The Next Indentured Generation?

The other day I received a blog comment that chilled me all the way through.  No, it wasn’t a threat.  The commenter just questioned why state and federal government should be supporting higher education at all.

On the surface, very much on the surface, it’s a perfectly logical question. At a time of financial difficulty, when almost all states have severe budget constraints, if not enormous deficits, and when the federal deficit is huge, why should the federal government and states be supporting higher education?

The question, I fear, arises out of the current preoccupation with the here and now, and plays into Santayana’s statement about those who fail to learn the lessons of history being doomed to repeat them. So… for those who have mislaid or forgotten a small piece of history, I’d like to point out that, until roughly 1800, there were literally only a few handfuls of colleges and universities in the United States – less than 30 for a population of five million people. Most colleges produced far, far fewer graduates annually than the smallest of colleges in the USA do today.  Harvard, for example, averaged less than 40 graduates a year.  William & Mary, the second oldest college in the United States, averaged 20 graduates a year prior to 1800.  Although aggregated statistics are unavailable, estimates based on existing figures suggest that less than one half of one percent of the adult population, all male, possessed a college education in 1800, and the vast majority of those graduates came from privileged backgrounds.  Essentially, higher education was reserved for the elites. Although more than hundred more colleges appeared in the years following 1800, many of those created in the south did not survive the Civil War.

In 1862, Congress created the first land-grant universities, and eventually more than 70 were founded, based on federal land grants, primarily to teach agricultural and other “productive” disciplines, but not to exclude the classics. By 1900, U.S. colleges and universities were producing 25,000 graduates annually, out of a population of 76 million people, meaning that only about one percent of the population, still privileged, received college degrees, a great percentage of these from land grant universities supported by federal land grants and state funding.  These universities offered college educations with tuition and fees far lower than those charged by most private institutions, and thus afforded the education necessary for those not of the most privileged status.  Even so, by 1940, only five percent of the U.S. population had a college degree.  This changed markedly after World War II, with the passage of the GI bill, which granted veterans benefits for higher education. Under the conditions which existed after WWII until roughly the early 1970s, talented students could obtain a college degree without incurring excessive debt, and sometimes no debt at all.

As we all know, for various reasons, that has changed dramatically, particularly since state support of state colleges and universities has declined from something close to 60% of costs forty years ago to less than 25% today, and less than 15% in some states.  To cover costs, the tuition and fees at state universities have skyrocketed.  The result? More students are working part-time and even full-time jobs, as well as taking out student loans.  Because many cannot work and study full-time, the time it takes students to graduate takes longer, and that increases the total cost of their education. In 2010, 67% of all graduating college seniors carried student loan debts, with an average of more than $25,000 per student.  The average student debt incurred by a doctor just for medical school is almost $160,000, according to the American Medical Association.

Yet every study available indicates that college graduates make far more over their lifetime than those without college degrees, and those with graduate degrees generally fare even better.  So… students incur massive debts.  In effect, they’ll become part-time higher-paid indentured servants of the financial sector for at least 20 years of their lives.

The amounts incurred are far from inconsequential.  Student debt now exceeds national credit card debt [and some of that credit card debt also represents student debt, as well]. The majority of these costs reflect what has happened when states cut their support of higher education, and those costs also don’t reflect default rates on student loans that are approaching ten percent.

As a result, college graduates and graduates from professional degree programs are falling into two categories – the privileged, who have no debt, and can choose a career path without primarily considering the financial implications and those who must consider how to repay massive debt loads.  And as state support for higher education continues to dwindle, the U.S, risks a higher tech version of social stratification based on who owes student loans and who doesn’t.

So… should the federal and state governments continue to cut  support of higher education? Are such cuts a necessity for the future of the United States?  Really?  Tell that to the students who face the Hobson’s Choice of low-paying jobs for life or student loan payments for life.  Or should fewer students attend college?  But… if that’s the case, won’t that just restrict education to those who can afford it, one way or another?

17 thoughts on “The Next Indentured Generation?”

  1. cremes says:

    Daily advances in educational technologies are causing disintermediation to occur in the educational industry. MIT has recently signed up *tens of thousands* of students for some of their online courses. The course is essentially free to anyone with a computer and a web browser. Accreditation from these classes is what costs money, i.e. they charge you to take an exam and get a paper saying you have mastered the work.

