Got debt?

The Journey to

Finding the

Location of the

Post-Secondary

Education

Destination

$31,231, a steep increase from the cost of $10,856 in

introduction
1971. However this jump has not caused the amount of
students enrolling in college to drop. Since 1971 the
number of students enrolled in colleges has more
than doubled, increasing to 19.5 million as of 2013 1.
Today, the total student debt in the United States has
January 7, 2017
reached 1.29 trillion dollars. This amount increases
Dear Journal,
at an average rate of $3,0552every second. Although
Today is by far the best day of my life. At least it
more teens are opting for education past high school,
should be. I just got accepted into my top
the majority, about 68% choose to attendeither a two
university, but there is a huge financial strain
or four year college 3; this leaves few graduates
thats preventing me from attending school. I feel
entering vocational or trade schools and the work
hopeless. My frustration is making my mother
force. This happens for myriadreasons, specifically
upset. She feels as though its her fault that
the stigma of choosing to not attend a four-year
college is no longer an option, but its not. Im
university. The statistics above and to the right
sick of the government taking advantage of my
suggest that it may be necessary to continue
family and I. A college education should not be
education beyond high school in order to become
this difficult to obtain. I dont know what to do
financially stable and successful. While some people
considering Penn State is the only school on the
find financial success with only a high school
East Coast with my major. I need loans, I need
diploma, those individuals are the exception. While
scholarships, I need books, and it seems as though
many people recognize the need to continue their
without a miracle, none of these necessities will
education, like the girl above, most people cannot
be in my reach. Maybe Ill win the lottery, or the
afford it. This creates a trap for many students - they
President will feel sorry for me and lend me a
need a post-secondary education, but they cannot
dollar.
pay for it. This may cause them to question the real
Sincerely,
value of education. This deliberation aims to solve
A Middle-Class Student with A Dream
this problem. Education is crucial to ones success, so
something needs to be done about the cost of one. If
The cost and necessity of a college degree is at an all you continue reading, you will discover some of our
time high. On average, the price of attending a private, approaches to making post-secondary education
nonprofit, four-year university this school year was more accessible and more valuable.

Alternatives to College
In todays age, there is a lot more required for the
average person to have a successful life than in the
past. The main differences between the old age and now
is the amount of education one needs to become a
productive member of society.Societal changes
supported by technological advances have shifted the
paradigm from the blue collar oriented labor force that
built Americas foundation to a new white collar job
focused system that is building Americas future.
According to the National Conference of State
Legislatures, While a high school degree used to be
adequate for many jobs, research estimates that by 2020
nearly 70 percent of all jobs will require some kind of
post-secondary training, certificate, or degree.This
approach will focus on ways to increase the accessibility
of postsecondary education for all through the lens of 4
year college alternatives. It will provide possible ways to
destigmatize these options and increase their availability
in order to allow everyone to accomplish their goals,
whatever they may be.
Lowering Entrance Costs
The cost of college has increased dramatically over the past
few decades, and it is often a hindrance to attain a higher
education for many young people of lower socioeconomic
status. This approach focuses on ways to make the entrance
to college more affordable and reasonable for all. The first
option involves offering more government subsidies to
colleges to help them offset costs, abling them to charge
lower prices to students. The second method restructures
the financial aid system to target the lower income brackets
that need it the most. In either case, the goal is to lessen the
financial burden of college to incentivise more people to
pursue higher education without as much fear of debt.
Financial constraint was the number one reason (79%) given
by college counselors for why qualified seniors did not go on
to college. Among those not attending their first choice
college, 62% said they could not afford it and 25% said their
first choice did not provide them with any financial aid. Also,
among students who chose not to attend their first choice
school, 60% say the financial aid package and/or the cost of
the school they chose to attend were significant factors in
their decision not to attend their preferred college.
Minimizing Exit Costs
Todays college graduates are facing staggering levels of
debt, the average $30,100 per borrower. This approach
targets the issue of student loan debt and offers several
solutions to remedy the problem. In 2015, seven out of ten
seniors from nonprofit and public colleges graduated with a
student loan debt, averaging $30,100 per borrower. In 2016,
the gross amount of student debt reached 1.3 trillion
dollars, gaining its title as one of the highest debts in the
country, second only to mortgages. Additionally, one out of
four of these borrowers end up defaulting their loans or
letting them go delinquent, often due to circunstancial
inhibitors the borrower has no control over, such as the
difficulty of finding a job in the increasingly competitive
labor market, or these graduates lack of work experience.
The consequences of student debt on the borrowers, are
not only limited to bankruptcy and financial crisis, but also
also extend to the rest of these students life. Over 70% of
these borrowers are delayed from saving for retirement
because of these loans, 75% are delayed from purchasing a
home, and over 40% are delayed from starting a family.
 approach one
Lowering Entrance
Costs of College

Why is the Cost of College so High?

