If you borrowed money from the federal government to finance your education and you're having an extremely hard time paying it back, I have good news for you. President Barack Obama has just signed an executive order that expands eligibility for Pay As You Earn, a newish program that caps the monthly debt payments of eligible borrowers to no more than 10 percent of their monthly income. And if you still have outstanding debt after 20 years, or 10 years if you work in the public sector or for a nonprofit, it will be forgiven, like a youthful transgression.
Remember when you thought taking on this student loan debt made sense because getting a college education meant that you'd eventually earn enough to pay it off? Those were the days.
Cutting debt payments for cash-strapped borrowers is a nice gesture. In 2008 and 2012, Barack Obama fared well with under-30 voters, and Pay As You Earn will give some of them a nice little boost, just in time for the midterm congressional elections. But there is a much larger problem that the president's feel-good proposal fails to address, which is the fact that people who take on federal student loan debt aren't earning enough to pay it back. America's higher education institutions aren't offering value for money. It would be far easier for borrowers to repay their student loan debt if they weren't unemployed or underemployed, and it would be easier still if they were employed in jobs that offered robust wage gains over time. Yet the debt crisis also reflects the corruption of mass higher education in America.
Federal student aid subsidizes attendance at any accredited college at virtually any price. The result is that students have no way of knowing which colleges offer the best bang for the buck, and colleges have little incentive to get better at actually serving their students.
Consider the findings of "Paying for the Party," a masterful account of the many ways life at a large Midwestern flagship public university is rigged against students from working — and lower-middle-class backgrounds. Over the course of five years, the sociologists Elizabeth A. Armstrong and Laura T. Hamilton tracked a group of female students at "Midwest University," a thinly disguised big public flagship school. One of their most striking findings is that standard college advising consistently failed to meet the needs of students from modest backgrounds. Students from affluent backgrounds turned degrees in "party majors" like sports communication and broadcasting or interior decorating into jobs in glamorous-sounding fields. Students who didn't have parents familiar with the ins and outs found themselves at the mercy of incompetent, indifferent and overworked advisers who routinely led them astray.
Many of the students profiled by Armstrong and Hamilton thus wasted precious dollars, and precious years, taking courses that ultimately proved useless.
So what can we do to address the ways higher education is failing young Americans? A good first step: Punish colleges that have failed their students; if a student defaults on her student loans, the higher education institution she attended should pay a penalty. This would make colleges think twice about their lackluster advising. Colleges would suddenly have an excellent reason to guide students to majors that would help them gain marketable skills.
We'd do well to rethink higher education from the ground up. Thinkers often talk up the importance of breaking down the barriers to entry in higher education — of making it easier for new higher education institutions better-suited to the needs of today's students to get up and running, and to compete with existing colleges that are failing to offer value for money.
Anya Kamenetz emphasizes institutional reforms that would also lower the cost of high-quality instruction. Among other things, she envisions "cohort colleges" that offer students who need the most help intensive advising and instruction designed to help them meet their educational goals and short-term pop-up schools that would meet the lifelong learning needs of working students looking to learn specialized skills. Flagship schools, meanwhile, would be transformed from elitist bastions that take pride in their exclusivity to educational innovation hubs, where resources would be devoted not just to teaching students lucky enough to be on campus full time, but also commuters educated at satellite campuses throughout the state.
It is egregious that students, parents, and taxpayers are the ones who suffer when colleges don't do their jobs while the colleges in question are left untouched. We simply can't let them get away with it anymore.