Free College Tuition Is the Cure for the Disease of Student Debt

Posted by Wyatt Larkin on September 21, 2015 at 11:00 AM

Many people are rightly focused on doing something about the scourge of student debt that is impacting the ability of an entire generation to get on with their lives. We at the Campaign for Free College Tuition commend those efforts, even as we focus on finding a permanent solution to the problem so no future generation ever has to be burdened by debt. 

Now, important new data on the nature of student debt in America has been released which demonstrates that the best way to get rid of the disease of student debt is to focus on making public colleges and universities tuition free.

Two researchers, Adam Looney who works at the Treasury Department and Constantine Yannelis from Stanford, recently published an analysis of a new database that matches records of student borrowings with their tax records to determine who is having trouble paying off their student loans.  Their research shows that three-fourths of the increase in student loan defaults between 2004 and 2011 is explained by the surge in the number of borrowers at for profit colleges and to a lesser extent by those attending community colleges. Students  with degrees from four year public colleges were, for the most part, able to pay off their student loans from the salaries they earned when they went to work, while students from these other types of colleges were either unable to find work or found work that didn’t pay enough to allow them to manage their student debts. This means that even as the Obama administration is moving the federal student loan program to a system where income based repayment loans become the norm, these students will still be burdened longer, with more dire consequences for their future success.

The data for public and community colleges makes it clear, as University of Wisconsin Professor Sara Goldrick-Rab so eloquently puts it in testimony to the Advisory Committee on Student Financial Assistance, “After FAFSA, college is unaffordable.”  She noted that “after all grants and scholarships are provided, Pell recipients today are left with out of pocket costs of $8,000 to $12,000 a year or even more—in the public sector.” And it is these $8,000 or more annual student loans that Looney’s and Yannelis’s analysis reveals as one of the main culprits in the soaring amount of student debt, not the often cited $100,000 loans for graduate students, who are doing just fine in finding jobs to help them pay off their debt.

Making community colleges tuition free, as President’s America’s College Promise program would do, is a critical first step in fixing the problem. Because it is a “first dollar” scholarship that each student would receive before they have to expend any of their Pell Grant money, the plan goes a long way to helping talented young people from families with modest income pay for the entire cost of attending community colleges.

That still leaves the problem of for profit colleges as fully half of the increase in borrowers between 2003 and 2013 came from students who attended one of these types of schools. While the Obama administration is increasing regulation of this sector that will help weed out the bad actors, CFCT’s National Promise Scholarship Plan would make these institutions less viable in the marketplace. Free four year public college tuition would be an offer prospective students wouldn’t refuse and the demand for student loans would drop dramatically.  As the data in this newest study demonstrates,  graduates of four year colleges would also be the most able to pay off whatever student loans they do accumulate to cover the cost of attending such schools beyond tuition, particularly if those loans are repayable as a fixed share of their annual income.

Doctors have long known that an accurate diagnosis is the key to effectively treating a disease. Now that we know the source of much of the problem of student loans, it is much easier to recognize what an effective cure would look like. Clearly that treatment should combine free public college tuition for both two and four year colleges, combined with a robust system of low interest, income based repayment loans, to preserve the health and wellbeing of future generations of college students in America.

We can't do this alone!

Our goal is to make higher education a possibility for every American, without regard to their financial circumstances.

We have a lot to do and not much time to do it, so your support is critical for our campaign to succeed. It’s with your investment that we can fundamentally reform how higher education is financed in this country, opening the doors to a more equitable society.

If you agree with our goal, our plan, and the urgency of the problem, we ask that you give what you can to help us write the next chapter in our nation’s history of continuously expanding access to universal, free education.

The Campaign for Free College Tuition is a 501(c)3 non-profit organization established in the State of Washington in 2014 to educate parents, students, the higher education community, policy makers and taxpayers about efforts needed to fundamentally reform our nation’s system for financing higher education. This website and CFCT’s educational outreach activities are made possible through generous individual and foundation support.

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