We must increase accessibility to higher education for the lower and middle class
Obtaining higher education in the United States is more important and more expensive today than ever before. A college degree is rapidly becoming a become a base-level requirement and necessary investment to be successful and competitive in today’s American economy. The following visual estimates the alarming and exorbitant increase in student loan debt in the U.S. at a rate of $2,667.20 per second over the past decade.
College remains the greatest driver of socioeconomic mobility and knowingly serves as a one-way ticket towards the American dream. Yet the U.S. is currently facing a significant opportunity gap between high and low-income families which is magnified by the financial burden placed on student loan debtors. Only 1 in 10 Americans from low-income families will hold a bachelor’s degree by age 25, while half of high-income families will obtain that same level of education, further intensifying this inequity.
Does college education matter?
The United States is quickly shifting towards a highly technical and service-focused economy. The U.S. Department of Education predicts that in the next three years, over 65% of job openings will require postsecondary education. It is crucial to pursue higher education in order to keep up with the rising demand for high-skilled labor and achieve the American dream.
There is statistical evidence to support the idea that a well-educated workforce is positively correlated with higher average wages across states. The diagram below illustrates the positive relationship among education and earnings. It shows that the median annual earnings for Bachelor’s degree holders is over 40% higher than that of a high school graduate.
There are also positive long-term economic benefits to reforming the accessibility and debt obligations to higher education. The majority of college graduates will remain in their respective state for the duration of their career. Consequently, the higher earnings of the higher educated workforce will benefit the state economy through income taxes and less reliance on government assistance programs.
Is it even worth it? Argument to critics of postsecondary education financing reform
Over the past decade, the costs of attending college have skyrocketed, while median household incomes have remained stagnant. Opponents of education financing reform argue that the costs of a college degree thus outweigh its benefits. Some suggest that not every graduating high school senior is best off by seeking higher education, rather he or she could take alternative routes to achieve success. Critics argue that the true value of a college degree depends on the major field of study.
However, data from the Federal Reserve Bank of New York suggests otherwise.
Researchers calculated the internal rate of return (IRR) to obtaining a Bachelor’s degree by weighing the costs and benefits of investing in higher education, then refined their findings by major. Benefits were measured as the extra wages [college graduates] would earn relative to those with only a high school diploma, received each year until retirement at age sixty-five. Note that these researchers compare the IRR of a Bachelor’s Degree to the market return average of 7%.
These results point to the idea that investing in higher education is a sound investment for the average undergraduate degree-holder, relative to those who receive less education. Even for the underemployed undergrad (working in an occupation that does not typically require a bachelor’s degree), the wages earned after receiving a college degree exceed wages of a high-school graduate, including those with less specialized fields of study. Employers continue to pay a premium to workers with a college education.
We must reform policy to lessen the financial burden and provide access to quality postsecondary education for the middle class. The Economic Policy Institute suggests a number of different ways education reform policy can be used to help lower inequity gaps and student loan debt:
- Restraining tuition growth
- Reduce high-school dropout rates
- Move people without high-school degrees through GED and associate degree programs
- Increase quality of K12 education to improve success of high school graduates in postsecondary education
If change isn’t implemented soon enough, student loan debt could become the source of the next U.S. economic bubble. We cannot allow college to become a barrier, rather than a ticket, to the American dream.