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June 6, 2016

American Education System and the Trillion-Dollar Student Loan

Wajid Hassan

Students in the United States are over-burdened with college tuition debt. Data from the Federal Reserve of Cleveland reports that “outstanding student loan balances reached $1.2 trillion in the fourth quarter of 2015, making student loans the second largest category of debt after mortgages” [1].  The New York Times reports that “over the past 35 years, college tuition at public universities has nearly quadrupled, to $9,139 in 2014” [2]. This article expounds the current political debate around educationand suggests that the current trillion-dollar loan is actually an obstacle to the country’ economic progress.

The cost to attend Colleges have skyrocketed over the last few decades but the cause of this problem is multi-dimensional and not one single item can be pin-pointed.

  • One of the answers to this riddle could lie in the number of faculty versus administration staff. From 1975 to 2008, the number of faculty has increased by 1% while people employed as college administrators, has ballooned from 3,800 to 12,183, a 221% increase [2]. During this same time, salaries remained the same for professors. The American Institutes for Research reports that while the economy was shrinking its overhead, universities were investing more heavily in their overhead [3]. The Huffington Post gives the reason for this with the following: Universities blame the high cost of tuition on rising regulations, advising and mental health counseling [3].
  • In 1987, universities started adding departments such as marketing, diversity, disability, sustainability, security, environmental health, recruiting, technology, and fundraising, and added new majors and graduate and athletics programs, satellite campuses, and conference centers [3]. Due to this massive increase in bureaucracy, costs rose dramatically. Robert Martin, an economist at Centre College in Kentucky explains that now these same colleges and universities are now outsourcing these services [3]. In effect, while the government provided jobs in shape of adding multi-layers of bureaucracy through creating administration positions, costs for the average student have increased. Because universities are unable to manage the bloated bureaucracy and now need to outsource, the student is not only paying for tuition but the costs to run the university.
  • Many other aspects that have been a cause in the rising cost of education are noted below but we also would like to mention that each of these have in turn made college education a great experience,
  • Increased use of computerized equipment which includes software and hardware
  • Availability of advanced laboratories and latest libraries
  • Reimbursement for books
  • Availability of student services

MarketWatch reports that every second, America’s student loan debt grows by $2,726 [4]. Today, a college graduate will pay $200 to $400 each month towards paying off their debt. This ricochets against their saving for their children’s education. The Federal Reserve released a paper on Student Loan Delinquencies. They found that students who had income-driven payment plans were more likely to pay back the loan despite credit card debt and real estate loans [5]. The answer lies right here on how to solve the billion-dollar student loan problem that is to have more with work-study programs.

Science, Technology, Engineering, and Mathematics (STEM) education is important to further one’s ambition to become a student that can attain degrees to satisfy future employers as well as support the country’s economy by bringing back jobs but if education is too expensive it might deter students from seeking enrollment in a college or university. Being a STEM graduate student I am a proponent of STEM education but don’t see how the current system crippled by large unmanageable student loans encourages students to get STEM education.I am all for Business and Liberal art education as well. As I have a second undergraduate degree in Business as well. We need to have the mindset of the son of a farmer alongside the son of a businessman, working hard to secure a growing academic field that reaches for STEM degrees. The call for lowering student debt is echoed by Rep. Rubén Hinojosa (D-Tex.),” Less than 8 percent of people in minority communities are represented in STEM degrees. That’s why college needs to remain affordable” [6].

Current Political Presidential candidates continue to debate the problem related to educational loan but do not offer concrete micro level solutions,we highlight here the point of view of each of the candidates about education and educational loans:

Hillary Clinton seeks to refinance all college loans, (a costly proposition in itself) and end predatory rates on student college loan rates of over 20%. Her talking points include, a New College Impact, a $350 billion proposal which would come from cutting tax deductions for the wealthiest [3]. She calls for states to start paying for student’s education but at what cost and who is going to pay for this? The onus lies on the taxpayer through hidden costs and fees and disables and burdens them. In essence, she calls for states to pick up the expenses of college education. In turn, states will either seek funding from the federal government or move to tax the population of the state to pay tuition costs.

