Eliot Spitzer’s Slate column this week proposes a different student-loan paradigm. His proposal would have students pay a fixed percentage of their income until loans are payed off instead of forcing young workers to pay a portion of their salary that makes it impossible to live even decently. What Spitzer points out, that I see as possibly the most important part of this issue, is that high-priced loans force graduates to try to find the most high-paying job they possibly can right out of school. He writes,
For too long we have asked students entering college and graduate school to choose one of two unappetizing options: pay astronomical tuition bills upfront or amass enormous debt that demands fixed, sky-high monthly payments the moment they graduate and enter the work force. These options serve as barriers to educational opportunity, since many cannot afford upfront tuition payments or qualify for the needed loans. That also distorts career choices, since for most the obligation to repay loans immediately has reduced the ability to choose socially desirable jobs such as teaching, forcing the pursuit of the highest-paying job regardless of personal or social utility.
A friend of mine – who will remain nameless – came up with an alternative. As a pre-med who is set upon doing relief work for the rest of his life, he has decided not to pay back his loans. Ever. But not everyone is willing to take such drastic action. These “income- contingent” loans would allow my buddy to go to the Congo without worrying about student-loan-collecting thugs.
The bigger issue here is that college is absurdly expensive. Just absolutely ridiculous. I once saw my parents’ undergraduate tuition bills. Both went to public universities and could pay for school as they went. That’s unthinkable now. Here’s a somewhat-dated WaPo graph. Tuition is rising disproportionately compared to t he costs of everything else. Sure there’s more technology in the classroom and that costs money, but isn’t that true for medicine as well? I can’t think of any reason why education costs are rising so high. I guess a degree is now essential for many more jobs and so they can charge whatever they want. The higher the price, the more desirable a school it becomes.
Making college so expensive also changes the culture of the university. If students are piling up a hundred-grand in student loan debt, can they afford to take fun classes or get involved in activism, or are they going to think of it as a very expensive trade school? Spitzer’s idea would take some of the heat off students. They would know that they will be able to pay their loans back, no matter what they do after college.