Posted on 01/27/2020 3:22:07 AM PST by gattaca
College affordability has gone from the arcane to the mainstream, with efforts to curb college costs quickly becoming a litmus test for presidential hopefuls. With good reason: an estimated 45 million borrowers now owe $1.5 trillion in student loans, more than any other category of debt besides mortgages.
But the cost of college is just one side of the affordability equation. Far too many students are leaving college without the skills they need to generate a return on their educational investments.
Despite record-low unemployment, job offers for recent college graduates continue to decline. Scarcely 40% of the Class of 2018 received job offers after earning a college degree. And 41% of all recent college graduates are underemployed.
The challenge stems from the fact that employers just aren’t “buying” degrees the way they used to, and students are left holding the bag. In a recent national survey, only half of employers said a degree is a “fairly reliable representation” of a candidate’s skills and knowledge — and almost two-thirds said they were actively working to de-emphasize the degree in hiring or exploring how to. And surveys by Strada Education Network and Gallup found that only 40% of Americans with bachelor’s and 48% with associate degrees strongly agree that their education was worth the cost. Only 26% of working adults with college experience strongly agree it is relevant to their work and day-to-day life.
This situation casts doubt on how well-prepared students are to enter the workforce. It reflects a serious and growing disconnect between the skills the employment market demands and those acquired by students at colleges and universities.
Against that backdrop, colleges can sell lazy rivers, luxury dorms, championship-caliber football — and claims of an easy path to great employment. But students have precious little data to validate those claims. It’s a dynamic that invites students and families to make emotional decisions on education divorced from labor market realities.
The challenge stems from the fact that student loans ignore the most basic tenets of lending. In other major categories of personal lending — mortgages and auto loans, for example — the value of the collateral drives decisions and loan terms. Similarly, business loans require a sound plan for generating the revenue necessary to repay the loan. Student lending is, in contrast, unsecured lending without any demonstration of future ability to pay.
Federal loan programs don’t view a degree in puppetry as any different than a degree in chemical engineering. Far too often, this leads to the accumulation of debt with little to no return. Private lending also does not differentiate, but compensates by almost always requiring a prime or super-prime co-signer for approval. This reliance on backward-looking criteria, like credit scores, irrevocably links the ability to borrow to the earning power, educational attainment, and wealth of a student’s parents — reinforcing structural inequities across generations.
What if, instead, student loans were tied to the skills acquired by the student? What if earning power formed the basis for a security created in the process? Labor market value would drive lending, and credentials — and skills with less value in the marketplace would receive less favorable terms.
Such an approach would be particularly powerful if employers had a role in the business of student loans, making a financial commitment to students who successfully obtain the skills industry needs. A loan “backed” by an employer could offer more favorable terms to the consumer and create incentives for students to evaluate programs based on the likelihood of employment after graduation.
Employers are hungry for new ways to grow their talent pipeline and have shown an increasing willingness to put up big money. Major corporations like Amazon and AT&T have announced huge ($700M and $1B, respectively), multi-year investments in worker retraining, and companies are increasing their offerings of education as a benefit to attract better talent. Through my work, I’ve talked with hundreds of companies looking to hire who would be willing — eager even — to invest in a potential hire’s education when and where the students share in the responsibility for positive outcomes.
The imprimatur of employer support alone cannot address the national crisis of runaway college costs. But it might lead to healthier and more sustainable financial outcomes for borrowers. From an accountability standpoint, employer backing also offers the ultimate signal of a program’s quality.
Employers will vote with their feet — and their dollars — faster than legislators can defund a public workforce development program or a higher education accrediting agency can revoke a college’s stamp of approval. And if an employer is unwilling to “co-sign” for the cost of an education or training program, then it’s not likely a program that leads to a positive return on investment.
This would be a new frontier for higher education finance and accountability — allowing employers to act as arbiters of quality, gauging and endorsing education outcomes and credentials by co-signing student debt.
The likelihood of any of this becoming reality is far from certain, with dimming prospects for a rewrite of the federal Higher Education Act and the vast complexity of the federal student loan system.
Still, policymakers feel pressure to create new federal measures to hold institutions accountable for outcomes, or at least steer higher education investments toward programs that will pay off.
As difficult as that task may be, policymakers may find a new and powerful ally in employers.
All the trends point to a new wave of education and training where companies can use their financial heft to tip the scales in favor of affordability.
By “co-signing” student debt, employers can help employees pay for their educations while ensuring the credentials they earn will help move them — and their companies — forward.
The goal was not actually to enrich professors and colleges, but to lock students into unsustainable debt from which they can only be liberated by communist politicians (like Bernie, Lizzie, et al.).
Communists in America are successfully utilizing the old carrot and stick method to herd their youngest and newest party members through the door.
