Over the past 15 years, I’ve gotten a first hand look at the education system as my four children have progressed through it. Unfortunately, from my perspective, it’s broken.
My first entered the university system this past year after spending two years at a community college. While she survived the change, it was very hard on me, or should I say my wallet. Having to write out those big checks this past fall was painful. On the other hand, I’m glad I’m able to help my daughter avoid taking on debt to pay for school.
Unfortunately, too many graduates from our university system will be in much worse shape than her. They will have an overwhelming amount of debt and a job, if they are lucky enough to find one, that will not provide enough for them to live on their own and satisfy their loan obligations.
Sizing the education problem
If you want some insight into just how broken this system is, the video below will help to put things into perspective. It’s a bit long at over 12 minutes, but well worth watching if you have children who are making their way through our educational system or are concerned about the future of education.
I like how the speaker, Greg Gottesman, doesn’t waste time getting into the problem. At the start of his talk, he points out that over $1,000,000,000 in student debt is outstanding, which is more than auto loan debit and credit card debit in this county. He goes on to say:
The way in which we finance higher education in the United States is unsustainable, and it requires us to rethink how we deliver education and how we finance it going forward.
Then he shows some basic statistics about student loan debt (2:25 in the video):
- The average student loan is $27,000;
- Over 1,000,000 student loans are for $100,000 or more; and
- 35% of graduates under the age of 30 are over 90 days delinquent on their loans.
Then, he shows a graph comparing the rise in tuition against inflation and housing since 1978 (2:45 in the video):
- Tuition has increased over 1,000% since 1978;
- The increase in tuition is 4x the rate of inflation; and
- As a comparison, health care costs, which are also considered out of control, have only risen 250% over the same time period.
Even more alarming is that tuition has increased 72% since 2000 while wages for graduates have declined 14.7% (3:20 in the video). Furthermore, he calculates a budget for the average college student. After factoring in taxes, food, shelter, and living expenses, there is effectively no money left for paying off student debt (4:20 in the video).
To top it off, he points out (at 5:00 in the video) that a student loan is the worst debt to take on. Why? It can’t be forgiven in bankruptcy. It stays with someone for the duration and is passed on to co-signers. It’s no wonder banks and the government are lining up to hand out student loans to kids.
So what’s the bottom line? In 1963, when the cost of going to UC Berkeley was $203 for the year, the investment was worth it. With a college education starting at around $100,000 today, and in some cases costing as much as $300,000, it begs the question if the investment is worth it? Depending on your college major, I would contend that it isn’t. In fact, I agree with Greg’s conclusion – we need to rethink how we deliver and finance education.
The roots of the education problem
In order to begin to talk about solving the problem, we have to start by looking at its roots. There are three things which have become evident to me:
1. The origin of our education system
Our education system was started during the 1800’s in order to help create a workforce for the emerging industrial age. It was meant to train workers for factories. Over the last 200 years, our economy has changed drastically, but our education system and how we deliver knowledge to students has not kept up. We are still training people to work in a factory environment while our economy has become one that is dominated by knowledge workers, service workers, and trade and craft workers.
To better understand the ails of our current system, watch this video short by RSA Animate:
2. The expectation of attending college
While it used to be that a minority would attend college from a graduating high school class, it is now an expectation that a majority will attend college. A stigma is attached to those who don’t strive for college. The problem with creating this expectation is two fold. One, there are not enough jobs awaiting college graduates that justify the investment to get the education. Two, there are many skilled, well paying jobs that do not require a college education that companies are struggling to fill due to a lack of qualified applicants. The notion of working smarter, not harder, has become so ingrained in our society such that jobs not requiring a college degree are looked down upon.
Mike Rowe, the guy from the Dirty Jobs TV show, did a great segment recently on how he is trying to reverse this stigma and encourage people to work both smarter and harder. Again, another couple of videos worth watching if you care about the subject.
3. Colleges lack accountability
As pointed out in the talk by Greg Gottesman, there is an abundance of easy money for attending college. The problem is that colleges receive their payment immediately from the loan underwriters. They aren’t tied to the success of their graduates or their ability to pay it back. In other words, if a student graduates from college, fails to find work, and can’t pay back their obligation, the college is unaffected.
It has created a system where there is a lack of accountability in the system. If anything, it encourages colleges and universities to proliferate and continue raising their rates in order to fund ever bigger facilities, staffs and offerings. I’m concerned that most institutions have lost sight of their reason for existence. I thought it was to educate students and, in the university setting, provide a platform for advanced research. I’m beginning to wonder if some administrations think that their prime reason for being is to raise money to fund an ever growing budget.
How do we move forward?
I’ll be the first to admit that I don’t have all the answers of how we move forward, but here are some starting points and suggestions that I would make.
1. Overhaul the elementary and secondary education systems
Instead of moving kids from one year to another based upon a curriculum that we developed a century ago, we need to rethink how we educate our children. Instead of a system that is geared toward removing passion and enthusiasm for learning, we should be helping our children identify their passions and provide a platform for them to pursue it.
2. Change society’s expectation of education
Attending college should not be viewed as the only successful outcome of the education system. We need to change our “one-size-fits-all” approach to education and recognize that a successful outcome can be achieved in many different ways. Yes, for some that could be attending college to become a doctor, lawyer, engineer, architect or other knowledge worker profession, but there are a number of other professions which do not require a college degree. We need to make sure that those outcomes are also treated as successes.
3. Bring accountability to the college system
Implementing simple metrics such as placement rates for college graduates could be used to identify which colleges and universities are eligible for loans. In other words, if a college is failing to graduate its students and place them into the workforce, then they should be seen as high risk institutions and treated as such, either with reduced loan availability, higher interest rates, or shared risk by the institution. At a minimum, prospective students need to be made aware of the placement rates and risks of attending specific institutions so they can make better decisions about taking on the debt required to attend those schools.
In wrapping up this long post, I want to be clear that I am not against a college education. I still believe that education is absolutely critical to our society. I see it as the great class equalizer. Making education accessible is the best way to provide everyone with the opportunity to achieve their dreams.
However, we also need to recognize that a college education is not for everyone. There are many other educational alternatives such as trade schools, vocational schools and apprenticeships. For some reason, these are not held in high regard or glamorized like a college education. At the end of they day, these alternatives are just as valuable and important to our economy and society as those jobs that are filled by college graduates.