The cost of college began to skyrocket around 1970, when a struggling economy and an oil embargo caused double-digit inflation in the US. College tuition and
other associated fees grew exponentially as federal grants and other public investment for college education fell, and private loans (still subsidized by the federal
government) became the main source of money for poor and middle class students looking to finance their higher education.Coupled with falling family income
due to the economic downturn in the 1970s, borrowing money for college became the new normal as public investment in college and other forms of higher
education withered. Sandy Baum, a senior fellow at the Urban Institute and professor emerita of economics at Skidmore College, explains that the drop in public
education investment has been the single biggest reason for the increase in college costs. 1 More recently, government spending on higher education was
slashed during the subprime mortgage crisis and Great Recession from around 2007 to 2009. According to the Center on Budget and Policy Priorities, this
recession led to record-breaking declines in state revenues, because high unemployment rates, crippled housing values, and other factors left the majority of
people with less income. 2Because one of the greatest sources of revenue for higher education spending comes from income and sales tax, as income and
purchasing power dropped, so did government revenue. States responded in part to this plummeting revenue by cutting higher education spending drastically,
and these cuts have not been fully reversed. For the 2015-2016 fiscal year, average state spending nationwide on higher education is still 18% less than it was
before the recession, after adjusting for inflation. Not only did state funding drop, but enrollment in public higher education increased about 9% between 2007
and 2014, placing an added strain on university funds. According to the same source, the recession and the lack of employment opportunities may have
encouraged students to pursue a college education. All in all, because state and local funding accounts for roughly 54% of teaching and instruction funds for
2
public universities (data from 2015), tuition has increased accordingly. A positive trend, however, has been the increase in federal financial aid (particularly in
the form of Pell Grants) in an attempt to offset the decrease in state
funding.2Currently, the Pew Charitable Trust reports that federal
funding is primarily directed at assisting individual students while
state funds cover the majority of the general operations of public
universities. Higher education spending accounts for about 2% of the
total federal budget, but takes up around half of the U.S. Department
of Educations budget, excluding loan programs.3

Why are High College Costs Harmful?

