Let Them Eat Debt

By Gerard Robinson

“S’ils n’ont pas de pain, qui’ls mangent de la brioche.” – “If they have no bread, let them eat cake.”
Queen Marie Antoinette [ca. 1789]

Thus spoke Queen Marie Antoinette in response to the peasants’ indignation about the scarcity and expense of bread in pre-revolutionary France. Scholars debate the authenticity of the quotation on several fronts: its translation, date, origin, and even its true delegate (whether it be Antoinette, philosopher Jean-Jacque Rousseau, or Maria Theresa of Spain, the first wife of King Louis XIV).[1] While the remark’s trustworthiness remains in question, nonetheless, the logic undergirding this “if-then” conditional statement represents an age-old algorithm powerful people employ to create prescriptions to solve problems for the masses. Today, the masses in America have a modernized “if-then” statement, and a well-meaning remedy too.

“If they have no jobs for lack of higher education, let them eat debt.”
2015

My amended “if-then” statement reflects the contemporary American dilemma over the availability and cost of higher education. Adult learners value an education for economic prosperity and self-enlightenment. This is hardly new; education in our Western democratic tradition has a long history that began in classical antiquity. In an American context, various states and private entities provided colleges for higher learning, beginning with Virginia’s (unsuccessful) Henrico College in 1619. Harvard College followed in 1636, and the College of William and Mary in 1693.[2] Several additional colleges opened throughout the colonies before George Washington delivered his first state of the union address in 1790, in which he referenced the, “[p]romotion of science and literature. Knowledge is in every country the surest basis for public happiness.”[3] Over the next 175 years, presidents, legislators, and intellectuals debated the merits of a federal role for higher education, as well. The creation of land grant colleges with the Morrill Acts of 1862 and 1890, and benefit packages for World War II veterans with the Servicemen’s Readjustment Act of 1944 (i.e., The G.I. Bill), are two examples of how the federal government defined its role in higher education.

Fifty years ago, President Lyndon B. Johnson, the only president to earn a degree in education, became a modern architect for an expanded federal role in higher education when he signed into law the Higher Education Act on November 8, 1965, at his alma mater, Southwest Texas State College. His goal in the Higher Education Act was to open the doors of postsecondary education to millions of qualified people by minimizing financial barriers to its access. The cornerstone of the law remains Title IV, which supports our Federal Pell Grant Program as well as Federal Direct and Family Loan programs.[4] Every president from Nixon to Obama has supported the Higher Education Act’s value, revising federal student aid policies along the way.

Fifty years later, the ambition of the law remains the same. Federal aid continues to make a sizeable contribution in the forms of grants, work-study opportunities, and scholarships. Federal loans, however, pay the lion’s share of students’ direct investment into their education. And unlike other forms of federal aid, students must pay back federal loans. The same is true for private loans. Even more concerning for first generation and low-income students, a report on student debt notes that:

Graduates who received Pell Grants, most of whom had family incomes under $40,000, were much more likely to borrow and to borrow more. Among graduating seniors who ever received a Pell Grant, 88% had student loans in 2012, with an average of $31,200 per borrower. In contrast, 53% of those who never received a Pell Grant had debt, with an average of $26,450 per borrower — $4,750 less than the average debt for Pell recipients with debt.[5]

These numbers do not even take into consideration the high number of low-income students who take on college debt but never complete; they are left with debt but no degree. Regardless of type of university or college, the majority of full-time enrolled students across this country uses a federal loan[6], and will continue doing so into the foreseeable future.

These numbers add up. In November 2014, the U.S. Department of Treasury identified an $806 billion balance in the Federal Direct Student Loan line.[7] Adding non-federal and other loans to this amount, student debt stands at $1.2 trillion, according to a study by global credit company Experian. Student debt increased by 84% between 2008-2014, eclipsing home loans, cars, and credit cards as America’s second highest consumer debt after mortgages.[8] Student loan debt is also a problem for 31 million students who enrolled in college between 1995 and 2014 but did not complete the program.[9] Loan default is a problem as well. According to September 2014 data calculated by the U.S. Department of Education, 13.7% is the national default rate for borrowers who entered repayment in 2011 and had defaulted on a loan in 2013. Of the 650,727 borrowers in default by 2013, 45% were affiliated with public universities, 44% with for-profit universities, and 11% private universities.[10] Loan default remains a problem in all three higher education sectors, most particularly in the for-profit sector.[11]

