Free College and Student Debt
Over at Brookings, Susan Dynarski is doing some sensible explaining about student debt, attempting to help people understand that the real crisis lies with borrowers with some debt (not a lot) and no degree.
It’s a piece with a worthy objective, (and I preferred it more when she made it over at the Upshot). But I disagree with her that the only issue facing these borrowers is their earnings, however. The key issue is that they do not have postsecondary credentials — and this was predictable. It isn’t rocket science to predict who will and won’t complete college — and it hasn’t changed much over time. We know that people from low-income families have especially high rates of non-completion and it is one reason why we have worked to provide grant aid, which lowers the risk of trying college. Yes, we want them to try — for if they succeed, it brings great social and personal benefits. But over time we have eroded grant support to the poor and saddled them with loans. They now face tremendous, predictable risk, and that’s a problem we can and should deal with. Adjusting repayment plans, as Dynarski suggests, does nothing to improve their odds of degree completion. But lowering the price of college would. Focusing on repayment may be less expensive, but that hardly makes it the right thing to do.
Dynarski and I disagree on one other point, and it’s critical. Towards the end of her blog she contends that Free College won’t help with student debt because it doesn’t address living costs or students at private and for profit schools. This is both factually incorrect and short-sighted. America’s College Promise, the federal free college proposal, does address living costs since as a first dollar program it eliminates tuition and fees so that existing grant aid can then be applied to living costs. Moreover, even today’s last dollar efforts — like TN and OR — are an initial step and easily could reduce debt, we just don’t yet know. It’s premature to say that they won’t.
Perhaps even more importantly, Free College creates critical competition for the private sector that’s been lacking since politicians have systematically defunded public higher education in an effort to enhance the public market. It works. When community colleges are weakened and can’t keep up with student demand, enrollment in for-profits rises. When community colleges get more resources, research suggests that for-profit enrollment falls. Private colleges know this and are actively fighting the Free College movement. So I’m not sure why Dynarski thinks they will be immune from price competition, which would reduce student debt, if Free College were implemented.
Student debt is a serious problem but it is ultimately an educational policy concern and cannot simply be treated as a finance problem to be solved with the usual finance tweaks. It’s an issue because of changes in our policy commitments to students, changes that accompanied and exacerbated growth in income inequality nationwide. Free College is a direct assault on those trends. Tweaking loan repayment terms is not.
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