The increased cost of college is significant. According to Adam Davidson reporting for the New
York Times, the tuition at a private university is approximately three times as expensive as it
was around 1970, while tuition at public universities is nearly four times higher. He goes on to
explain that, for the average American household that doesnt receive a lot of financial aid,
higher education is simply out of reach the great national crisis is the fact that too many .
other young adults are not going to college or, if they do, dont graduate, in large part because
they cant afford it. 5 Indeed, a graph of data compiled by the College Board, the National
Center for Education Statistics, and other sources shows that the cost of college (for private,
public 4-year, and public 2-year) is dramatically outpacing the growth in income for the
average American family. 6A study done by the Pew Research Center finds that the primary
barrier to going to and graduating from college is financial; Among adults ages 18 to 34
who are not in school and do not have a bachelors degree, two-thirds say a major reason
for not continuing their education is the need to support a family. Also, 57% say they would
7
prefer to work and make money; and 48% say they cant afford to go to college. In
California, a state that provides students with a relatively large amount of financial
support, rising prices have caused 75% of the lowest income students in the University of
California system to take out loans (a much higher proportion of students than higher
income groups). The Institute for College Access and Success finds that getting a UC
education can now drain a family making less than $30,000 a year of two-thirds of their
discretionary income. 8Even for those students who find a way to attend college, Pathways
to Prosperity, a study done by the Harvard Graduate School of Education, finds that only
56% of college students in four-year degree programs graduate within six years (just 29%
of students graduate in three years from two-year degree programs).9A major factor that
causes students to drop out of college is financial
pressure, as seen in the
figure to the right.
Increased tuition prices
also have devastating
impacts for diverse student What about Financial Aid?
bodies. A 2015 study from According to Davidson of the New York Times, federal financial aid
New York University finds has not been enough to offset the increased cost of college.
that, All else equal, a However, the current financial aid system actually benefits the
$1,000 tuition increase for wealthiest and most educated populations in America, rather than
full-time undergraduate those who actually need the financial support. Students attending
students is associated with private nonprofit schools, a demographic group that is
a drop in campus diversity disproportionately middle to upper class with college educated
of almost 6 percent, parents, receive an average of $25,000 annually in financial aid,
potentially because low- while students attending public community colleges who are
income and those of disproportionately from socioeconomically disadvantaged
underrepresented racial or backgrounds with non-college educated parents, only receive about
ethnic groups $8,000 a year. As Davidson says, our system gives three times as
disproportionately tend to much aid to the least needy as it gives to the most. In fact, this
5
be unable to afford higher problem has been worsening for a while now. According to Jon
11
costs. Marcus with the Hechinger Report, the share of financial aid being
given to low-income students who are falling deeper and deeper
into debt, has declined steadily over the last 10 years.12 While many colleges are quite generous with their financial aid, this money ends up in the hands of those
that are already well off. An article by Kim Clark of US News & World Report explains this situation. Clark estimates that since most students admitted to the
small elite universities (which happen to be some of the most expensive and generous with financial aid) come from wealthy families, less than 1% of college
freshman actually receive full financial aid for college.13 Moreover, Clark notes that students from middle and lower income families are left with an outstanding
cost after federal aid since the governments calculations leaves out costs such as living, travel, books, supplies, and other materials needed to support someone
in college.13 This problem extends even further than just federal grants or loans. Although only the top 20% of American households have annual incomes greater
than $100,000, according to the Tax Policy Center, this top tier group receives over 50% of the tax deductions for tuition and other college costs, despite the fact
12
that 13 out of 14 of these students would have been able to attend college without the aid anyways.
All in all, the federal
financial aid system,
originally intended to help
lower income students
attain a college education,
has been helping out
wealthier, better educated
families instead. As
Davidson with the New York
Times writes, high-
achieving students from
educated families receive a
disproportionate share of
financial assistance, while
those at the bottom,
struggling students from
families ill equipped to
support their educations,
receive a disproportionately
small share. This happens
even though the net sum of
all available financial aid
could support everybodys
education if distributed
5
evenly.
 Plan One: More government subsidies for Plan Two: Restructuring the financial aid
colleges to help them offset costs and system to better target lower income
charge students less brackets
As the most significant rise in the cost of college was caused by decreasing In order to help combat the education gap between students of low and high
education investment in the form of subsidies for colleges, increasing the socioeconomic status, this approach proposes restructuring the financial aid
amount of federal and state money allocated to universities could help offset system to ensure that money goes to support students who truly need the
costs and lower the burden on students. The action in this approach would money in order to attain higher education. The key player in this approach
be taken by the federal and state governments, perhaps by allocating more of would again be the government. The benefits of this approach are slightly
the education budget to covering college costs. This would directly benefit all different from Plan One in that this directly benefits those of lower
students attending college while simultaneously making post-secondary socioeconomic status instead of the student population at large. Support is
education more accessible to lower income students, increasing the number targeted specifically to increase college accessibility. This approach, however,
of people who are able to attain higher education. However, the money to be which can be thought of as an increase in need-based scholarships, could
allocated to universities has to come from somewhere. This approach could come at the cost of merit-based scholarships, require an increase in taxes, or
come with a price tag siphon money away
for taxpayers, even from other education
those without any kids or government sectors.
who will benefit from Moreover, students
the system. If we want from middle or upper
to increase state class families may be
education funding getting the most aid
back to pre-recession because they tend to
levels, states would have better academic
have to spend an records (hence earning
average of $1,598 more more merit aid) and
per student, 2 which is tend to go to much
a daunting task more expensive, elite
considering there are universities. These
currently around 13 students could
million students potentially see a drop
enrolled in public four in their financial aid.
and two year To avoid these
15
institutions. deductions in merit
Otherwise the money aid, perhaps the
may be pulled from government should
other areas of revise their system to
government spending, particularly because spending on higher education is already eating up about half of the U.S. more accurately incorporate merit
Department of Educations budget. Another concern may be that much of the federal funding is not distributed equally aid scholarships when
among the states, meaning some states may get the short end of the stick when it comes to federal higher education determining ones financial aid.
help. Data from the Pew Charitable Trust show that federal higher education funding varies significantly from state to For example, if merit aid and
state.3One thing we may want to consider during this deliberation is explained by Dr. Walter McMahon, emeritus federal/ state aid would end up
professor of economics at the University of Illinois. He writes that, in the long run, investing in education and being more than the total cost of
increasing the number of people who attain postsecondary degrees would generate enough tax revenue throughout the college for an individual, the
persons life to more than pay back the initial investment. This is because a person with a postsecondary degree tends government would redirect some
to earn more in future income. He finds that the return on investment on a college degree is such that, every $100 of that aid to other students that
invested in education brings an additional $15 in income for every year of a persons working life. Someone who truly need it and may not have
14
graduates from a four-year institution earns about $1 million in additional future earnings. received merit scholarships.
 Alternatives to a Costly
approachtwo 4-year University
In todays age, there is a lot more required for the average person to have a successful life
than in the past. The main differences between the past and now is the amount of education
one needs to become a productive member of society. Our culture has shifted from the blue
collar workforce we once knew to a technology based white collar workforce. What is
meant by this? A blue-collar worker is defined as someone who performs labor intensive jobs
and typically works with their hands. For the most part, many blue-collar businesses hire
unskilled and low-educated workers to perform basic jobs such as assembly line work. A
white-collar worker is defined as someone who usually has a job that takes place in an office
setting. These workers are skilled and formally educated professionals. Some jobs include
engineers, accountants, and lawyers.17 Societal changes supported by technological advances
have shifted the paradigm from the blue-collar oriented labor force that built Americas
foundation to a new white-collar job focused system that is building Americas future.
According to the National Conference of State Legislatures, While a high school degree
used to be adequate for many jobs, research estimates that by 2020 nearly 70 percent of all
7
jobs will require some kind of post-secondary training, certificate, or degree. This
statistic includes the blue-collar jobs that used to require little to no training. While this is
not a bad thing, due to a variety of factors and the way the post-secondary education system
is set up, not everyone is able to keep up with the shift. This approach will focus on ways to
increase the accessibility of postsecondary education for all through the lens of 4-year
college alternatives. This approach suggests efforts to destigmatize these options and
incentivize their consideration in order to provide viable alternatives for students who do not
find a 4-year degree niether viable or attractive.

What are the alternatives?

Not everyone is suited for the traditional 4-year college approach to receiving education after
after high school. So what are the alternatives? Two of the main options are community
college and vocational schools.

