Sunday, January 18, 2015

Education and Spending

With the recent announcement by President Obama concerning his proposal to enhance the education of America's youth through a free community college program, I thought it worthwhile to reflect on my personal experiences with the cost of education, especially as it relates to my children.

First, Obama's proposal was met with the standard political reactions; support and cheering by Democrats and liberals, dismissiveness and "cost" concerns by Republicans and conservatives.  (Is it even possible for a member of either party to praise a proposal from someone across the aisle?).  Those supporting the idea cite numerous studies that find a correlation between level of education and income, marital stability, employment with a livable wage, access to health care, and perhaps most importantly, those same categories for their children.  Even the business community, often quoted as bemoaning the lack of skills among those applying for job openings, generally support advanced education. 

As for the cost, it is a no brainer that for every dollar spent on education, the return is substantial, ranging from money realized through taxes, to money saved from expenditures on public housing, welfare, unemployment and incarceration.  Lamenting that it is $60 billion that we don't have to spend as some Republicans have stated, reminds me of the old oil filter commercial where the mechanic says, "You can pay me now or pay me later".  It continues to amaze me when some politicians play the cost card for everything that helps those with the least, yet find no objection to spending 500, even 600 billion dollars per year on our military budget.  Or, find no reason to reduce the tax benefits for the richest, all in the name of (bow your head) business. 

(Perhaps with this proposal, the business community will put some money where their mouth is, lack of skills among job seekers wise, and get all the Washington politicians to include education funding within the framework of their worship of business).

For me, addressing education reform is far bigger than free community college.  One reason why attendance at community colleges and technical institutions has exploded is that the cost of higher education, public or private, is out of control.  In Pennsylvania where we live, the state college system is about $20000 per year.  Most private schools start in the upper $30K range and end in the $60K range for the "best" schools.  As compared to inflation, the cost of college has risen many times the cost of almost any other commodity, certainly much more that the average family's salary.  (Of course, the good news is that the salaries of the top 1% has kept pace with the cost of college.  Is it possible that education costs are driven by what the richest can pay?  HMMM).  It is no wonder that college tuition debt is the fastest growing type of debt.  When middle class parents are no longer able to save for their kids college, and are less able to use home equity to finance tuition, yet still retain the belief in the American dream of a college education for their kids, then borrowing by both the parents and the children becomes the only option. 

For my family, now that my son has graduated college, we are starting repayment on the tens of thousands of dollars we borrowed, while my son has begun his own $300 a month for 10 years repayment program to cover his Stafford loans.  I accept the idea of some debt for college.  While I applaud the free community college idea, I firmly believe that with any privilege, all should have some skin in the game.  It makes everyone appreciate what they are involved in, work that much harder to be successful knowing there is a cost.  What galls me is the interest rates being charged!
The parent plus loans we have are 7.9%.  Stafford loans range from 3.5 to 6.0%.  At a time when the prime rate is virtually nil, charging 5,6, 7% interest for 10 years is obscene.  If zero interest loans for education seem anti-capitalist to you, fine, but let's at least agree that 7.9 is outrageous.  How about 1% over prime, with a maximum of 5%?  Remember, the more money the middle class and recent college graduates spend on education, the less money there will be to purchase the goods and services that we need to keep the economy growing, to keep the demand for jobs high, to allow everyone to pay their debts in the first place.

Another question we need to address relates to who should go to college.  In some European countries, a test is administered in high school; pass, and you attend a free university for higher education, fail, and you are taught a skill that suits your talents and will provide a livable income.  I can't imagine Americans agreeing to allow such a system here; there are too many examples of people who test poorly but are good students, or are late bloomers, or who find the motivation to succeed in college while being unmotivated in high school.   However, if we hold the idea that only through college education can one be deemed successful, then we do a great disservice to those for whom college is not the best choice.  We drastically need to provide better counseling to our high school children about all the paths to success, we need more partnering of local businesses with public schools to direct the right skills to be taught to those not going to college, and we need to
re-emphasize the importance of the skilled trades as being, not only necessary for our society, but a solid career choice for those with the aptitude, not just a second best choice.  This also means that we need to address this issue by re-evaluating compensation levels; do we need $100 million dollar salaries in any field?  Should there be a salary structure that provides a livable wage for all job choices, as opposed to one which relegates those at the bottom to poverty wages while rewarding those at the top with obscene salaries? 

Curiously, if one is to research the original GI Bill and its 62 year history, there were many detractors of the concept, many doubters that it would provide assistance without encouraging laziness.   In retrospect, it seems crazy to question the efficacy of these programs and the astronomical return we received on the investment in the various GI bills, yet most new programs, especially government programs, are met with doubt at the time of birth.  This is even more so now, in light of the movement to depict the government as the bad guy, and the desire to make it smaller.  When I see someone of this ilk, I always wonder which government program they or their family used to help them and I wonder if they are unappreciative or merely the victim of selective memory.    

I applaud Obama's proposal although I do so with restraint, fearing that the real problems in education may not be addressed.  Perhaps, education should be one of those services that is not market driven.  Perhaps our education system should focus on knowledge for the sake of knowledge, and skills which enhance the life of the graduates.  Perhaps it should teach how to think just as much as what to think.  Perhaps be less concerned with budgets, and alumni donations, and more concerned with graduation rates and employment opportunities.  Like our health care system, there is far too much money in our education system that is not being directed properly.  We should be able to cut the cost and improve the product, but we need all parties involved to work towards the same goal and I fear that those who support the status quo will win the day.

In the meantime, my wife and I will continue to make sacrifices to pay for my son's college debt, and the ongoing college education of my daughter.  I have seen first hand how college helped my son to mature, become a more confident person and a more productive citizen.  And I already see similar results for my daughter after a year and a half.  I know we are not unique in this perspective, there are tens of thousands of parents who make similar decisions every spring when their children decide on a college in the fall.  My hope is that over time, those voting, those who win elections, and those who claim to be educators will come together and realize that the future of America lies not in how many guns and bombs we can make, but in how many young people we can inspire to believe in themselves and in our country.   

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