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Needed: A New Way to Finance the American Dream

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Our nation is witnessing the shattering of another American dream. Gaining access to higher education has become an obstacle not only for the poorest families, but also for middle-class households that once assumed their children would attend college.

Americans can’t hide from this expensive truth: Skills training or education that leaves graduates poised for success in the workplace is beyond the reach of far too many families. Gaining access to higher education is now an arduous mission, and paying for that education or training can be a lifetime burden. Can we honestly tell our children that the debt from college, which often stretches to more than $100,000, is going to be worth it?

For decades, we have taught our children that going to college would open the door to opportunities and the path to success—landing good jobs, raising a family, and owning a home. But can we make that promise today, at a time when many graduates from higher education institutions cannot find jobs? At least 39 states have cut funding for higher education this past year, many severely. Colleges overall have done little to contain tuition expenses. Many employers now demand that workers get their own “on-the-job training” before they are hired.

If America hopes to remain competitive in the global marketplace, we must make postsecondary education much more accessible. We have to be focused on creating opportunities for young people, especially those from low-income families and communities of color, who already feel the deck has been stacked against them. Our young people need to be encouraged, and not discouraged. We want them in classrooms learning, not on street corners, feeling as if they have nowhere else to turn.

Yet, it’s abundantly clear that the government may be looking through a clouded lens.

If the government can bail out Wall Street, it can certainly invest in the future of the young people who live on Main Street.

The U.S. Department of Education has proposed the “gainful employment” rule for career schools, a measure that would prohibit federal loans and grants to students seeking to attend an institution that the government has determined has a high default rate on student loans.

Clearly, the career schools need tougher oversight. There have been reports of unscrupulous recruiting tactics at some of the career schools. But these as well as other concerns must be addressed in a way that does not jeopardize the continued operation of the institutions, does not shut down access to higher education and training for students vying to get better jobs, and does not put approximately 100,000 people associated with the schools out of work. If this rule is implemented as planned, it will take away opportunities from those least capable of overcoming an additional hurdle. And that would be contrary to the Obama administration’s vision for education.

Let’s give the career schools some credit. Their students are disproportionately low-income, women, and minorities. Nearly 40 percent of the colleges’ students in 2005-06 were minorities, and career schools also play a leading role in the granting of associate degrees for minority graduates; about 20 percent of African-American and Latino students with associate degrees attended career colleges.

While the government has pointed the finger at these schools, it has overlooked the fact that the student-loan-default rates at career schools are hardly any different from those of low-income and minority students who attend public colleges or students at historically black colleges and universities.

What that tells us is that the root problem is not necessarily the schools. The main problem is the cost of education and training and the burdensome interest rates on student loans.

The country would be far better served if the U.S. Department of Education set higher education on a new course. There needs to be a new way of financing how students pay for college. Our students need lower interest rates on loans, and the schools need new incentives for reducing the cost of education and training. Maybe it’s even time for corporate America to make a greater contribution. To be sure, the business community benefits from a skilled and educated workforce. Companies could offer low-interest loans to students who train in related fields, offer to pay a portion of the loans of new employees, or give more to higher education institutions to enable the institutions to lower their fees.

Let’s urge the Education Department to begin brokering these arrangements or find ways that the government can leverage lower interest rates and lower school costs. If the government can bail out Wall Street, it can certainly invest in the future of the young people who live on Main Street.

These are challenging times that require innovative solutions. America needs oversight and regulatory changes to improve the quality of higher education and increase access to it. Our nation doesn’t need public policy that creates more unemployed workers and diminishes opportunities for better jobs.

Vol. 30, Issue 15

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