Community College:
Community college or junior colleges are two-year schools that provide affordable
postsecondary education as a pathway to a four-year degree. Their accreditations allow
students to easily transfer between community college and a four-year college or university
if they desire.Attending a community college can offer savings of thousands of dollars. The
average cost of attending public community college is $2,713 per year. By comparison, the
average cost of attending a public four-year college or university is $7,605 per year. To
ensure students have adequate preparation for jobs that require higher education or
workforce training, community college officials are working with employers to develop
flexible, affordable and relevant training programs that meet business and regional economic
needs. The partnership between businesses and community colleges can maximize
workforce development strategies, job training programs, and ultimately, job placement.
International students can take advantage of these opportunities through optional practical
17
training, a one-year authorization to work. Community colleges have had a long and rich
history in this country. Joliet Junior College in Illinois, founded in 1901, is the oldest existing
public two-year college. In the beginning years of community colleges, the education focused
on general liberal arts studies. It was not until the Great Depression when community
colleges began offering job-training programs as a way of easing widespread unemployment.
In 1948, the Truman Administration suggested the creation of a network of public,
community-based colleges to serve local community needs. Today, there are 1,166
community colleges in the United States. Community colleges are so prevalent that they
4
educate more than half the nation's undergraduates.

Vocational/Trade Schools:
Vocational schools can also known as a technical or trade schools. These schools are
educational institutions that exists to teach skills related to a specific job. Trade schools are a
more streamlined approach to education. Curriculum focuses on developing a particular
skillset and knowledge base for a career rather than receiving a general education. They have
smaller class sizes, and the majority of the training is hands-on. Just to name a few options,
students may become electricians, mechanics, pharmacy technicians, or dental hygienist
15
after attending a vocational school. Just like community college, vocational schools have a
long history in this country. In 1917, the Smith-Hughes Act of 1917, authorized federal funding
for vocational education in American schools. 1 This act explicitly described vocational
education as preparation for careers not requiring a bachelors degree. The philosophy that
drove this system was to fit people into their probable destinies.
 The Stigma:
There is a clear bias in American society against 4- year university alternatives. A
counselor from Park City High School, a high school in the northeast US, stated
that the stigma associated with community college had its origins in ignorance.
Her exact words were, Ignorance, yeah ignorance and apathy I think. Yeah,
because I think kids think only the kids who are not as smart or who cant make it
at a four-year college will go to County but clearly thats not the case. She
explains that students associate these 4-year college trade offs with low levels of
intelligence. People do not fully understand the benefits and opportunities that
community colleges and vocational schools can provide.8
The negative bias on 4-year alternatives also comes from how Americans place a
higher value on white-collar jobs than blue-collar ones. Parents want their
children to pursue careers that will maintain or increase their status despite the
fact that it may not be what the child wants to do. Evidence of this is clear in high
socio-economic communities where it is almost disgraceful to attend a
community college. Most people believe that if a student is academically
successful, then not attending a 4 year university is a "waste of talent." Mark
Phillips of the George Lucas Educational Foundation states, The bias against
vocational education is dysfunctional and unfair to students.12 Students are
going through school with this pressure of attending a large university because if
they do not, then they will not succeed in life.
Past Challenges/Issues Some of the
AlternativesFace:
Four-year alternatives have dealt with declining enrollment numbers
due to the shifting paradigm for decades now. According to an article
written for the New York Times in 1991, The statistics show that with
the notable exception of Yonkers, enrollment in vocational-education
programs for the Southern Westchester County's high school students
2
dropped precipitously during the 1980's.People have turned away
from these programs out of ignorance and unreasonable societal
standards for years now.
On the community college side, after jumping nearly 25 percent
between the 2007-2008 academic year and 2010-2011, the number of
students in community colleges fell nearly 4 percent from 2012 to 2013
and another nearly 3 percent since then, the American Association of
Community Colleges reports. 13
In addition to the declining enrollment, all forms of higher public
education have faced cutbacks in state and federal funding. This has
directly affected funding for community colleges and vocational
schools.