    Many/most colleges and universities have not been serving their students well, particularly when some have huge multi-billion dollar endowments that they sit on to little good purpose.

    I look forward to the opportunities and innovation that a *reduced* influence from state money will have on higher education.

    1. Having watched the “opportunities” already “created” from reduced state funding, I’m far less optimistic than you are.

  2. Frank says:

    Education is our most important investment in our future. The failure to recognize the need and importance of this investment will put us (America, our Country, our society and way of life) at a competitive disadvantage versus other societies who are not so near sighted (like China and a great number of other Countries that are getting ready to “eat our lunch”).

    This isn’t “wide-eyed” liberalism; it’s a plain, hard, capitalistic view of our current position and apparent (and appalling) lack of action.

    If the support for education was being done inefficiently, then the process should be fixed – not terminated. In the name of “sounding tough” we are getting soft.

  3. Marcus says:

    Nicely put, but might I also point out that, unlike credit card debt, student loan debt cannot be discharged in bankruptcy? Indentured servitude, indeed.

  4. R. Hamilton says:

    I want _everything_ defunded, and since I’ve got enough ammo to outlast the first wave of anarchy, I don’t care (except for a few people) what happens.

    Ok, close but not quite; especially since I’m not in a position to protect any of those few people.

    Now, having gotten that bit of verbal bomb-throwing off my chest, on to the subject. Just because at one time we had a system that held people captive by not offering enough opportunities for improvement doesn’t mean we might not be making the opposite error – overselling inappropriate opportunities – now. We could spend _half_ the public funds we do now and achieve more with them, if they were spent wisely rather than in vote-buying pandering to every last special interest group that can be sliced, diced, enumerated, and manipulated.

  5. Ihad the same reaction when I read that statement about defunding colleges. I teach college and have done so for 28 years as part-time faculty. This means I teach mostly the general education courses – which means I see a wide variety of our students. I was lucky enough to have my educational loans taken out before the Republicans changed the student loan system so disasterously and so paid mine off in 8 years. So been there, done that.

    Most of my students could not attend school without subventions (this is the proportion of costs paid by state or federal government), even as low as they are.

    Defunding education is indeed short-sighted – or perhaps we are electing legislators who want a population which is ill-educated and indentured to financial institutions which they or their kin own? Food for thought.

  6. Tim says:

    A post on the UK BBC education site today supports LEM in that a graduate, on average, pays back more than 10x in tax than it cost the government to get them through higher education.

    That same site states that India and China is churning out hundreds of thousands of graduates. The problem with this is that, having experienced the perils of outsourcing offshore, I would say that many graduates from these countries which I encountered did not appear to be particularly bright or good at their job. So maybe this statistic is not what it sounds.

    Countering this, the last UK government wanted over 50% of young people to get degrees. The subsequent rapid expansion of the university system has led to a perceived devaluation in the standard of academic qualifications such that secondary education in the UK is now in turmoil and revision, and universities have proliferated to the extent that many are viewed as jokes. Only the universities which existed 30 years (or 500 in the case of Oxford and Cambridge) have perceived value.

    So should we really encourage everyone to attain degrees when many people would probably have benefited from a very good vocational training. And, counter to LEM, these are not low paid jobs. Welders on oil rigs earn far more than many people with degrees.

    1. I certainly did not mean to imply that all non-college degree jobs are low paid. As I’ve noted elsewhere, skilled technical and industrial jobs are an area where trained people are also lacking.

  7. Bain says:

    There are many parties out there; believe education should be only for the rich. As a full-time nursing student I have encounted the lack of education first hand,long term nursing home hired people with limited or no education to take care of the patient. At my junior college they cut the certified nursing assistant program for the summer and you need this course to enter the LVN and RN programs. I know several students who are homeless and attending college and university full-time, many of these students are receving financial aid but it is not enough to cover housing, books and food. Thank you Mr. Modesitt for writing this article.

  8. DoctorT says:

    If you read articles on higher education written by economists, you learn that every increase in federal funding of student grants and loans led to colleges and universities raising their tuitions and fees, on average, by amounts equal to or greater than the increased funding. That is the primary reason why costs of higher education have risen far faster than inflation. (The secondary reason is that education is one of the few fields that failed to increase productivity and cost-effectiveness during the computer age. The tertiary reason is that too many teens are encouraged to go to college, which greatly increases demand.)

