Rethinking college costs
By MATTHEW PATE
The English statesman, Sir Francis Bacon once observed, “Knowledge is power.”
Bacon is correct. With a little knowledge, we can accomplish great things, but the price of power should give us all pause for thought.
The story of Damocles comes to mind. In Cicero’s tale, Damocles is given all the wealth and power of Dionysius, a tyrannical ruler in 4th century Magna Graecia. Things are all well and good until Damocles notices a sharp sword is suspended above his head by a horse hair. At that moment he recognizes the true cost of all that power.
Young people all over the United States now face a similar situation. Eagerly clamoring to possess knowledge (and its associated power) they go to college. College is, after all, the modern baseline for many “good” jobs. There’s just one small problem: To pay for all that fancy book learnin’, many of them take out huge student loans.
For most students, once they graduate (or leave school), the meter starts running. Interest racks up and they are obliged to start repayment. The harsh reality quickly attaches.
Outstanding student loan debt topped $1 trillion in 2011. According to Forbes magazine, student loan debt now exceeds U.S. credit card debt, which stands at about $798 billion.
A New York Federal Reserve study finds that delinquencies are also increasing. The borrowers who are at least 90 days late on student loan payments have jumped from 8.5 percent in 2011 to 11.7 percent in 2013.
Enter Congress. Apparently, folks like Republican Reps. John Kline of Minnesota and Virginia Foxx of North Carolina don’t think the sword is sharp enough or the horse hair thin enough. They sponsored — and the House just passed — the Smarter Solutions for Students Act. If enacted this measure would require subsidized and unsubsidized Stafford loans to be recalculated every year and tie them to 10-year Treasury notes, plus 2.5 percentage points.
The government currently sets interest rates on these loans. Absent congressional action, the interest rates will double on July 1 from 3.4 to 6.8 percent for millions of subsidized Stafford loans.
Since Republicans seem to be hot on teaching revisionist history, creationism and refuting climate science, this move is consistent with their staunch anti-intellectualism. As kings throughout history have known: Keep the peasants from reading and they’ll be less able to question you.
President Barack Obama vowed to veto the bill, should it get past the Democrat-controlled Senate. “The bill … would impose the largest interest rate increases on low- and middle-income students and families who struggle most to afford a college education,” the White House said.
The non-partisan Congressional Research Service estimates the Republican plan would mean a student who borrows the maximum amount of subsidized and unsubsidized Stafford loans over five years would pay $14,430 in interest. If rates double on July 1, a student would pay $12,598, compared with $7,965 if they don’t.
As one who teaches several hundred college students each year, I see a lot of kids before the harsh light of reality burns through their college dreams. Too many are oblivious to the financial millstone awaiting them.
College guarantees nothing, certainly not a particular income bracket. We shouldn’t facilitate the fantasy that it does.
In the main, we need to find a way to better underwrite students loans; imbue students with a deeper sense of the obligation on the front; and rethink the way we cover the costs of college in the first place.
To these points Francis Bacon had another sage admonishment, “To be ignorant of causes is to be frustrated in action.”
Matthew Pate is a former law enforcement executive who has advised police agencies around the country. He writes from Pine Bluff, Ark. Contact him at email@example.com
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