2. a brief history
n Servicemans Readjustment Act aka GI
Bill: gave funds to returning veterans to
go to school; about 51 percent of them
took advantage of the funds and 1/4
went to college
n National Defense Education Act of
1958: Opened doors to civilians, women
n Higher Education Act: 1965 President
Johnson made education a priority
n Reauthorization of HEA: 1972; most
significant reauthorization, Senator
Claiborne Pell – grants for individual
students instead of to colleges
1944-
1972
1990-
present (1)
1990-
present (2)
1980- current
stats
1944-1972
3. 1980s
a brief history
n GOP influence in the 80’s made it
more difficult and more expensive to get
student loans
n By the late 80’s tuition costs were
rising and aid was not
n Loan borrowing outpaced grants,
and loans created private profits for
corporations and banks
n Only bipartisan legislature on student
aid was making the GI bill permanent
1944-
1972
1990-
present (1)
1990-
present (2)
1980- current
stats
4. a brief history
n In the early 90’s, government started
making loans directly to students and
bypassing banks
n1995-present, government became
more polarized and dysfunctional and
unable to pass or reform legislature:
Republicans favor bank loans and
Democrats favor direct loans through
government
1990s to
present
1944-
1972
1990-
present (1)
1990-
present (2)
1980- current
stats
5. 1990s to
present
a brief history
n Sallie Mae became biggest lender with
biggest profits; grants continued to dwindle
and tuition climbed
n Taxpayer Relief Act 1997 and Hope
Scholarship tax credit let people deduct money
from their taxes for each eligible student
n Scholars deemed tax policies for students
unproductive and ineffective
n Lenders and colleges themselves have
benefited most from legislature
(Continued)
1944-
1972
1990-
present (1)
1990-
present (2)
1980- current
stats
7. currentlystats
Pell Grants Fall Behind and Student Borrowing Soars as
Tuition Rises at Four-Year Public Institutions (2010 Dollars)
8. currentlystats
Percentage of first-time bachelor’s degree recipients under
age 24 who did not live with family during their last year
of undergraduate education but reported living with their
parents or in-laws 1 year after graduation, by level of total
undergraduate borrowing: 1994, 2001, and 2009
9. currentlystats
Average ratio of cumulative debt in federal loans to annual income
among first-time bachelor’s degree recipients who borrowed for
their undergraduate education, by employment status 1 year after
completing a bachelor’s degree, 1994, 2001, and 2009
10. currentlystats
Average cumulative debt of first-time bachelor’s degree recipients
for their undergraduate education in 2009 dollars, by loan type
and Pell recipient status: 1992-93, 1999-2000, and 2007-08
12. Low-income
students
Inequality Students who take
less than 20 credit
hours their first year
are 1/3 less likely
to graduate…what
does this say for part
time or impoverished
students?
n A student who works off
campus is more likely to drop
out and have a lower gpa
than a student who doesn’t
work…what does this say for
students who HAVE to work?
n Grant money from federal
and state levels has been cut/
reduced.
n Significant detriment
to low-income/low
socioeconomic students
13. Changes
in law
Inequality
n Low socioeconomic students hit hardest by law changes;
reductions in funding
n Who are the universities and policy makers looking out for?
Poor constituents or donor constituents?
In the 1990s/2000s, laws
changed to favor wealthy and
corporations/ didn’t meet the needs
of students and their families.
14. Enrollment
patterns
Inequality
n “Transfering between institutions, even transfers from 2yr to 4yr institutions, has long been assumed to be
a negative indicator of degree completion.”
n What happened to “from here, go anywhere?” TCC slogan...
n Students who complete a reverse transfer (transferring from a 4yr to a 2yr school) are even less likely to
earn a degree than students who complete upward and horizontal transfers
n From a students point of view, nontraditional enrollment options may seem like they increase choice,
increase institutional competition, and give better options for nontraditional students to achieve graduation;
in opposition, as differential outcomes are linked to different attendance patterns, non traditional attendance
could create disparities between students
Enrollment patterns differ
by race and ethnicity,
socioeconomic status, and first
generation status, and that the
different enrollment patterns
relate to differential outcomes.
15. Enrollment
patterns
n Those from lower income families more likely to be debt averse
n Instead of borrowing, students may:
n Begin at a community college with the intention of transferring later to a 4 yr school
n Success rates of students beginning at community colleges is not good
n 15 % lower chance of actually earning a bachelors degree
n Colleges cannot support their current business models without raising tuition and are actively
recruiting “full pay” students. Some “admit-deny.”