Plan 1: Creating a new paradigm about 4 year college alternatives

This plan includes eliminating the stigma that exists surrounding two-year institutions by promoting and educating students about the benefits of alternative
options. This can be done by implementing better guidance in high schools regarding postsecondary education and laying the foundations for a nationwide
initiative that promotes two-year institutions and vocational training as an alternative to costly four-year schools, while inherently minimizing stigmas that
surrounds college options and alternatives. There are many initiatives that exist within our society has everlasting impacts, and implications that support and
promote a particular cause. For example in 2010 Michelle Obamas launched her Lets Move campaign as an initiative to encourage young children to live a
better lifestyle. Her efforts have really resulted in the nation as a whole I think recognizing what an important issue it is for us stated by Dr. Risa Lavizzo-
Mourey. Michelle Obamas plan sparked a nationwide effort to improve the health of our children. The initiative has reached schools across the country,
America's Food and Drug Administration, the U.S. department of agriculture, etc. By creating a similar campaign that educates individuals on the benefits of
11
two-year institutions and vocational training will allow people to explore their future and career options with all possibilities at hand.
 Plan 2: Larger nationwide initiative for
free community college
Post-secondary institutions have faced major cutbacks in the past several
years. According to the Huffington Post, Funding for public two- and
four-year colleges remains well below pre-recession levels in almost
every state. The situation in Alabama is a perfect example of this.
The cuts in Alabama have had a major impact on the future of the state as
a whole. The cutbacks reach far beyond the traditional four year
universities in these states.10 In Missouri, 11.9 million dollars in cuts have
9
been made for community colleges. These cutbacks are detrimental to
the accessibility of post-secondary education. As a way to negate the
effects of these state-level cutbacks, federal initiatives to create free
community college and vocational schools should be implemented. This
idea is not brand new and many people have already attempted to put the
plan in action. For example, President Obama proposed a similar plan
during his last term in office. The Obama plan, which would cost the
federal government an estimated $60 billion over 10 years, with states
picking up as much as $20 billion in additional costs, targets community
colleges and is designed, the White House says, to make the first two
7
years of postsecondary education as free and universal as high school.
The federal government is not the only possible source of funding for this
plan. Currently, there are several other small scale initiatives in place to
make postsecondary education more accessible. Oregon and Tennessee
have developed tuition assistance programs that have made community
college free in their states. In Philadelphia, Pennsylvania, the Community
College of Philadelphia has eliminated all tuition and fees for low-income
18
students.
Plan 3: Better prepare students for post
secondary education
This approach aims to better prepare students for all of the possible
options after high school. Our first place to implement change are high
schools. Many high schools focus on a college-for-all message and
provide little guidance on alternative postsecondary pathways
(Rosenbaum 2001). 6 We need to draw closer relationships between
educators, specifically counselors and students. According to
CollegeBoard counselors are responsible for preparing students for
college,Some of the things they are responsible for include:
- Help to plan a challenging course schedule.
- Keep records of classes and grades.
- Track graduation requirements.
- Suggest which college admission tests to take and when to take them.
- Connect students to information on various colleges, majors and
careers.
- Recommend colleges to match academic profiles and career goals.
- Advise on "safety," "probable" and "reach" colleges.
- Make sure transcripts are sent to colleges.
- Write letters of recommendation.
- Explain how aid awards and financial aid work, and connect students
to local scholarship opportunities.
Yet still only a third of U.S. High School Seniors are prepared for college,
statistics show that, seniors are not adequately prepared for college-level
math and reading, refer to the image at the bottom of the page:
and according to the U.S. Census and American College Testing Program,
an estimated 18 million students enrolled in college in 2088; nearly 34%
dropped out in the first year because they were over confident, under-
10
prepared and laced realistic expectations about college. What we need
are more schools across the U.S. that fulling prepare students for
postsecondary education, and allow student to explore alternatives. For
example At the City Arts and Technology High in San Francisco, all
juniors and seniors secure internships in the community wherethey are
mentored by an on-site professional and regularly visited by their school
advisor. MetWest High School in Oakland, California is one of many that
12
place student internships at the center of their mission. And Nancy
Hoffman's excellent new book, Schooling in the Workplace, looks at how
six countries successfully integrate schools and workplaces, while also
providing a look at where this is happening in the U.S. Programs like
such allow students to explore alternative options such as vocational
schools. According to the U.S. News The modern high school curriculum
can and must do a better job of addressing the needs of these straight-to-
workforce graduates, as well as the needs of the roughly 15 percent of
high school graduates who are neither employed nor enrolled in college.
Of the 32 percent of recent (2014) high school graduates who have not
enrolled in a college or university, more than half are already working,
and another 21 percent are looking for work. In much the same way that a
great shop class could have provided past generations with the
foundation for middle-class success, an excellent coding class can help
lay the groundwork for today's students to achieve middle- and even
3
upper-class incomes. It is no longer a matter of encouraging students
to attend college, rather to find the best option for students. Often
students are unprepared for college, nearly 34% dropped out in the first
year because they were over confident, under-prepared and laced
realistic expectations about college. Overall as a society it is evident
there needs to be an overall change in the education system, starting at
the high school level that better prepares students for postsecondary
education, to help alleviate the financial burdens and hardships faced by
students when exploring postsecondary education options.
 approachthree
Dealing With Debt After
Graduation

