Grad­u­at­ing classes: Ma­jor­ing in stu­dent loan debt

Calhoun Times - - FRONT PAGE -

As col­lege stu­dents head back to school, some are anx­ious about nav­i­gat­ing a new cam­pus or get­ting lost on the way to their new classes. Oth­ers are anx­ious that protests or end­less strug­gles over free speech will once again cast a cloud over their col­lege ex­pe­ri­ence.

But for stu­dents on track to grad­u­ate this year, one con­cern looms above all oth­ers: How on earth am I go­ing to pay back my stu­dent loans?

Let’s take a look at how re­cent col­lege grad­u­ates are do­ing:

Stu­dents who grad­u­ated col­lege in 2017 held a whop­ping av­er­age of $39,400 in out­stand­ing stu­dent loan debt. This marks an uptick from 2016 grad­u­ates, who held an av­er­age of $37,173 in stu­dent loan debt, prompt­ing the CBS News head­line, “Con­grats, class of 2016: You’re the most in­debted yet.”

Re­cent col­lege grad­u­ates also pushed to­tal out­stand­ing fed­eral stu­dent loan debt to $1.5 tril­lion held by more than 44 mil­lion bor­row­ers; 4.7 mil­lion of those bor­row­ers hold loans in de­fault.

While un­em­ploy­ment for re­cent col­lege grad­u­ates has fallen in re­cent years, un­der­em­ploy­ment re­mains ex­tremely high: 43 per­cent of re­cent col­lege grad­u­ates are un­der­em­ployed, mean­ing that they are in fields that un­der­uti­lize their skills, such as a Star­bucks barista with a bach­e­lor’s de­gree, ac­cord­ing to a re­cent study by Burn­ing Glass and the Strada In­sti­tute.

These num­bers surely do not grant much op­ti­mism to stu­dents who are about to grad­u­ate from col­lege and pur­sue the ca­reer of their dreams.

Surely any busi­ness with such a poor track record of suc­cess would prompt calls for sig­nif­i­cant pol­icy changes, changes in lead­er­ship, or would sim­ply face bank­ruptcy. Un­for­tu­nately, due to fed­eral poli­cies, schools can get away with a rel­a­tively poor track record of suc­cess and qual­ify to ac­cept stu­dent loans and grants.

For­tu­nately, some uni­ver­si­ties are look­ing for in­no­va­tive ways to put their money where their mouth is and en­sure that their stu­dents have suc­cess after grad­u­a­tion.

Pur­due Uni­ver­sity, for ex­am­ple, has started its “Back a Boiler” ini­tia­tive, in which the school fi­nances the tu­ition for stu­dents who wish to par­tic­i­pate in ex­change for a per­cent­age of a stu­dent’s fu­ture earn­ings. This ar­range­ment, also known as an in­come share agree­ment (ISA), in­cen­tivizes a school to grad­u­ate their stu­dents with the best pos­si­ble skills to com­pete in the job mar­ket and se­cure a well-pay­ing job. Pur­due Uni­ver­sity has also been able to fi­nance this pro­gram with­out rais­ing tu­ition for the past seven years.

Pro­pri­etary schools fo­cused on ca­reer and tech­ni­cal ed­u­ca­tion are also ex­per­i­ment­ing with ISAs. App Academy for ex­am­ple, which teaches stu­dents to code, has granted their stu­dents an ISA op­tion. This is par­tic­u­larly at­trac­tive op­por­tu­nity for stu­dents who may want to sup­ple­ment their ed­u­ca­tion or are per­haps go­ing back to school later in life and do not want to take on ex­ces­sive stu­dent loan debt.

Pol­i­cy­mak­ers must look at changes to the higher ed­u­ca­tion sys­tem that will pre­vent the class of 2019, 2020 or 2021 from be­com­ing the next “most in­debted class yet.” In­come Share Agree­ments are one op­tion, but fed­eral poli­cies that pour more money into a bro­ken sys­tem ul­ti­mately dis­in­cen­tive schools from low­er­ing tu­ition or up­dat­ing their cur­ricu­lums to meet the needs of the chang­ing work­force.

The class of 2019 will likely face the same strug­gles as grad­u­at­ing classes be­fore them. But with re­duced fed­eral in­ter­ven­tion in higher ed­u­ca­tion and the emer­gence of in­no­va­tive op­tions that com­pete with the long stand­ing sta­tus quo, there may be few classes that share their same fate in the fu­ture.

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