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Higher Education Needs Reform

Student Loan Debt
Photo courtesy of Occupy* posters/Flickr

Yesterday, I spent over a half hour speaking with Elizabeth Gutierrez who happens to be the Director of State Policy for the Lumina Foundation. The goal of the Lumina Foundation is to ensure that more people get involved in higher education with a target of getting the nation to 60% involvement by the year 2025. The President has called for the nation to “invest” more in higher education as well, but I think the system needs a few major changes before the investment will pay back in the way we want it too.

We need to drastically change the way that federal and state money flows to institutions of higher learning. Right now most money flows to colleges based on the number of students an institution serves, but pays little attention to the percentage of students that graduate. In fact, it’s not in a university’s interest to let its students graduate, which is why higher education is structured like a hamster maze. Nearly every student has had to deal with courses that won’t transfer, classes that are needed but can’t be accessed for another year, and degree restructuring (which changes the courses needed). If federal and state money was distributed based on an institutions outcomes, needed reforms would get a strong kick in the pants.

As part of the focus on outcomes, universities that accept government money should be required to enlighten their students of the cost and benefits of each degree. The simple fact is that not all degrees have the same value. The Georgetown Center on Education and the Workforce published an excellent census data based study on the earning power of various degrees. The study is over 200 pages, but you can click here for an easier to absorb graph. When students realize that their counseling degree only pays out an average of 29k a year, they may want to switch to something like petroleum engineering (average of 129k).

Last night, students from Santa Monica College rioted over the rising costs of higher education. I recommend scrolling forward to 1m 10s where you can hear a man yelling “We won, we won! We got pepper sprayed!”

Although I’m not about to go riot, rising costs effect everyone. Why? Because they add to the personal debt load of millions of Americans. Education debt just hit 1 trillion dollars for the nation (more than auto and credit card debt). Education debt is special, because you can’t use bankruptcy to back out of it (at least since 1998). If schools are going to get special government protection they should have a higher standard of disclosure to their students. All of this, of course, is based on whether or not institutions receive federal money. If institutions don’t want to change policies let them hand back the cash.

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