Student debt gets political

A key issue in the current (and often strange) American presidential election campaign is student debt. There are a number of reasons why it has taken on political significance, but as an issue it was initially raised by the Democratic candidate Bernie Sanders, who in his election programme promised to make university education ‘free and debt free’. The issue has also been taken on board by Hillary Clinton.

The prominence of this issue is underscored by various reports and news items. A blog post published by the Federal Reserve Bank of New York has pointed not just to the scale of student debt in America, but also its socio-economic consequences, increasing the gap between rich and poor and creating ‘negative wealth’ in a number of households. This finds a resonance on this side of the Atlantic, with a British lobby group suggesting that for many graduates the lifetime salary premium secured by a degree is likely to be overpowered by the weight of debt.

All of this tells us that nobody has yet found the silver bullet for higher education funding that is effective in providing necessary resources for institutions while also being socially equitable. Free tuition, notwithstanding the proposals by Sanders, places institutions at financial risk; a loans-financed higher education based on high tuition fees creates unsustainable debt. Sooner or later politicians will need to face up to the fact that means-tested support is the only way out of this. Maybe the US election campaign will help.

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5 Comments on “Student debt gets political”

  1. Or, like most other industries, we could figure out how to provide it more cheaply.

  2. John Bradley Says:

    As I understand it there are two other features of the US system that are currently not so dramatic over here. One is the size of tuition fees and the other is the independent sector using ‘hard sell’ techniques to persuade students to enrol and take on debt. The loans often come from federal or state funds so the provider is at no risk if the student doesn’t complete their course.

  3. callumkellie Says:

    Surely it depends on your outlook on education, is it a business to generate profit or a service to b provided by the state or agents funded by the state , like the NHS. Presumably the answer lies in between.

    • Yes, as you say, somewhere in between. We have to find a way of addressing both access issues and resourcing issues. A high quality system that many can’t afford is unjust; a sector that is able to attract all who can benefit from learning but without the resources to deliver high quality is ineffective.

      • James Fryar Says:

        Well, the NHS is an interesting example … not every NHS hospital is a teaching hospital. Since the NHS is publicly funded, the buck stops with the department of health who is responsible for national strategies.

        The university sector, in my mind at least, is very different. Each university is effectively an independent institution free to pursue its own strategic and academic plans. Government can influence the direction of that through funding – for example, research grants in particular fields on particular topics in the ‘national interest’.

        I think this is the real problem in terms of funding. On the one hand, if universities are publicly funded, then you could argue that university presidents are unnecessary and it is for the department of education to decide the strategic plan for each university. Like they do with the NHS, when they decide to close departments and reallocate funds to specialist centres.

        What I’m getting at is that I think the funding issue is actually due to the strange public-private relationship of universities with central government. In my view there are three possible scenarios:

        1. Universities suddenly say ‘Right … that’s it! We’re going to stop here and maintain everything as it is. We’re not accepting any more students than we do already. We’re not going to add any new degrees or departments. We’re going to keep our funding requirements exactly as they are right now’. Great! The public knows how much to spend. Since we can’t really expect universities to have no aspirations for growth and development, I fail to see how we can possibly ever fund the system since its requirements will keep growing.

        2. Universities get together and form their own strategies. ‘University B up the road has a wonderful science department that is outperforming ours. But our humanities department is world-renowned. Tell you what, we’ll stop taking science students, close our science departments and University B will close their humanities departments … we’ll both save a lot of cash!’ This sort of scenario isn’t going to happen if you have universities operating as independent entities, in which case, I fail to see how you can ever fund the system adequately.

        3. Universities lose their independence and central government controls everything. They close some departments, re-allocate resources and teaching staff, and basically run the university sector as they do the NHS. Since this is never going to happen, and the above scenarios seem unlikely, I fail to see how you can ever fund the system!

        Basically, I think there’s no solution. Unless we have a wholescale and pretty radical change in the concept of a ‘university’.

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