Mo’ Money, Mo’ Debt: Accounting 101 for Politicians

If children are our future, why is their commencement into adulthood a Sisyphean burden of student debt?

Both Republican and Democratic candidates have begun sprinkling policy specifics into their presidential campaigns, and addressing student loan debt has managed to earn some attention in between blustery rhetoric aimed at Trump, Obamacare, and choosing the best epithet for describing immigrants.

Hillary Clinton’s campaign released the details of her proposal, which essentially promises students a ten year limit on debt repayments—as well as a strict income-based rate of repayment—before the feds pick up the tab.

Meanwhile, Marco Rubio (maybe a frontrunner, maybe not—who can tell in this tangled Republican primary crowd?) came out with his own plan, which is a modern repurposing of an old idea to allow investors to pay for students’ schooling, in return for a guaranteed cut of the graduates’ future incomes. Money would thus flow to students, schools, and degree programs that stand to provide returns, while irrelevant degrees would descend into obscurity.

Neither Clinton’s nor Rubio’s proposals for student debt reduction do much to target the root cause of such debt, which is two-fold:

First, schools have carte blanch to raise prices—which they have gotten into a habit of doing enthusiastically with every increase in federal student aid, effectively nullifying the value of such programs while they increase the share of public funds being dumped into universities without accountability. Whether the third-party financing comes from the feds or from scrutinizing investors, schools remain free to multiply costs and endeavor to maximize enrollment without answering for what, if any, academic value they actually provide.

And second, modern gospel equates higher education with a more skilled, nimble, and competitive workforce—in spite of the fact that college degrees, despite their recent multiplication among the workforce, are increasingly failing to prove their value. They are instead treated as a bare-minimum requirement for employment (rather than a competitive advantage), leaving a growing, underemployed mass of indebted smart people wondering whether they just need another loan and another degree to get back into the game. (Just one more hit, then I’ll quit).

Between Clinton and Rubio, the partisan flag-wavers positing to have solved the student debt crises, all signs point to getting more stakeholders to dump more money into the system. Rubio wants to commoditize students entering the workforce by having investors buy shares of their future income; Clinton wants the government to double-down on its role in advancing the cycle of increased aid leading to increased prices, and neither particularly wants to voice any concern that schools have no real accountability for providing value at any price.

So which stakeholders ought to be more engaged to affect meaningful change—and tackle the debt/value imbalance head-on?

As Starbucks CEO Howard Schultz has voiced (repeatedly), that onus should fall on employers. Impressively, Schultz has gone so far as to actually back his words up with money: in June of 2014 Starbucks partnered with Arizona State University to begin providing qualifying employees with corporate-sponsored access to the school’s online degree programs.

That this ‘benefit program’ was heralded as revolutionary at its unveiling speaks to the broader problem both politicians and private interests are vigorously ignoring: employers stand to benefit more from and educated workforce than indebted students, so it stands to reason that they should invest more in securing both value (i.e., relevant, useful skills and training) as well as affordability in higher education.

Employer sponsorships, however, run the same risk as government aid for simply guaranteeing a line of customers for every degree factory in the country. Starbucks is not the only company paying or cost-sharing in employee enrichment, continuing education, or loan-forgiveness programs. Taking shots at the debt-load is only part of the much-needed effort on the part of employers.

Employers particularly ought to be more concerned that all this consumption-suppressing student debt is growing without any promises of high-value education, only high costs. Considering how popular it is among universities to tout the demand and income potential for specific programs (if not the four-year degree at large), employers ought to start punching their weight in voicing demands and expectations—and calling attention to those universities or programs (online, traditional, or otherwise) that actually satisfy market demands for skills and knowledge.

Then, perhaps, big-name schools would require more than history to support their reputations and price-tags, and both students and tuition payments could flow more freely to any institution actually innovating and delivering value in its academic offerings.

The candidates at least pay lip-service to this side of the issue. Rubio is hedging on investors to divert money from low value degrees, schools, and programs; the market working its magic to extract efficiency and value from the bloated, government-subsidized university system. But that doesn’t stop loans from being issued (and demanded) for programs unattractive to investors, nor does it directly link employers and students to ensure they are learning what they most need to learn. Investors could well continue to prop-up their alma maters and schools already bolstered by rich endowments.

Creative industries need thinkers, not just skills programing, from academic institutions. Students should be accountable for doing real learning at school, but schools should also be accountable for staying modern, putting academics first, and delivering real value at their exorbitant prices. Raising fees to finance athletics, marketing to high schoolers, and other irrelevant endeavors is a poor excuse for the resulting unaffordability it entails for students.

Rather than guaranteeing payment from public and private angels, employers should better communicate to students—and politicians—what will and won’t pay. They should demand knowledge, rather than credentials, as a consideration for hiring. Above all, they should recognize that they have a stake in investing in higher ed, and their indebted employees need more evidence that going to school was actually worth it.

In the meantime, the candidates are offering the same, tired lines that pit every policy as a question of Big Business vs Big Government, without reaching the heart of the matter. Poor students need evidence that they are buying into a system that works; to give that, leaders in public and private sectors need to start demanding that it start working.

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Edgar T. Wilson is an Oregon native with a passion for cooking, trivia, and politics. He studied conflict resolution and international relations at Amherst College, and has split his time between New England and the Pacific Northwest ever since. He has worked in industries ranging from international marketing to broadcast journalism, currently serving as a marketing consultant and blogger. He can be reached via email here or on Twitter @EdgarTwilson.