By Representative Jerry McNerney
Years ago, I graduated from a state university with no student debt and very little financial help from my parents. But times have changed. It is only now -- more than 10 years after my youngest child graduated from college -- that I will finish paying off my portion of our kids' college loans. This illustrates the stark contrast between the cost of college education now and from a generation ago. Steadily increasing college tuition costs have outpaced inflation, making a university education out of reach for a large portion of the population.
The fact is that most students and their families cannot pay their tuition and other fees, leaving them to seek financing through private and public loans.
By the end of last year, student loan debt far exceeded credit card debt in this country, topping $1 trillion. Equally troublesome, the default rate on student loans has doubled in the last eight years.
The average student will graduate with an outstanding debt of $26,000, and 10 percent of 2012 graduates owe more than $63,000. The bleak employment picture for recent college graduates means many of these young adults will face a life of crushing debt as a result of getting a college education. It's no wonder that many young men and women are forgoing a college education altogether.
Adding to that debt is the overwhelming cost of graduate and professional schools that are so vital to keeping our workforce competitive in the global market. The professional fields that require this advanced education are the very ones that produce the innovators and entrepreneurs that keep the United States at the forefront of the most cutting-edge industries. Yet, an increasing number of students simply don't see the economic benefit in pursuing those paths.
The student loan rate is set to double on July 1 unless action is taken by Congress. The current low interest rate of 3.4 percent, set by a Democratic Congress and signed into law by then-President George W. Bush in 2007, is set to jump to 6.8 percent for about 7 million students and families, according to the Department of Education. This is clearly a step in the wrong direction.
An educated workforce is critical to keeping the United States as a leader in this increasingly competitive world. Other nations are investing in their educational system, and as a result, could become the world's innovation leaders.
In California, we have a perfect example of how times have changed. In the University of California (UC) system, tuition was essentially free to students accepted for admissions until the early 1970s. This commitment to education helped fuel the tremendous economic growth in California by educating a cadre of engineers, business professionals, technicians and others. Since that time, college has become less affordable, with UC tuition, fees and room and board now approaching $30,000 per academic year, a number that continues to far outpace the rate of inflation. Additionally, the cost of textbooks has risen at a rate three times that of inflation, adding to the financial burden placed on students and their families.
Due to the high costs of college, as well as job uncertainty after graduation, many prospective students today lack confidence in the economic value of a college education. We need to provide stability and give reassurance that students will be able to repay their loans in order to help regenerate enthusiasm for higher education, not create an environment in which they have no guarantee of what they will be paying years down the line.
Earlier generations of Americans made affordable higher education a priority. We have a moral obligation to do the same for future generations.
How can this be done? First and foremost, states and academic institutions must step up to their obligation to make college education affordable. This investment will prove worthwhile by building a strong, vibrant economy. Second, the federal government must reinvigorate student grant programs with robust funding for deserving students. Third, interest rates on loans must be kept low and stable. Finally, we should explore loan forgiveness for highly trained professionals who have incurred the considerable debt and will dedicate themselves to public service for the first part of their careers.
These common-sense approaches will make colleges and universities affordable and accessible, which in turn will ensure that the United States has the skilled workforce needed to remain a leader in an increasingly competitive global economy.
McNerney has represented California's 9th Congressional District in the House of Representatives since 2007. He serves on the Energy and Commerce Committee.