A Modest Plan for Paying College Costs

falonI’m just about to head off to a commencement here at University of Califonria,  Berkeley. The news that keeps banging around in my head is that the state has just announced a whopping 9% increase in fees for next academic year, the third fee increase in three years.

The average young person now graduating from college anywhere in America has to repay almost $22,000 of student loans. That’s a record, partly because college costs have continued to rise even during the downturn, because states are cutting their support for public universities, and because other sources of college funding have taken big hits — like home equity loans and 529 plans that allowed families to sock money away for college.

But how can a young people repay this much money when the job market is so bad? The law doesn’t allow college loans to be discharged in personal bankruptcy.

Even when they do find jobs, college grads have no choice but to take the job that pays the most. They can’t afford to do what they might really want to do — become, say, a social worker or writer or legal services attorney.

This problem won’t go away when the economy recovers. College debt burdens have been rising for years, and the career choices of many newly-minted graduates are narrowing to those that help repay college loans. We need a new system. So here’s my proposal: Any college student can get full funding from the government, with only one string attached. Once they’ve graduated and are in the work force, they pay 10% of their incomes for the first 10 years of full-time work into the same government fund they drew on to finance their college education.

Now maybe that formula will need to be adjusted up or down to cover all the costs. And surely some people will game the system as they do every other one. But the essential idea is that linking the costs of college to subsequent wages makes college affordable to everyone.

And linking repayment to a fixed percent of subsequent wages for a limited number of years enables all graduates to follow their dreams into whatever work they want, without worrying about earning enough to repay a loan. Those who end up in relatively high-paying jobs subsidize those who end up in relatively low-paying ones.

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It’s fair, it’s simple, and good for society as well as the individual.

For those who are getting their degrees: Happy graduation.

by Robert Reich

Robert B. Reich is Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton.

This article first appeared on Robert Reich’s Blog. Republished with permission

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Comments

  1. says

    When I went to college in the 60s and 70s, tuition really wasn’t a barrier for anyone. Whether it was an Ivy League college or a state school, you could pay some, borrow some, and get through.

    Now, the costs are ridiculous, even at state schools. Thank goodness my daughter can go tuition-free at any public college here in California — thanks to an old law covering the children of disabled Vietnam vets.

    If it weren’t for that, I’d have to pray she got a big scholarship.

    Getting more kids into college — even if some of them misuse the opportunity and even if in the short run it costs taxpayers something — is absolutely the best thing for America.

  2. says

    There’s an incongruity here:

    “Those who end up in relatively high-paying jobs subsidize those who end up in relatively low-paying ones. It’s fair”

    How is subsidization fair? Ever.

    You may be able to make a strong argument that subsidization has the potential for positive social change or that it is a “good” thing. But, fundamentally, subsidization is explicitly unfair.

    If such a system could be run that requires no involuntary taxpayer contribution and is a purely opt-in system, it sounds like a great idea.

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