A higher education used to be one of the fast-tracks to achieving the American Dream. But over the last 50 years—despite more and more people attending university—income inequality in the US has steadily risen. The social mobility that once came with a college degree has been counteracted by the enormous amount of debt that comes with increasing tuition rates, as well as the uneven playing field such tuition rates create.
How much money a student has not only affects where they can afford to go to school but it also affects their chances of graduation. Someone who needs to work one or more jobs while attending school will, understandably, have less time to study and less time to engage outside the classroom. The need to work extra hours to cover costs associated with college is one of the top reasons people drop out. According to the National Center for Education Statistics, wealthy students have a graduation rate of 60 percent, while low-income students have a graduation rate of just 16 percent.
The cost of going to college has gone up by over 1,100 percent since 1978. Repeated funding cuts to public colleges and universities have resulted in the raising of tuition and fees, exacerbating the problem and pushing higher education further out of reach for lower- and middle-income students.
Even in the last ten years, tuition at four-year schools has gone up by an average of 35 percent, or approximately $2,500. In eight states (Alabama, Arizona, California, Colorado, Florida, Georgia, Hawaii, and Louisiana), tuition has gone up by well over 50 percent in the same timeframe. Rather than intervening and helping foot the bill, the federal government has encouraged students to take out larger and larger sums of student loans.
Today, Americans owe more than $1.5 trillion in student loan debt, and the number grows every year. Studies show that student debt has negative effects on a person’s life after university, leading to increased financial distress, lower savings, later retirement and decreased physical and mental health. Further consequences include restricted career choices, lower job satisfaction, delayed home ownership, and less entrepreneurship. Possible correlations to student debt could also include decreased and delayed birth and marriage rates. This is about much more than money.
This is a problem that affects everyone. A large and increasing number of jobs require a college education, and a dearth of talented labor can lead to a misfiring national economy. As people put money towards the occasionally predatory interest rates on their student debt, they save less and less for retirement, threatening to turn the question of Social Security into a full-blown crisis. And the negative effects of an increasing income inequality can harm an entire society, including its wealthy members.
Perhaps the most frustrating part of the current state of affairs is that it so clearly does not have to be this way. Germany, Sweden, Denmark, Finland, Norway, Czechia, Estonia, and Iceland all offer free college tuition. Students do pay undergraduate tuition in France, but by American standards, it’s hardly tuition at all: the average annual amount due is $212 per person. None of these countries have seen their economies collapse as a result of their educational policies. All are members of the OECD, a group of wealthy nations committed to a democratic government and a free economy. By using a tiered tax structure to subsidize higher education, the effective cost of attending college is roughly the same for everyone: it’s charged as a small percentage of their income rather than a large, flat figure. It’s no surprise that the four happiest countries in the world all offer free higher education.
To most Americans, it’s a given that education should be free from kindergarten through high school. But why should it stop there? Unless serious educational reforms are made soon, the US is going to end up looking like a high school student in a world full of college graduates.
When the federal government fails to step in, progressive states can lead the charge. That’s the ethos behind New York’s Excelsior Scholarship program. Under the program, close to a million middle-class families and individuals are eligible to attend college tuition-free at all CUNY and SUNY two and four-year schools. It’s available to all New York State residents who earn less than $125,000 per year and who also plan to live and work in New York after graduation for a length of time equal to the time they will have participated in the scholarship program.
The major problem with the Excelsior Scholarship, however, is in the fine print. Those applying to the Excelsior program must take at least 30 units of classes per year, which equates to super-full-time status. Also, the Excelsior program doesn’t cover room and board. Working enough to afford living in New York can seriously cut into one’s ability to attend school on a super-full-time basis. In the program’s inaugural year, over two-thirds of applicants were denied the Excelsior scholarship, largely due to their inability to meet the annual 30-credit requirement.
It’s only early days for the Excelsior Scholarship and it’s not even fully phased in yet. But the Center for an Urban Future is already calling for a reduction to the number of credits required and for an increase in supports that help overcome non-tuition financial barriers.
If New York wishes to continue to call itself a progressive beacon of free education, then it would be wise to listen to this early stage feedback. An expansion of the program’s budget and a reduction of its restrictions would be a step in the right direction.
Introduced by Senator Bernie Sanders, the College for All Act aims to amend the Higher Education Act of 1965 and eliminate all tuition at public four-year colleges and universities for people making under $125,000 per year (approximately 80 percent of Americans), while also eliminating tuition for all citizens at community colleges. Furthermore, the act would cut student loan interest rates in half and also ensure they couldn’t rise above certain levels (5 percent for undergraduate borrowers, 8.25 percent for non-undergraduate borrowers). At the same time, the act would keep current financial supports in place, such as the Pell Grant, in order to allow students to use the funds to pay for non-tuition related costs.
The federal government would supply 67 percent of the funding. States would pick up the rest of the bill. In total, the College for All Act has an estimated cost of almost $600 billion. This would be paid for by a Wall Street speculation tax, which would include: a 0.5 percent tax on stock trades, a 0.1 percent fee on bonds, and a 0.005 percent fee on derivatives. A similar tax has already been imposed by some 40 countries, including Germany, France, Switzerland, Britain, South Korea, Brazil, and Hong Kong.
In short, some investment bank margins can afford to be thinned by mere pennies on the dollar if it means catapulting an entire generation into higher education. In this regard, the US should copy its friends’ homework.
While the Excelsior Scholarship and the College for All Act aim to stem the bleeding into student debt, Senator Elizabeth Warren has a plan to fight back. Fittingly for a champion of consumer rights, Senator Warren’s plan would pay dividends to those who have been the victim of predatory and unequal practices. The plan would cancel up to $50,000 in student loan debt for every person with a household income under $100,000 with a tiered structure to include some debt relief for those with a household income of up to $250,000. In total, the plan would cancel out some amount of student loan debt for more than 95 percent of those who hold it, providing relief for 42 million Americans.
Warren’s loan forgiveness plan would significantly increase wealth for minority families and reduce the wealth gap overall. At the same time, it would provide the middle-class with a massive stimulus package that could boost home sales, improve average credit scores, increase economic growth, and lead to more entrepreneurship and small business ownership.
In addition, Warren takes the Sanders plan and escalates it a step further: making free college truly universal and allowing every American an opportunity to attend a two or four-year public college without paying tuition.
It’s important to note that non-tuition costs account for 80 percent of the cost of community college attendance and over 60 percent of the cost of four-year public college attendance. That’s why Warren’s plan also invests $100 billion in Pell Grants over the next ten years. This program would be funded by a 2 percent tax on families with more than $50 million in wealth. No one’s likely to lose their Manhattan penthouse over a 2 percent tax, but a college education can be truly life-changing for those who, previously, couldn’t afford this investment in their future.
If you’re willing to lend your voice to promoting a brighter and more intelligent future, check out some of the links below, and make yourself heard.