In 2015, seven out of ten seniors1from

nonprofit and public colleges
graduated with a student loan debt,
averaging $30,100 per borrower. 2 In
2016, the gross amount of student debt
reached 1.3 trillion dollars, gaining its
title as one of the highest debts in the
3
country, second only to mortgages.
Additionally, one out of four of these
borrowers end up defaulting their
loans or letting them go delinquent,
often due to circumstantial inhibitors
the borrower has no control over, such
as the difficulty of finding a job in the
increasingly competitive labor market,
or these graduates lack of work
experience.4In other rare cases, such
as that of 47 year old Donna Troestler,
unfortunate accidents or tragedies
may be the reason behind the
borrowers increasing debt. Troestler,
a graduate of the University of
Wisconsin, suffered a serious injury
two years after she graduated from
college, therefore had to rotate or
5
switch jobs due to her incapacity. Due
to her unstable situation, she ended up
deferring around 23,000 dollars of
student debt and was forced into
financial crisis. By defaulting their
debt, these borrowers find themselves
having to deal with the harsh
penalties, punishment and compiling
interest rates, that eventually lead
them to bankruptcy and a deterrent in
their future. Many, such as Garrett
Mockler, who held three jobs and
struggled with credit card debt, find
themselves in moments such
desperation, where they are forced to
chose either pay one bill or not eat The consequences of student debt on the borrowers, are not only limited to bankruptcy and financial crisis, but also
or not have a roof over my head. How also extend to the rest of these students lives. Over 70% of these borrowers are delayed from saving for retirement
did it get this bad? Why is student debt because of these loans, 75% are delayed from purchasing a home, and over 40% are delayed from starting a family.7 It is
one of the worst debts to have and the estimated that between 2010-2020 there will be around 19 million college graduates and only seven million jobs that
hardest to get rid of? The facts at the require a college degree, thus indicating how more and more students are going to find themselves in debt and
top of the next page can help explain therefore with a less prosperous future.
the matter.
 Plan 1: Non-Taxable Stipend
from Company
The first possible approach involves companies
offering non-taxable stipends to employees,
exclusively for paying off student debt. In a 2015
survey from Iontuition, 80% of people who
responded stated that they would prefer to work
for a company that would offer them student
loan payment assistance. 50% of the same group
stated that they would rather have assistance
paying off their student loans than contributions
to a 401(k) plan.8Additionally, half of this group
also said that they would rather have loan
9
assistance than a health care plan. While this
attractive offer may seem like a no brainer for
companies looking to win over millennials,only
4% of companies are currently offering student
loan repayment assistance, up from 3% in 2015. 8
The reason for this may be because student loan
assistance payments are currently treated like
taxable income. Employers may be hesitant to
offer these payments because the benefit is at the
moment, essentially a salary increase. If
companies were able to offer a non-taxable
student loan assistance stipend, the debt of
recent college graduates would begin to greatly
reduce, and these employees would have greater
appreciation for the company, those receiving
the stipend, seeing it as an investment for their
future. Additionally, from a company
perspective, the payments could be capped and
would eventually not need to be sent out as the
student loan disappears, making this option
better than a salary increase while also keeping
job prospects open due to available funds.
Overall, the non-taxable stipend would attract
new workers and work as a recruiting tool while
also keeping a high retention of workers due to
the benefits. Through this option, both the
company and the student benefit in different
Option 2: Provide Aid to those who work in low ways.
income/rural environments
Trade-offs toPlan 1
The next option involves providing government aid or student loan forgiveness to those who choose to
work in low income or rural environments after graduation. In many rural areas or areas where funds are There are some downsides to this approach for
limited, there is a shortage of people available to provide services for the community. The most prominent both the student and the company. First, because
of these is health care and social services. As of late, This industry (health care) is going through a major the payment would end when the student debt
talent shortage in rural areas. In fact, rural areas account for almost two-thirds of all Health Professional disappeared, the employee would eventually stop
Shortage Areas. These are areas that have a shortage of primary, dental or mental health care as defined by receiving a stipend. Because they were already
10
the federal government. Because the average doctor graduates medical school with $166,750 in student receiving extra funds, the employee would have
11
debt, it would make sense to offer a program that provides aid to these doctors if they work where they less of a chance to earn a salary increase during
are most needed. There is also a teacher shortage in poorer rural areas. Because of this, the federal the student loan payment period. Also, the
government has established The Teacher Loan Forgiveness Program, which is intended to encourage company could cap the total amount given to pay
individuals to enter and continue in the teaching profession. Under this program, if you teach full-time for off the loans, the amount possibly not enough for
five complete and consecutive academic years in certain elementary and secondary schools and some graduates with crippling debt. The non-
educational service agencies that serve low-income families, and meet other qualifications, you may be taxable stipend would still help, but again the
eligible for forgiveness of up to a combined total of $17,500 on your Direct Subsidized and Unsubsidized student would be faced with the prospect of
Loans and your Subsidized and Unsubsidized Federal Stafford Loans."12 Expanding programs like these and halting the probability of a salary increase and
extending them to other jobs in which services are needed in specific areas, the employee shortage and still being in debt after receiving their payment
student debt will both decrease. installments. Also, from the company's
perspective, there may not be enough money to
Trade-offs toPlan2 provide new workers with extra money to help
with their debts. Additionally, workers that have
Cons: These programs while helping certain graduates, leave out a large spectrum of the new workforce. been with the company for a while may be
Additionally, only specific services are particularly needed in the areas discussed, causing issues for those betrayed because this option did not exist when
who want to become involved with the programs, but are not qualified to enroll in one. These programs they started working.
also will need immense support from taxpayers willing to give their money.
Plan 3: Make Saving Programs More Accessible
Another option to reduce student debt is incentivising borrowers to enter saving programs to finance a postsecondary education, rather than having to rely
heavily on a federal or private loan, thus giving them monetary relief when it comes to covering this debt. A current example of these saving programs is the
increasingly popular 529 plan, which is a savings account that can be withdrawn federally tax free and has a higher interest rate than that of bank.13 In fact, the
earnings from this program are almost double than that of local banks, making these programs particularly beneficial now that the interest rates are so low.
Due to its great benefits, the program has grown increasingly successful, with around 5.5 million households in 2012 created 529 plans. The reason why these
plans are more profitable than those of normal banks, is because in order to increase ones earnings in a saving account from a bank, one needs to increase
their amount of assets. However, this program combines all of its assets from all of its investors when taking in account one persons savings, thus allowing
their officials to negotiate higher interest rates, which consequently create higher profits. Additionally, these programs are also more flexible and lenient than a
normal savings account. While very beneficial and profitable, these programs are still not of common knowledge and sometimes not feasible to families due to
initial costs or lack of access. In order to make these existing programs more accessible, it is required to further advertise these programs, and to make known
how the 529 plans can be more favorable than student debt.

