The increasing cost of higher education recalls the housing bubble before it burst. In the meantime, our higher-education factories crank out an updated variation of indentured servitude.
Surprise, surprise: The current political dust up over student loans completely misses these points.
On Friday, April 27, U.S. Sen. Patty Murray visited the University of Washington campus to plea for the continuation of low-interest student loans. Murray’s speech constituted political grandstanding at its most effective: How could anyone oppose low-interest rates for students?
The terms of the interest rate on the Stafford loans came out of the Higher Education Act of 1965. The current interest rate of 3.4 percent is to set return to the old mark of 6.8 percent July 1, propelled by a Republican-backed measure in the U.S. House of Representatives passed last Friday, which President Barack Obama says he will veto. Republicans and Democrats disagree on how an extension of the 3.4-percent level would be funded — hence, the Republican-backed vote to raise the rate. But the tiresome, and tireless, political finger-pointing is beside the point.
The difference in interest rates amounts to about a $1,000 increase on a typical student loan — a tough amount to swallow but hardly a game-changer.
And the game is in dire need of change.
Student debt in this country is estimated to be $1 trillion, far outpacing the nation’s credit-card debt. In the last two decades, college tuition in this country has increased some 300 percent — double the rate of cost increases in our health-care system. The University of Washington figures an incoming freshman’s budget — with tuition, room-and-board and related expenses — to be about $24,000 per year. Think about what this means for an incoming or graduating student: There’s nothing like incurring a mountain of debt at an early age to require an asterisk on our beloved phrase, “Land of the free.”
Syndicated newspaper columnist Froma Harrop has called attention to the “hatpin” that may burst the cost-of-education bubble: high quality, on-line courses provided by startups like Coursera and Minerva. In such a universe, a student may choose courses from a broad band of higher institutions. We can see the day where a new kind of fully accredited, on-line university will be available to hundreds of thousands of students at a fraction of today’s tuition rates. Politicians — masters of the incremental — cannot overhaul a business model that needs capsizing. The solution, through private capital and entrepreneurial spirit, lies with the “home of the brave,” and brains, outside Washington, D.C.
The straws of change are on the wind.
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