To put the enormity of student debt in context, let us compare it to the wealth of higher education institutions. A recent report notes that 835 American colleges and universities, ranging from Harvard to Howard and U.C.L.A to Southern Virginia University, received an 11.7% average return on investment for fiscal year 2012-2013. Some 82 of the 835 schools hold endowments worth more than $1 billion, and 70 hold endowments worth between $501 million and $1 billion.[12] Student debt dwarfs these endowments. Even if each of these 835 schools had an endowment worth $1 billion in 2015, their cumulative total of $835 billion would still lurk in the shadow of $1.2 trillion in student debt. This is simply untenable. When debt accumulated by adult learners to pay for an education surpasses the wealth of our nation’s institutions of higher learning, we must find a remedy. “Let them eat debt” is no longer a sufficient response.

Where do we go from here? I offer four practical and two conceptual recommendations and identify the key stakeholders who must support them, based on my experience as a former Virginia Secretary of Education, Florida Commissioner of Education, and as a current trustee of Patten University.

Practical

  • Technology is pointing the way to new, cost-effective and resource-use efficient examples for delivering education. Savings derived from an innovative use of technology can support financial aid or make higher education more affordable. For example, UniversityNow, a social venture based in San Francisco, has created a world-class technology platform that can deliver a quality, competency-based education online and at affordable price of $3,900 a year for an undergraduate degree. Key stakeholders: governors, state legislators, college presidents, and entrepreneurs.
  • Community college students have the lowest debt among postsecondary learners. High school students should consider this an option after graduation. Key stakeholders: community college presidents, nonprofit organizations that support community colleges, high school counselors, and PTAs.
  • Colleges and universities can increase their students’ completion rates by providing additional supports to at-risk students. The City University of New York’s ASAP program significantly increases completion rates by providing additional financial, academic, and social capital support for full-time students. The Texas Interdisciplinary Plan at the University of Texas at Austin has done the same. Key stakeholders: trustees, provosts, and philanthropists.
  • State Department of Education leadership must ensure that its high school curriculum prepares students to enroll directly into credit-bearing math, reading, and writing courses to avoid spending money on non-credit-bearing courses at four-year colleges and universities where remediation is not a priority. This requires that Commissioners of Education lead the way in back-mapping K-12 preparation to ensure readiness for freshman year. This is politically difficult, as New York State Commissioner John King found when he raised the cut scores required for graduation and tried to align a curriculum that would prepare students for the new challenge. Commissioners need critical support from college presidents, business leaders, and parent organizations in the process. Key stakeholders: state legislators, college admission deans, employers, and high school teachers.

Conceptual

  • Our nation must align the growing demand for quality jobs with a quality education essential for securing them, and without sacrificing the humanities, social sciences, and the arts in our pursuit of STEM. Creative thinking, clear communication, problem solving, and knowledge about human synergy are skills our corporate and nonprofit employers want from college graduates. Requiring students to engage with a balanced college curriculum would increase students’ overall skills and employability. Stanford University, for example, created a “digital humanities” program for students to major in English and computer science, or music and computer science. Another option is to require STEM majors to enroll in more non-STEM courses. At MIT, at least 25% of coursework is in non-STEM courses. Key stakeholders: deans for each discipline, Nobel laureates, employers, and college students and alumni.
  • Adult learners over age 25, employed, and not living in a college dormitory are the new normal. We must reimagine higher education costs with them in mind too. This means creating alternative systems for delivering education to nontraditional students while maintaining the quality of the college’s degree or certificate. The University of Virginia’s School of Continuing and Professional Studies, for example, provides a top-ranked education to adult workers through online courses and on campuses located throughout the Commonwealth. The University of Utah created the Osher Lifelong Learning Institute to cater to the educational needs of students over 50 years of age. Key stakeholders: federal and state legislators, college residential and student life deans, online education providers, corporation-based tuition assistance specialists, and working adults.

