A day after hearing that billionaire Robert F. Smith had pledged to pay the collective student debt of the entire 2019 Morehouse College graduating class, a newly minted University of Vermont graduate said the obvious, “Well, that’s a sweet deal for them … It’s too bad the system is so askew that that even has to happen. I can think about that every month for the rest of my life.”
The UVM student was part of the chorus of Americans whose emotions have ranged from feeling overwhelmed by such a poignant act of generosity to envy to anger to doubt that the complicated gift could actually ever be realized.
Smith’s pledge was to 396 graduates — some whose student loans were as much as $200,000.
Expected to run well into the millions of dollars, the pledge will not benefit those who never made it to graduation because their crushing debts forced them to withdraw before they earned a degree.
And among the questions: Are all student loans included? Does the pledge include loans taken out by the graduates’ parents? What about gifts from home equity loans?
Ultimately, the generosity highlighted the systematic problems of debt in American college education.
According to published reports in the days since the announcement, over all, the majority of seniors at four-year colleges — about two-thirds — are carrying student loan debt. Recipients of bachelor’s degrees in 2016 who left school with debt owed an average of about $30,301, according to the most recent federal data. Parents on average incurred another $33,291 in debt. In 2017, that average was nearly $29,000, according to an analysis of federal data from the Institute for College Access and Success, a nonprofit advocating affordable higher education. Adjusted for inflation, that same average was about $13,000 in 1996.
The picture for recent African-American graduates of four-year colleges is worse: These students owe, on average, $7,400 more than their white peers, according to research from the Brookings Institution that examines all graduates, including those who did not borrow. And over the next few years after graduation, that debt gap, including new graduate school loans, widens to about $25,000.
Students attending historically black colleges like Morehouse are also more likely to take out loans compared with other students, in part because of the racial wealth gap.
The sum of all of these fears is that college is no longer truly attainable for many American young people. The choice is a mountain of debt, or entering the workforce that mostly provides higher-paying jobs to individuals with college degrees.
Without question, this generation of students is the most debt burdened ever. There is no way it will not be a problem for them. Some sociologists argue that debt is such a game-changer, that young people today will focus more on finding lucrative careers than they will on finding partners and starting families.
None of this is OK.
The New York Times this week issued a scathing indictment in its editorial on the issue.
“Around the turn of the last century, the steel magnate Andrew Carnegie paid to build 1,689 libraries across the United States. Many are still in use, celebrated as monumental works of philanthropy.
“They should be seen as monuments to the failure of public policy. The United States could have built a lot more libraries by taxing the incomes of Carnegie and his fellow Gilded Age plutocrats, but, at the turn of the last century, there was no federal income tax.”
It is taking a more global toll, according to the Times editorial: “Economic growth requires an educated workforce. Americans who entered their working primes in the 1990s were far more likely to have college degrees than their peers in other developed nations. Now the United States has fallen behind much of the developed world — and one reason is that the average cost of obtaining a college degree is among the highest for any developed nation.”
And, notably, the editorial points to the Morehouse gift as the greatest irony of all.
“The problem facing policymakers is not merely a lack of will, but also a lack of money. The federal government collected 16.5 percent of the nation’s economic output last year — well below the 17.4 percent average federal share over the last half century. The primary reason for the shortfall, of course, is the steady reduction of income taxation. No one has benefited more from that trend than financiers like Morehouse College’s 2019 graduation speaker,” the editorial states.
It does not take a college degree to see our education system is broken. For certain, the gift is a generous one; it’s just too bad it had to be given in the first place.