Forty years ago, a college student could get a well-paying summer job at a factory or warehouse, or perhaps on a Great Lakes freighter, and earn nearly enough to pay for an entire year at a good state university. That’s no longer true.
Increasingly, students are graduating with loan balances of $45,000 or more, and often struggle to find a job that will enable them to repay their debt. For those who go on to graduate school, the amount they owe often reaches six figures.
With so much money outstanding, and some unemployed graduates unable to pay off their balances, you might suspect that student loans are big money-losers. In fact, such loans have become a huge profit center for the U.S. Department of Education.
Last year, the government made more than $42.5 billion in profits from student loans, and that wasn’t even a record. The figure would have topped $50 billion if interest rates hadn’t been lowered.
It’s nice to see a government program that doesn’t run in the red. But should profits come at the expense of students who are struggling to get an education, at a time when college is more essential — and expensive — than ever before?
Much of the problem stems from the fact that federal and state governments no longer subsidize higher education to the extent they once did. State support once accounted for 70 percent of university budgets in Michigan. Today, that share comes from tuition and fees.
This nation needs a better-educated work force. Figuring out an intelligent plan to use loan profits to make that happen might be the most worthwhile investment possible in the nation’s future.