Students’ debt is nearing a tipping point
Rochester Post-Bulletin Editorial, Apr 11, 2012 –
Youth is a wonderful thing, but those of us who sometimes look back wistfully upon early adulthood have at least one reason to be glad that we’re a bit further along in our life’s journey.
Consider the dilemma for today’s high school graduates. Twenty or 30 years ago, a bachelor’s degree was a relatively affordable commodity, especially at public colleges and universities. And for anyone with the degree in hand, the job market was strong.
Things have changed. Since 1985, tuition and fees at U.S. colleges and universities have risen an average of 498 percent — nearly five times the rate of inflation. Meanwhile, the federal Pell Grants that make college possible for the nation’s poorest young people haven’t come close to keeping up. For next year’s freshman, the maximum grant of $5,645 will cover just one-third of the the average costs. The GOP’s latest budget proposal by Rep. Paul Ryan would hit Pell Grants even harder, cutting $170 billion from the program over the next decade, with one million students losing their grant entirely.
And here’s the kicker: According to the latest numbers from the federal Bureau of Labor Statistics, the unemployment rate for 2010 college graduates is 9.1 percent — an all-time high.
So, is a college education still worth the investment?
We think so, but if we’re not approaching a tipping point in that equation, we certainly can see it from where we’re standing, especially in Minnesota. We’re accustomed to seeing ourselves at or near the top of educational rankings, but here are a couple that shouldn’t be points of pride:
• In a state-by-state ranking of college graduates’ student loan debt, Minnesota’s class of 2010 ranked fourth. Students who borrowed money to our attend public or not-for-profit schools began the next chapter of their lives with a $29,058 burden on their backs.
• 71 percent of Minnesota undergraduates are borrowing money to attend college — a rate that’s exceeded only in Iowa, Maine and New Hampshire.
During the past several years, we’ve often editorialized about the need for high school students to be informed about their post-secondary educational options. Not every high school graduate is ready to pursue a bachelor’s degree, and there are good jobs available to people who receive the proper training at trade schools or technical programs.
But students who have the ability and the desire to pursue a college degree shouldn’t have to mortgage their futures to obtain it. Some level of student loan debt is acceptable, but when well-employed college graduates are paying off that debt in their mid-40s, something needs to change.
Unfortunately, the change that’s coming might be for the worse. Federal legislation that in 2007 capped the interest rate on federal student loans at 3.4 percent is about to expire, which means the rate could double, to 6.8 percent. Sen. Al Franken is co-sponsoring a bill to extend the rate cut, but it faces opposition from Republicans who say it’s costing the government nearly $6 billion per year.
In a country that recently spent hundreds of billions of dollars to bail out the auto industry and keep Wall Street from imploding, we’re dumbfounded at the notion that we’d now choose to dump more debt onto the shoulders of our best and brightest young people.
After all, rates on 30-year fixed-rate mortgages are still hovering around 4 percent. Surely our nation should be able to offer a similar deal to people who are investing in their own futures.