 48 percent of students borrowed more than $40,000, compared to 12 percent at public colleges and 20 percent at private, non-profit colleges. The accumulated debt, with a less-respected degree, dims future career prospects for those students.
Colleges do not face penalties for accepting loan money from students who later default. If the cohort default rate for the college’s graduates gets too high over a certain time period, they (and thus their students) can be shut out from the financial aid system, but the profits or funding they received is unaffected.
Some proposals look to correct that and make colleges financially accountable, but it could unfairly harm community colleges.
As policymakers rethink the role of student loans and federal funding in higher education, it’s imperative to rethink the role of higher education in society. The “college premium,” the wage gap between graduates and non-graduates, shows that college graduates earn more. However, that is an average. Prospective students should think on the margin.
Especially for low-income students, the risks of not graduating, and the amount of debt to pay for college, should be weighed. Higher education is valuable, but encouraging students with a low likelihood of graduating and a high likelihood of amassing large debts to attend is not improving their life prospects.
