US can't afford education its students can't afford

The National, August 25, 2010

The US government has another nasty deficit on its hands, to add to its rather alarming fiscal woes. It is what some are calling the country's education deficit. That is, its ability to produce students with degrees has slumped way below that of many other countries, despite the fact that those graduates are essential to fill skilled jobs, maintain the competitiveness of the US in the global marketplace, and drive its long-term economic growth.

The statistics are pretty shocking. According to the OECD, a decade ago, the US had the world's highest percentage of 25 to 34-year-olds with associate degrees or higher. Now its percentage of 25 to 34-year-olds with degrees ranks twelfth in the world, behind South Korea, Russia and Japan, among others. As Gaston Caperton, president of the College Board, a non-profit group that advocates for better college access, puts it, “At the precise time that the importance of a college degree is increasing, the ability of the United States to compete in a global economy is decreased.”

The Obama administration has at least acknowledged that it is crucial for the country to produce more graduates to ensure its future economic competitiveness. In fact, in a speech at the University of Texas in Austin earlier this month, the president said that the US needed to produce at least eight million more college graduates by 2020 to compete effectively in the global economy. “Education is an economic issue. It may be the economic issue of our time,” he said. “Lifting graduation rates. Preparing our graduates to succeed in this economy. Making college affordable...That’s how we’ll lead the global economy in this century, as we did in the last.”

But despite the administration's promises of more tax credits and more financial aid, making college affordable will be the real challenge. That is because the escalating cost of a US college education is the key reason why less students are completing degrees. Since 1981, college tuition prices have increased sixfold, while the US consumer price index has only risen 2.5 times. Over the last decade, average tuition costs per year for a private four-year college have risen to $26,270, from $16,070, according to the College Board, while annual public school tuition costs have doubled during the same period, to $7,020.

Federal and state funding for colleges and student aid has not kept up with these increases, and this year, as the recession has slashed budgets, it is predicted to decline. So it is clear that these sort of increases are not sustainable. If average annual tuition costs at private colleges were to go up the same amount over the next 10 years, the sticker price of such an education will be $169,178 over four years, before the cost of lodging, food, books and so on.

In fact, many students cannot even meet today's rising college costs without borrowing heavily. Americans owe more in student loan debt than they do in credit card debt - outstanding student loans now total $830 billion, according to another recent report - and student borrowing has risen nearly 25% in the last five years.

Which raises another important point about the country's economic competitiveness. Cutting the cost of a college education, or finding different ways to subsidise it, will not only be crucial if the US is to produce the graduates necessary to fill skilled jobs in the growth sectors of the economy. Making college more affordable will also allow those graduates to enter the workforce as the engaged consumers the country desperately needs to kick-start economic growth, instead of being hobbled with tens or even hundreds of thousands of dollars in student loans that they could spend decades repaying.

Both would be a good idea if the US is really serious about securing its economic future. >

Copyright The National 2010