Bernie Sanders wants the US government to refinance student’s loans to the 2006 interest rate of 2.6% instead of the current 4.29% [5]. He envisions the US government/taxpayers to pay 100% of tuition costs for low income students only [5]. He is a strong proponent of imposing this “education” tax that reflects the current systems of Britain, Germany, France, Switzerland and China [5]. He believes that once the federal government supplements a student loan, that more high school graduates will seek a higher education.

Trump does not believe that the federal government should profit from student loans. He alleges that the Federal Loan Student Program turned a profit of over $41 billion in 2013.  Bernie Sanders agrees with Trump’s call to end government’s profit of student loans but says that the US government makes over $110 billion from student loans [5]. Trump also dislikes Common Core State Standards which Common Core supporters even call, a regurgitated No Child Left Behind Act [7]. No Child Left Behind, requires a school to perform well to retain or to receive funding from the federal government.

Trump believes in the importance of education but wants States to manage their own education systems.  He uses a report from the BBC which took its erroneous data from the Organization for Economic and Co-operation and Development that asserts the following [8]:

￿US ranks 14 out of 28 countries where the percentage of today’s young people are expected to graduate with a college degree

￿ 24% of 15-year-olds in the United States do not successfully complete even the basic Level 1 Programme for International Student Assessment tasks

Trump does not talk about education because he believes, like the original Framers of the US Constitution, that education should be given solely over to the states. He sees an engorged bureaucracy that has rendered academic pursuits too expensive for the average student. The explosion of college administration proves his point as costs grew 221% from 2007 to 2013.

Hence none of the presidential candidates have the complete solution to the studentloan problem. Bernie Sanders calls for Free Education but who will eventually pay for it? Trump wants to make education a state level subject but in my opinion it should be a federal subject and must be supported by federal government. Hilary Clinton stance on education loan seems to be the most reasonable approach in solving the educational loan problem of the United States

The Trillion Dollar student loan is directly effecting the STEM education graduates and is hampering the country’s economic progress.Educationalists, Academicians, Policy Makers and Politicians need to get together and think through how they want to promote STEM education so that more students would be interested in it.

[1] Elvery, Joel. ”Is There a Student Loan Crisis? Not in Payments." Federal Reserve Bank of Cleveland. N.p., n.d. 15 May 2016. Web. 25 May 2016.

[2] Campos, Paul F. "The Real Reason College Tuition Costs So Much." The New York Times. The New York Times, 04 Apr. 2015. Web. 25 May 2016.

[3] Kingkade, Tyler. "New Analysis Shows Problematic Boom In Higher Ed Administrators." The Huffington Post., 4 Feb. 2014. Web. 28 May 2016.

[4] Berman, Jillian. "Watch America's Student-loan Debt Grow $2,726 Every Second." MarketWatch. N.p., 30 Jan. 2016. Web. 26 May 2016.

[5] “On the Issues: It's Time to Make College Tuition Free and Debt Free." Bernie Sanders RSS. N.p., n.d. Web. 28 May 2016.

[6] Beard, Katherine, “Behind America's Decline in Math, Science and Technology.” US News. N.p. 13 Nov 2013. Web. 3 June 2016.

[7] “Donald Trump on Education." Donald Trump on Education. N.p., n.d. Web. 25 May 2016.

[8] Hanushek, Eric A. and Ludger Woessmann. “Universal Basic Skills: What Countries Stand to Gain.” OECD (2015), Universal Basic Skills: What Countries Stand to Gain, OECD Publishing. Web. 30 May 2016.

Wajid Hassan is a Ph.D. Fellow in Technology Management at Indiana State University, USA. He currently serves as the President of Pakistani American Congress and is a concerned Citizen who has deep passion for the betterment of the lives of the people and thinks attainment of higher literacy rates and quality education is the only solution for this matter. He is author of the book ‘Deciphering Pakistan's Education Riddleメ