Sharing the Burden

Banks have for some time been required to disclose all terms and costs associated with loans.  Most people take this for granted when dealing with their bank.  Why isn’t this same policy required in education?  After all individuals many times are mortgaging their futures when borrowing tens of thousands of dollars for a degree that may or may not produce a living wage.  In most cases, a degree in women’s studies and black history costs as much as a degree in business or engineering.  The only problem is the formers provide little income while a degree in accounting and civil engineering will get you a job.

Colleges and universities should be required to disclose to each applicant what their income prospects are for earning a certain degree.  That might not be important if you were merely auditing the course, but for most students a degree is a step to a better life.  Schools should also bear responsibility if your degree produces no job prospect.  After all, in most cases a councilor talked you into the course and your money (or borrowing) paid a faculty member and other administrators.  The form this may take is how banks reserve for loans that go bad.  They estimate future losses and reserve for them.

How this might work is if one cannot find a job within two years of getting a degree, they would ask for a one-year refund of their tuition and fees.  The school would debit the reserve and pay the student.  It wouldn’t take long for most colleges to drop courses that were unprofitable.  Today there is no incentive to rein in worthless degrees.

You may say such a program will never be approved by a faculty and administrations that only want more money.  That may well be the case. In Oklahoma, 39 percent of high school graduates must take a math-remediation class that cost them but which produce no college credits.  It also may be the case in Tulsa public Schools, which wants more state money, but can only produce a 63 percent graduation rate.  Most companies could not stay in business with a 37-percent failure rate, yet we keep listening to their unwarranted pleas for more money.

In the Wall Street Journal, Douglas Belkin wrote an article entitled, “Colleges Offer a Degree and a Guarantee.”  The story was about a program at Adrian College in Michigan.  This private liberal arts school promised to cover some or all of a student’s loan payment up to $37,000 a year depending on how much the student earned after graduation. The case was about Natalie Dunn, a junior studying radio broadcasting, who will owe $40,000 in student loans without knowing how much her degree will earn.

What the country cannot stand is the next two generations held back by staggering student debt.  Young people can’t move out on their own.  They cannot afford a home or a new car much less a marriage.  The school officials have sold them a bill of goods.  It’s time schools to share the burden.

About 100 schools, according to Mr. Belkin, mostly liberal arts colleges are now offering a variation on this guarantee through an Indiana company call LRAP Association.  It is similar to an insurance policy and costs $1,300 per student.  As an illustration – if a student has graduated and is still earning below a certain amount in salary, LRAP cuts the student a check to help cover their student loans.

Another example is offering employment guarantees and a chance to return to campus for up to 48 free credits if a graduate isn’t employed in their field within six months of graduation.  Cameron University Lawton had such a program.  If an employer thought one of their graduates (now an employee) was deficient, they would take them back for free retraining.  Now, that’s confidence in your course work.

By sharing the burden, many schools are seeing a bump in their enrollment.

In 2015, Senator Lamar Alexander, R-Tennessee, chairman of the Senate’s Health, Education, Labor and Pensions Committee, called for “market-based accountability policies that required all colleges and universities to share the risk of lending to student borrowers.”  Let’s hope such efforts continue.  They make the country stronger, students better educated and prepared and get rid of worthless degree programs and their faculties.