Paul on April 22nd, 2015

HamletWhen it comes to paying for college and the college financial aid system, how are we doing?  Here are just a few benchmarks upon which to fashion a reasonable judgment.

•    America’s young people now graduate with an average debt of about $33,000+ bringing the grand total to over $1.2 Trillion!
•    Because of the crowded conditions in many colleges (often a function of the need for revenue), it takes longer to graduate which adds untold billions of dollars lost in opportunity costs.
•    Money that could be used to drive the economy or enhance the retirement assets of millions of Americans is diverted to pay for college.  The implications are that our failure to adequately support the college financial aid system for a student over a projected 4-year college career, will force us to underwrite the 30 years of retirement for families, many of whom have been financially “neutered” by college costs and a financial aid system that by any standard, doesn’t work for the vast majority of students, their parents and our colleges.
•    Colleges like Sweet Briar, founded in 1901, are beginning to close for financial reasons largely because the government has failed to properly design and underwrite its own system of financial aid making the way we collectively fund a college education unsustainable.
•    The EFC (Expected Family Contribution) which was once a dollar amount the family could be expected to pay for one year of college is now an ill-defined “index of eligibility”, a term that nobody seems to adequately describe with anything approaching specificity.
•    There is not a scintilla of enforcement regarding the obligation of colleges to meet the demonstrated need of students (assuming the EFC actually means something) and not only do they fail to meet the need but as a financial reality, they can’t.
•    The resulting chaos that a largely unenforced, lawless system of financial aid creates is a new and very troublesome meaning of the term “need-blind”.
•    Up to an estimated 500,000 college-ready students fail to enroll in an appropriate college every year or any college at all because of the uncertainty of aid and the promise of debt.

In short, the way we pay for college has no winners at all except possibly purveyors of 529 plans (people who educate no one), proprietary colleges (the greatest per-student source of loan default nationwide), and wealthy foreign students who are happily recruited by colleges across the nation as simply a wise business decision.  Foreign students typically pay “full-freight” and rarely ask for and/or receive significant financial aid.  Unwittingly or otherwise, we have developed a system of funding higher education where everyone loses including the nation, its security, its global competitiveness, its colleges and its economy.

While the ivy-covered “Rome” burns, The U.S. Department of Education and the Obama Administration boast about how much easier it is to navigate the financial aid system.  And to their credit, it is.  But entering the system is like gliding by a ticket booth to gain entrance to the play.  It is an illusion of progress.  What good is easy access to the theater when the play is bad?  Isn’t it time for the Obama Administration, Congress, the U.S. Department of Education and, frankly, the entire post-secondary education establishment to more critically observe not just the ticket booth and the lobby but the play itself?  If the financial aid system were an actual stage production, it would close in a day or two. The reason it doesn’t is because this misguided spectacle has a captive audience of millions of ordinary families who are forced to attend no matter the cost or the quality and length of the performance.  It’s the only play in town!  One couldn’t build a more destructive, harmful system if they tried with malice aforethought. But let’s be clear that it isn’t only the current administration who has been a silent partner in the creation of the current debacle.  That persistent negligence is entirely non-partisan with every administration since the late 1960’s a co-dependent player in support of this strange and toxic long-run production.

Colleges and our nation’s future are at risk and the people who can address that issue continue to aimlessly mill about the ticket booth.  Go inside; watch the performance; make the bold adjustments that are required before it is too late.  Or better yet, write a new play!

Since 2009, the Obama Administration has been the recipient of a new paradigm for college financial aid.  They have failed to respond for many reasons not the least of which is an unexpected insensitivity to the damage the current “system” inflicts every day.  Essentially, the model:

•    Eliminates forever the scourge of student loans for non-proprietary colleges
•    Preserves the financial well-being of parents
•    Is 100% reliable and transparent
•    Protects and even enhances the financial strength of colleges
•    Provides incentives for colleges to rein in costs and to assure graduation in four years
•    Creates unrivaled college access to all qualified, college-ready students regardless of economic status, race or ethnicity…where the primary currency for admission is  character and talent, not dollars
•    Dramatically reduces the growing bureaucracy in the U.S. Department of Education
•    Eliminates the FAFSA and CSS Profile financial aid forms along with their associated costs and paperwork
•    Encourages and enables parents to focus on saving for retirement rather than college
•    Mobilizes the full talent reserve of the nation
•    Includes a smart public/private plan to pay down existing student loans
•    Reduces the reliance on off-shore human resources
•    Benefits “Main Street” and ordinary Americans instantly
•    Creates a huge, ongoing economic windfall for the nation

It is odd and a little unsettling to observe the entire higher education establishment acting as such a passive player in the determination of its own destiny.  After all, these are some of the smartest people on the planet. For years many of us have been waiting for that demographic so profoundly affected by the utterly dysfunctional model of the way Americans pay for college to take a stand for change.  If The Chronicle of Higher Education, the first-rate publication-of-record for our post-secondary education community, is any measure, it would suggest that all too many members of that constituency continue to stand idly by as just more helpless victims, largely devoid of financial game-changing ideas. And in the absence of any convincing evidence to the contrary, apparently they are content in their role as just some tidal flotsam at the margins of a turbulent financial sea.

As the Bard once said in reference to the hatching of a sub-plot in the unfolding of another tragedy, “The play’s the thing….” In Hamlet, there were only a handful of casualties but in the college financial aid tragedy there are millions every year.  In the play the characters were imaginary and in the end the victims could always rise to an often thunderous, cleansing curtain call.  In our play, there is no curtain call; the plot is real; the victims are real; and the casualties remain casualties often for the rest of their lives and beyond as nameless, faceless “extras” in the pages of this nation’s increasingly checkered history.

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