I’ll offer three criticisms of this concept:
1. If companies did step forward and be co-signers...they’d mandate only degrees of value would be co-signed. Hint: these colleges handing out worthless degrees? They’d immediately get a message that 40,000 college professors in the country can be let go.
2. The kids shocked over degree directions? They’d sit there in the last year of high school, and realize they don’t have science or math skills to meet the mandated degree ‘path’. You’d suddenly have a minimum of a quarter of these college-bound kids in some massive fit...unable to resolve their ‘mess’.
3. Finally, somewhere in this idea...companies would dictate to colleges that they need to cut costs, fire administration overages, and limit a four-year degree program to roughly $12,000 a year for tuition.
Frankly, I don’t see this idea going far.
LOL no
Ridiculous on its face. You wanna see costs come down and there be much greater accountability?
Have the school co-sign.
“Far too many students are leaving college without the skills they need to generate a return on their educational investments.”
That tells the whole story... Too many progressives and socialists in academia, and FAR TOO MUCH importance placed on ‘higher’ education.
Post High School? Trade schools provide focus on functional, usable skills and are often supplemented with more basic academic courses to reinforce reading, writing and math/sciences.
As vocational education takes new root, its graduates will find, over time, that their individual skills in basic education will determine their advancement beyond first and second line employment status. Wanna be a manager? Learn to read and count. Wanna be in sales? Learn to speak, advance ideas, and make a logical argument.
Vocational education makes that possible, all while earning a living and not being a slave to a student loan that was funded on the backs of US Taxpayers.
That idea’s already been advanced.
It’s excellent.
Buy a car and it turns out to be garbage? If you live in a state with a “Lemon Law”, you get your money back.
If you “buy” a degree and it turns out to be garbage, you should also get your money back.
Mike Rowe has a foundation that helps train people in the vocational trades.
Oh look.
An article which appears to be written by the education establishment and which (from beginning to end evinces no evidence of any sort indicating any research went into it.
Businesses have had integral training for centuries, and apprenticing new employees to highly skilled employees and writing in house training materials has always and still does produce employees more knowledgeable about the specifics of the job and more effective at accomplishing it.
you mean like slavery?
More like greek and roman slavery
We protect/give to you and we own you
Because Baccalaurate studies are not, and are not supposed to be, vocational education.
I disagree. The car owner didn't intend to buy a lemon and delibertely bought new car to avoid that. OTOH, the student did intend to get a degree in "homosexuality in homosapiens studies".
But let's take this idea a step further. If the students do get their money back, then they should be required to forfiet their degrees, as the car buyer would forfiet the lemon. To keep the degree is to acknowledge it isn't worthless.
And one more point, it's the tax payers who should be reimbursed since they paid for the degree, but the students should still have to forfiet the degrees for the reasons I gave above..
Something like this has been happening for years in cooperative education programs, in which a student works for an employer typically for 6 months, then goes back to school for 6 months through several cycles. A traditional 4-year degree then takes 5 years, but the student gains valuable practical experience, and the employer gains confidence that there will be a positive return on any financial assistance that they provide to the student.
Make student loan debt dis-chargeable in bankruptcy court LIKE EVERY OTHER FORM OF DEBT.
But they should be.
There are no worthless degrees, only worthless students.
I majored in English Literature with a concentration in the 15th and 16th centuries.
I got my vocational education in medical school, courtesy of the State of New York, which cost $1600/year all in and the State paid half because I did good on a scholarship exam.
However, the timeless insights into human nature and human behavior that I got with my worthless degree, I use every day.
If the number of students in four year college programs dropped by 90%, we would all be better off.
But stop with the "worthless degrees" stuff.
” the students should still have to forfiet the degrees for the reasons I gave above..”
I have often said the same. But why change the basic rule - student borrows, student pays back. This is how the world works. No breaks for you. Grow up or let your mommy and daddy pay it for you.
If Harvard can afford to pay Elizabeth Warren >$400,000 for teaching a class, then the last thing we should be doing is asking employers to contribute to Harvard's bottom line - or to the bottom line of any university.
Harvard's endowment is now at $40.9 billion, and it's a ‘not-for-profit’ with all the tax advantages of that designation. They likely make more than a 10% return on that money annually, and 10% would give them $4 billion a year. That's roughly $174,000 per student per year in investment income.
They also receive $600,000,000 - $700,000,000 annually in federal research funding, and have many other sources of income.
The average full professor at Harvard makes ~$250,000/year, with a light teaching load.
So why should ANYONE give them more money?
No, there should be vocational schools for those who need them.
I went to one.
That's great for those of us that went to school and tuition was $300/semester. Go ahead and adjust that for inflation and see the difference in today's highly inflated tuition. . Also most older Freepers never had to compete with an H-1B visa invasion cutting wages and opportunities.
Your comment was ignorant and myopic.
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