Last week, the New York State Comptroller released a report that indicates that over the last decade, student loan debt for New Yorkers has grown by more than $10,000 for the average borrower. According to the Brookings Institution, Americans now owe a record $1.3 trillion in student loans, and student loans are second only to mortgages as the largest source of household debt.
It is not a mystery why student debt is exploding. It’s because of the incredible increases in the cost of higher education. In 1980, the average cost of tuition, fees and room and board at a private four-year college was $16,143 (in 2015 dollars). In 2015-16, those costs have increased 172 percent to $43,921. Sadly, these increases aren’t limited to just private colleges. The average cost of tuition, fees and room and board at four-year public colleges in 1980 was $7,362 (in 2015 dollars). These costs in 2015-16 increased 166 percent to an average cost of $19,548. Simply put, the growth in college tuition and fees have outpaced the growth of housing prices, consumer prices and the average hourly wage.
These increased costs and the huge debt load needed to cover the costs have many wondering whether higher education is worth the economic return. While overall, unemployment rates are lower and weekly earnings are higher for those who have college degrees, it is also true that the increases in student debt associated with obtaining these degrees is eroding these benefits. Further, as our economy continues to struggle, many college graduates are underemployed — that is, they tend to be employed in jobs that don’t require a college degree. It has been estimated that in 2012, 1 in 3 college graduates had jobs that required a high school diploma or less.
Why there has been such tuition inflation is complicated. In my opinion, it is probably due to a combination of factors. First, there is high competition among institutions for high-quality faculty and students. In order to attract faculty and students, colleges are spending large amounts on higher salaries, more services and more amenities. Second, there is tuition discounting, which is essentially the practice of charging different students different prices for the same educational opportunities. These discounts are given for a variety of reasons such as merit or financial needs. To cover these costs, colleges are ratcheting up the tuition on those who don’t qualify for the discounts. Lastly, due to the very nature of higher education, unlike a private business, there is little initiative to improve productivity and efficiency that could lower costs.
Ultimately, what most can agree on is that the current system is unsustainable. More and more people are going to ask what is the cost benefit of a college degree. If institutions of higher education cannot answer this question, they will lose students and their viability will be in jeopardy. In order to address this and in effort to bring accountability to colleges and universities, I support legislation that would require any higher education institution receiving state funding to disclose information to students that would among other things, show: (i) the average post-degree earnings broken down by program of study; (ii) percentage of students with student loan debt upon graduation and for students who do not complete a program of study; (iii) student loan default rate; (iv) financial aid breakdown by student type and specific programs of study; and (v) percent of students who received the degree level initially sought.
Providing this information would give students a clearer understanding of the economic costs and benefits of the institution and programs that they are considering. In addition, it would put pressure on colleges and universities to clearly express the benefits of their programs. This in turn, may force them to reconsider their tuition policies. This is only a first step. The sheer enormity of student debt and the increasing default rates are going to require state and federal policy makers to address the issue. When considering policy changes, whatever we do, we want to make sure that all students, who are so inclined, have an opportunity to attend college. At the same time, we will need to encourage colleges and universities to institute tuition policies that makes college affordable without needing huge government subsidies or tremendous student debt loads.
If you have any questions or comments on this or any other state issue, or if you would like to be added to my mailing list or receive my newsletter, please contact my office. My office can be reached by mail at 200 N. Second St., Fulton, New York 13069, by email at [email protected] or by calling 598-5185.