Trade-offs toPlan3
Con: These programs, while well intentioned, are fairly new and have not been tested as much as loans and bank savings accounts, therefore are both uncertain
and risky in the future. We have not yet seen how these programs will react to a drastic or unexpected change in the economy. Also, these programs have higher
fees than regular savings accounts, therefore may affect the investors finances if they chose to engage in the program. The 529 program also has high penalties
if these funds are not used for scholastic and academic spendings, such as tuition and room and board, therefore if the child chooses not to attend college or a
problem presents itself that the funds are not used for postsecondary education, the financial repercussions for the family may be severe. Finally, there is the
chance that these programs may affect the households eligibility for financial aid in the future, thus maybe leaving them worse off when paying and dealing
with college const and debt.

Plan 4: Lower the Interest Rates

Our final option, one that may seem the most straight-forward one, is to lower the interest rates on student loans. Legislation and Congress are the ones who
14
set and have control over federal student loan interest rates. For private companies, it is the lenders and the institution are the ones who have this control. If
the interest rates are lowered, the monthly payments for the borrower would decrease, therefore making it more feasible for them to pay off the loan. The
current interest rates for most student loans vary between 3%-10% for variable interest rates and 7%-13% for fixed rates,15 both of which, when accumulated can
16
reach up to $20,000 in debt and when defaulted can build up to penalties as high as $70,000. If this rate is lowered, particularly in the case of fixed rates, the
overall cost for the loan would decrease and therefore the borrower would be better off.

Trade-offs toPlan 4
Cons: One of the main arguments against lowering interest rates, as economist Susan Dynarski explains to Forbes, is that "the effect (of lowering the interest
rate) is quite small... since loan payments are largely determined by principal, rather than interest." It is argued that lowering the interest rate will not greatly
affect the borrowers when it comes to paying loans, since the majority of the cost lies within the loan, therefore lowering interest rates would be an expensive
and unnecessary fix to the problem. If they lower the interest rates, the relief it will provide the borrower in the monthly payments, may not be enough to
17
compensate for the amount the borrower original owes.
References
Introduction
1. Schoen, John W. "The Real Reasons a College Degree Costs so Much." CNBC. CNBC LLC, 08 Dec. 2016. Web. 08 Feb. 2017.
2. Stoetzer, Ethan. "Federal Reserve Report Finds Link between Increased Federal Aid, Rising Tuition." USA Today. Gannett Satellite Information LLC, 20 Aug. 2015. Web. 08 Feb.
2017.
3. Wyman, Nicholas. "Why We Desperately Need To Bring Back Vocational Training In Schools." Forbes. Forbes Media, 1 Sept. 2015. Web. 8 Feb. 2017.

Approach One
1. Sanchez, Claudio. "How the Cost of College Went from Affordable to Sky-High." NPR.
2. Mitchell, Michael, et al. "Funding Down, Tuition Up: State Cuts to Higher Education Threaten Quality and Affordability at Public Colleges." Center on Budget and Policy
Priorities, 15 Aug. 2016.
3. "Federal and State Funding of Higher Education: A Changing Landscape." The Pew Charitable Trusts, 11 June 2015.
4. Travis Mitchell. "Chart: See 20 Years of Tuition Growth at National Universities." U.S. News & World Report. U.S. News & World Report, June-July 2015. Web. 10 Feb. 2017.
5. Davidson, Adam. "Is College Tuition Really Too High?" The New York Times Magazine, 8 Sept. 2015.
6. "Growing Numbers of Students Priced out of Going to University as College Costs Jump a Staggering 250 PERCENT in the past 30 Years While Median Income Has Stagnated."
Daily Mail. N.p., 25 June 2013. Web. 02 Feb. 2015.
7. Is College Worth It? College Presidents, Public Assess. Pew Research Center, 15 May 2011.
8. Krupnick, Matt. "Low-income Students Struggle to Pay for College, Even in a State That Still Provides Help." PBS Newshour, 18 Aug. 2015.
9. Symonds, William C., Robert Schwartz, and Ronald F. Ferguson. 2011. Pathways to prosperity: Meeting the challenge of preparing young Americans for the 21st century.
Cambridge, MA: Pathways to Prosperity Project, Harvard University Graduate School of Education
10. Rowan, Rachel. "High Cost of Dropping Out If You Dont Graduate, Student Loan Debt Hits Even Harder." Tuition.io, 11 Mar. 2013.
11. Allen, Drew, and Gregory C. Wolniak. Exploring the Effects of Tuition Increases on Racial/Ethnic Diversity at Public Colleges and Universities. New York University, Apr. 2015.
12. Marcus, Jon. "College, Federal Financial Aid Increasingly Benefits the Rich." The Hechinger Report, 9 Mar. 2014.
13. Clark, Kim. "Who Really Gets the Most College Financial Aid?" US News & World Report. N.p., 19 Oct. 2009. Web. 16 Feb. 2016.
14. McMahon, Walter W. Higher Learning, Greater Good: The Private and Social Benefits of Higher Education. 2009.
15. "College Enrollment Statistics." Statistic Brain, 7 Aug. 2016.