These recommendations constitute interlocking, not isolated, solutions. It does no good to encourage first-generation students to attend community colleges on debt ratio grounds when their completion rates are still abysmally low (a social capital issue). It is also of little benefit to prepare students intellectually and socially when they cannot receive a financial aid package to make higher education affordable—as it does for athletics (an equity issue). An optimal strategy would attack the various components of the debt dilemma in concert.

Here are a couple of strong models. At the two-year level, Project Success at El Camino Community College in Torrance, CA, has a proven track record of producing first-generation students who graduate with a degree or certificate and transfer to a four-year college or university—and without major debt (a social capital solution). At the four-year level, Davidson College in North Carolina addressed the debt issue by becoming the first liberal arts college in the nation to offer incoming students a financial aid package that is free of loans (an equity solution).

America will celebrate the 50th anniversary of the Higher Education Act of 1965 this year. Let us remain thoughtful about ways to keep the spirit of the law alive. This will require vigilance, single-mindedness, and the courage to be unpopular. Our taking up this charge will replace “let them eat cake [debt]” with “let them eat an affordable piece of the American pie.”

___________________________

[1] See Fraser, A. (2002). Marie Antoinette: The Journey. New York: Anchor; Temerson, C. (2000). Marie-Antoinette: The Last Queen of France. New York: St. Martin’s Griffin; and Lanser, S. (2003). “Eating Cake: The (Ab)uses of Marie-Antoinette.” In D. Goodman & T. Kaiser. Marie Antoinette: Writings on the Body of a Queen. New York: Routledge; andhttp://www.history.com/news/ask-history/did-marie-antoinette-really-say-let-them-eat-cake.

[2] Urban, W. & Wagoner, J. (2004). American history: A reader. New York: Routledge.

[3] http://www.presidency.ucsb.edu/ws/index.php?pid=29431&st=knowledge&st1=.

[4] For a history of the Higher Education Act of 1965 see http://www.tgslc.org/pdf/HEA_History.pdf.

[5] http://projectonstudentdebt.org/files/pub/Debt_Facts_and_Sources.pdf

[6] http://nces.ed.gov/programs/digest/d13/tables/dt13_331.60.asp?current=yes.

[7] http://www.fiscal.treasury.gov/fsreports/rpt/mthTreasStmt/mts1114.pdf.

[8] http://press.experian.com/United-States/Press-Release/experian-analysis-finds-student-loans-increased-by-84-percent-since-the-recession-40-millio.aspx.

[9] http://nscresearchcenter.org/wp-content/uploads/NSC_Signature_Report_7.pdf.

[10]http://www.ifap.ed.gov/eannouncements/092414CDRNationalBriefings3YR.html.

[11]http://www.ticas.org/pub_view.php?idx=954, and http://febp.newamerica.net/background-analysis/federal-student-loan-default-rates.

[12] https://www.insidehighered.com/news/2014/01/28/college-endowment-funds-did-well-market-2013; and http://www.nacubo.org/Documents/EndowmentFiles/2013NCSEPressReleaseFinal.pdf Note: National Association of College and University Business Officers (NACUBO).

Comments on this Post

  1. After reading this very superb, thought provoking, and solution-based essay, the biblical scripture, “The rich rule over the poor, and the borrower is slave to the lender” (Proverbs 22:7 NIV) comes to mind.

    Despite the factual brilliance and scholarly points detailed by Mr. Gerard Robinson related to the often invisible, “contemporary American dilemma” umbrellad under the Federal Student Aid programs – I believe that a major financial conspiracy looms large. It is a financial conspiracy (see: https://www.youtube.com/watch?v=S5CbxBtqpOk&feature=youtu.be) that reflects the likes of Santa Claus – a blatant, symbolic lie that ultimately acts as an economic catapult for this very capitalistic insatiable, U.S. government that most of us just survive in.

    I also believe it is the “new normal” because the systemic process used has multidimensional strategies that constantly distort and change the rules in the middle of their very refined economic game. Therefore, the plethora of past, present and future solutions will never be truly rectified.

    As a current, online graduate student, I am smart enough to understand the nuances and pitfalls of my selected learning plantation and slave owner. Thus, in my selected, disciplined plan I will eat and repay all of the cake that I consume.

    Kevin L. Moore
    GCU Graduate Student
    01/19/15

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