Inequality
(Continued)
16. International
Students
n The Unted States charges
international students out-of-state
tuition fees
n Must prove financial access
n Restrictions on working
Inequality
17. What does it
all mean?
n Our poorest
students are getting
left behind
n Our richest students are
getting even farther ahead
n This is increasing
the gap and therefore
increasing inequality
among those who have
access to college funding
and opportunity for
completion
Inequality
18. Occupy Student
Debt movement
possible
solutions
n Inspired by Occupy Wall Street
n Suggests that all student loan debt should be forgiven
n Occupy student debt website: “borrowers default on their student loan payments
after one million individuals have similarly signed the debtors’ pledge”
n Blanket student-loan forgiveness will do little to stimulate the economy
19. Private grants/
scholarships
possible
solutions
Rolling Jubilee is a project
of economic activists called
Strike Debt, which formed
out of Occupy Wall Street
n Has erased $3.9 million in private
student loans
n Buys student loan debt for less than
3 cents on the dollar - instead of trying
to collect the debt,
the group makes it disappear
n Online donations
n Nearly 3,000 student of for-profit
colleges
n The amount erases by Rolling
Jubilee and the number of students
helped will not make a practical
dent in the $1.2 trillion student
loan debt
ACE Alternative
Credit Project,
funded by $1.86
million Bill &
Melinda Gates
Foundation
n Boost the ability of
nontraditional learners to
gain a college degree
n Pool of about 100 low-
or no-cost, lower division
courses and gen ed online
courses across 20-30
subject areas
n 40 colleges/universities
will agree to accept transfer
credit for these courses
20. college
spending
reform
possible
solutions
n Much of the spending has been on new buildings,
administration, or “amenities” spending, rather than
on the education itself
n For systemic reform to work, the government will
have to take a leading role in fixing incentives and
stopping the college spending arms race in its tracks
n Schools with large endowments can cover
shortfalls in tuition by drawing from these reserves
n If the spending arms race is a fight for more
spending on financial aid, rather than other
expenditures, it would be an arms race worth
having
n The rise of MOOCs raises the hope that we
could slash the price of college by replacing
expensive college campuses with technology
Pictured:
Arizona
State
University
21. Income-
contingent
loan
repayments
possible
solutions
n Superior option to blanket
student-loan debt forgiveness
n When incomes go up,
payments go up. If incomes
go down, payments go down
n The Obama administration
plans to reduce the amount
of income to be repaid from
the current 15% to 10%
n The payment structure
could be incorporated into
tax returns, for instance,
with student loan debt being
withheld in the same manner
as FICA taxes are currently.
n Graduates need not ever
face the prospect of default -
just the possibility of a longer
time frame for repayment
22. state & federal
reform
possible
solutions
n States are now spending 28% less per
college student than they were in 2008
n Budget cuts have forced states to raise their
tuition
n We need to restore funding of public
universities and increase that funding
n The government can tie its financial aid
support to the elimination of the arms race
n Push for policies to promote full
employment and the creation of good jobs
that do not require a college education
n Hold lending services accountable: Senator
Elizabeth Warren brought attention to Navient
(Sallie Mae company) broke laws, got a new
contract with Dept of Education, makes more
money, doesn’t treat borrowers better
http://youtu.be/9k19ZrwM58c
Video
23. state & federal
reform
possible
solutions
n There is bipartisan interest in a
solution
n Hears more about student debt than
any other issue
n Proposed the Dynamic
Student Loan Repayment
Act (with Senator
Marco Rubio) to
consolidate, simplify
and improve income-
based repayment
options for federal
student loans
Senator Mark
Warner came to
ODU on 9/2/14 to
speak with students
about financial aid
Possible solutions
suggestions
n Shorten time in college (high
school credits, community
college)
n Revisit articulation agreements
with community colleges to be
sure credits will transfer
n Site similar to Zillow for
colleges (Know Before You Go)
n Financial literacy should be
part of education
n Reduce student loan interest
n Income-based repayment
capped at 10%
n Employers take certain dollar
amount of your salary and
apply it pre-tax to tuition or
student debt
n Make FAFSA easier to file
(Continued)
24. Education
bubble
Future
implications
Surowiecki, 2011 states that
young people today are radically
overestimating the economic value
of going to college, and that
many of them would be better off
doing something else with their
time and money.
If this is true, it will have significant
consequences on all of the young
adults graduating college that
expect a different outcome.
26. Blanket
Forgiveness
?
Future
implications
Occupy Student Debt Movement’s
plan is to have people default
on loans and randomly pay off
people’s loans in full.
This does not stimulate the
economy. One time transfers help
one group of individuals, with no
promise of future aid.
28. Small
businesses
Future
implications n 60% of jobs
are created by
small businesses
n Higher
loans can cut the
ability to create
small businesses
and can harm
the economy
n People only
have a certain
amount of “debt
capacity”
31. RECAP
n History
n Current State
n Affects on Inequality
n Possible Solutions
n Future Implications
Student
loans and
inequality
32. The
conver
sation
Student
loans and
inequality
n Biggest issues going forward for this
country; Hear more about it than any other issue
n Turning away international students
n Financial literacy and more education on loans and student
aid in high school and college
n Average student loan debt is $20,000 and students are paying
their loans overall, but there are students that are not in this picture.
n Adopting some of the potential solutions
n Colleges need to allocate funds away from unnecessary
spending and put it towards aid.