    College and university spending per student skyrocketed during the past forty years. The additional spending mostly went to administration: higher salaries, more executives, and bigger staffs. Colleges and universities, despite bursting at the seams with more students, decreased the numbers of full-time professors and tenure-track assistant professors. More and more courses are taught by part-time instructors who lecture at hundreds of students. The courses are watered down, writing assignments are minimal or nonexistent, and examinations are multiple-choice with answers recorded on bubble sheets.

    Big government is not a friend of higher education–it is helping higher education self-destruct. Most of our institutions of higher education are becoming four- to six-year long socialization camps for young adults. Half of the young adults will emerge with a piece of paper indicating that they could pass multiple-choice exams while socializing and are theoretically ready for white collar jobs. Those without the diploma wasted those years and will spend decades paying off student loans while earning less than if they had learned and entered a trade after high school.

    1. The colleges and universities increased their fees because increased federal funding led more students to enter college, and the states didn’t increase state funding, which meant that for colleges to accommodate the demand meant increasing tuition and fees. The state legislatures went along with this because they didn’t want to restrict enrollment or keep standards high because both were politically unpopular. You’re absolutely right about the growth of administration. In my wife’s university, the number of students has tripled over the past thirty years, as has the administration, while full-time faculty has increased by less than 40%, and faculty salaries have been frozen at least six years out of the last twenty, and the “nomimal” pay increases have averaged less than 2% per year, while deductions for health care [as well as health care deductibles] and other costs have increased more than pay increases. The number of adjunct faculty has increased notably,and professors who demand rigor and excellence, such as my wife, continually receive evaluations that say they demand too much of their students.

  9. DoctorT says:

    Increased demand for college attendance does not increase the cost per student. It certainly doesn’t increase the administrative cost per student.

    State universities had options besides massive expansions (coupled with massive tuition increases). Many chose to pack students into existing facilities: triples in dorms, classrooms and lecture halls crammed full, courses scheduled on evenings and weekends to make more use of existing classrooms, and reduced lecture hours per course (with the claim that independent study would replace the missing lectures). Schools that chose this option had very low marginal costs per additional student and significantly reduced average costs per student. The existing tuitions and fees would have covered the additional costs. But, most state universities that chose the “pack them into existing facilities” option raised tuition, fees, room, and board costs just as much as other universities and still begged for (and often received) more money from their state governments. The increased demand for college kept applications high, increased student loan funds made the higher costs affordable, and the extra money went to administrators. This happened in the University of Tennessee system where I was an associate professor and my daughter was a student. It also happened at the U. of Delaware (where my other daughter is a student).

    Another option for universities was to keep class sizes stable and select the most qualified matriculants from the enlarged pool of applicants. Costs would increase at (or slightly above) the inflation rate with this option, and schools adopting this approach probably would acquire reputations for higher quality graduates. I know of no state university or college that chose this option.

    For another viewpoint on the state of higher education, see the recent column by George Will.

  10. Chad says:

    Not seeking higher education does not mean low paying jobs. There are plenty of jobs that require hard work and some risk but include a reward to justify the risk.

    By the way… the point I made previously about government support for higher education was directed more at the current powderkeg of government student loans then in direct support and aid. The amount of debt being racked up which can not be tied to an asset nor can be discharged through bankruptcy is horrifying. Much being driving by college costs which have risen drastically faster then inflation.

    This is a bubble which will dwarf the housing bubble.

  11. Joe says:

    I expect higher education will evolve away from its current single-stint format.

    In high tech, it will change because one must constantly stay up to date to be relevant. Since life expectancy and work expectancy are increasing, it will become increasingly obvious that spending all our “university” funds in one go is foolhardy. Initiatives such as MIT’s/Standford’s will be quite useful in that regard.

    In other fields the same is probably true since countries such as Denmark find it profitable to provide free retraining of unemployed people (so they can contribute again — see “flexicurity”)

  12. Brendan says:

    And let’s not forget what a relatively minor fraction of the overall federal budget funding for universities is. The military budget dwarfs it.

  13. It is difficult for someone oriented to a particular government-financed activity like higher education, law enforcement, health care, or public schools to see beyond the needs for government support of that function.

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