Every year, the federal government shoves billions of dollars in grants and student loan subsidies over to colleges and universities to make an education more accessible for American students. Every year, colleges and universities respond by increasing their tuition, putting that education further out of reach.
As a result, students are graduating with crushing debt loads, causing many to delay buying a home, a car or even marriage. Students who can’t afford to finish school are in even worse shape and enter the workforce with almost as much debt but without the benefit of a college degree.
So, President Barack Obama’s plan to make colleges more accountable for the money they receive is a step in the right direction, but one that probably doesn’t go far enough. Until there is a national commitment to educate all qualified students without saddling them with crushing debt, we will continue to ration economic opportunity and our society will suffer.
Obama proposes to stop writing a blank check to any institution that takes students who receive aid in the form of grants or loans, but it would not happen right away.
Under his plan, the government would collect information about how the institutions used federal funds. They would be graded on their real costs, students’ debt burden and graduation rate. That information would be published so prospective students and their families would have a better idea about what they were getting into.
The next step, which would require congressional approval, would use those grades to determine how much federal aid the schools could receive. Colleges could continue to take money from students who don’t graduate, but they would have to do it without the support of the federal government. The policy would put pressure on the institutions to control costs so students are not forced to drop out.
Such a system is years away, however. The grading system would not start until 2015 and if all goes well, colleges and universities would not be in place until 2018, right around the time this year’s college freshmen should be graduating.
That will be another cohort of young people piling on debt in the current system.
Americans currently hold $1 trillion in student debt, making it the biggest source of consumer debt after mortgages. That borrowing was used to fuel a bubble in college costs, and the students who had to choose between going into debt or not going to college should not be left alone with the responsibility for a bad policy.
Holding colleges accountable is a good idea, but it should start before 2018.