Approach Two
1. American RadioWorks. N.p., n.d. Web. 16 Feb. 2017.
2. Brenner, Elsa. "Educators Try to Overcome The Stigma of Vocational Classes." The New York Times. The New York Times, 25 May 1991. Web. 16 Feb. 2017.
3. Camera, Lauren. "High School Seniors Aren't College-Ready." U.S. News & World Report. U.S. News & World Report, 27 Apr. 2016. Web. 16 Feb. 2017.
4. " Community Colleges Past to Present ." Community Colleges Past to Present. N.p., n.d. Web. 16 Feb. 2017.
5. Ed.D., Brian Harke. "High School to College Transition, Part 1: The Freshman Myth." The Huffington Post. TheHuffingtonPost.com, 22 June 2010. Web. 16 Feb. 2017.
6. "Finding Colleges That Fit." Finding Colleges That Fit College Guidance | Education Professionals The College Board. N.p., n.d. Web. 16 Feb. 2017.
7. "Free Community College." National Conference of State Legislatures. National Conference of State Legislatures, n.d. Web.
8. "Get It!" Get It! N.p., n.d. Web. 16 Feb. 2017.
9. Hellingdhelling@kcstar.com, Dave. "Missouri Gov. Greitens Announces $146 Million in Cuts; Higher Education Takes Biggest Blow." Kansascity. N.p., n.d. Web. 16 Feb. 2017.
10. Mitchell, Michael. "Higher Ed Funding Cuts, State by State." The Huffington Post. TheHuffingtonPost.com, 28 Jan. 2016. Web. 16 Feb. 2017.
11. National Archives and Records Administration. National Archives and Records Administration, n.d. Web. 16 Feb. 2017.
12. Phillips, Mark. "Why Should We Care About Vocational Education?" Edutopia. N.p., 29 May 2012. Web. 16 Feb. 2017.
13. Report, Jon Marcus The Hechinger. "Why Even Top Tier Students Should Consider Community Colleges." PBS. Public Broadcasting Service, n.d. Web. 16 Feb. 2017.
14. "State Funding for Higher Education Remains Far Below Pre-Recession Levels in Most States." Center on Budget and Policy Priorities. N.p., n.d. Web. 16 Feb. 2017.
15. Trent Hamm Updated on 07.20.16. "Why You Should Consider Trade School Instead of College." The Simple Dollar. N.p., 20 July 2016. Web. 16 Feb. 2017.
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17. "What Is Community College?" Study in the States. N.p., 31 Aug. 2016. Web. 16 Feb. 2017.
18. Zeilinger, Julie. "Why The Stigma Against America's Community Colleges Has to Stop." Mic. Mic Network Inc., 27 Oct. 2015. Web. 16 Feb. 2017.

Approach Three
1. "The Institute For College Access and Success." Home | The Institute For College Access and Success. Web. 10 Feb. 2017.
2. Gitlen, Jeff. "Student Loan Debt Statistics for 2017." Lendedu. 03 Jan. 2017. Web. 10 Feb. 2017.
3. LastWeekTonight. "Student Debt: Last Week Tonight with John Oliver (HBO)." YouTube. YouTube, 07 Sept. 2014. Web. 10 Feb. 2017.
4. Bloomberg. "Why It's So Hard to Get Rid of Student Debt." YouTube. YouTube, 03 Nov. 2015. Web. 10 Feb. 2017.
5. Glater, Jonathan D. "That Student Loan, So Hard to Shake." The New York Times. The New York Times, 23 Aug. 2008. Web. 10 Feb. 2017.
6. Bulkat, Attorney Baran. "What Is the Difference Between Dischargeable and Nondischargeable Debts in Bankruptcy?" Nolo.com. Web. 10 Feb. 2017.
7. Setalvad, Ariha. "Choosing between Variable and Fixed Rates Student Loans in 2017." Credible Blog. 06 Feb. 2017. Web. 10 Feb. 2017.
8. Zimmerman, K. (2016, August 24). Which Employers Are Helping Millennials Repay Their Student Loans? Retrieved February 07, 2017
9. Berman, J. (2016, March 27). More Companies Help Employees Pay Off Student Loans.
Retrieved February 07, 2017
10. These Areas are Desperate for Health Care Workers. (n.d.). Retrieved February 07, 2017
11. Kristof, K. (2013, September 10). $1 million mistake: Becoming a doctor. Retrieved
February 07, 2017
12. Teacher Loan Forgiveness. (2015, September 02). Retrieved February 07, 2017
13. "Earn High Interest While Saving for College With 529 Plans." US News and World Report. 13 Feb. 2013. Web. 8 Feb. 2017
14. Macklin, Dan. "3 Factors That Affect Student Loan Interest Rates and When to Refinance." SoFi. N.p., 03 Nov. 2016. Web. 10 Feb. 2017.
15."PNC." PNC. Web. 10 Feb. 2017.
16. "The Sallie Mae Smart Option Student Loan." The Sallie Mae Smart Option Student Loan. Web. 10 Feb. 2017.
17. McGrath, Maggie. "The Argument Against Lowering Student Loan Interest Rates." Forbes. Forbes Magazine, 15 Apr. 2016. Web. 10 Feb. 2017.