The Contract For College
The Contract For College
Education has long been recognized as a primary means of improving one’s economic prospects. Today, a postsecondary degree or certificate has become increasingly necessary for earning a middle-class living. The last two decades have greatly heightened the demand for a highly educated workforce—and the earnings differential between those with and without college degrees has widened substantially. A worker with a bachelor’s degree now earns about 66 percent more than a worker with only a high school diploma.1 Over a lifetime, that wage gap will add up to over $1,000,000. At the same time, a college education has become more difficult for students from modest backgrounds to afford.
The rising cost of higher education is a problem in and of itself – and colleges and universities must act to keep their tuition in check. But students are also hindered by the way student aid is allocated. Over the last 20 years, federal financial aid has steadily shifted away from grant-based aid to a predominantly loan-based system. As a result, borrowing has become the most common way for students to finance their education. In 2009, the average graduating college senior from a four-year institution was saddled with $24,000 in debt, a number that has been rising steadily.2 This works out to a monthly payment of $276, or 9.5 percent of the typical graduate’s income. Yet repaying student loans will be even more difficult for many graduates given that the unemployment rate for young degree-holders soared to 8.7 percent in 2009.3 The picture is still darker for students who left school without completing a degree – of the students who entered college in 2003 (the most recent year for which data is available), 31 percent of those with student loan debt in excess of $22,000 had not earned a degree six years later.4 The student loan burden is taking a toll on young adults’ lives: almost 1 in 5 significantly changed their career plans because of student loans; nearly 40 percent delayed buying a home and just over 20 percent reported their debt burden caused them to delay having children.5
The major reason for lower enrollments in 4-year institutions among qualified students from low-income families is the level of unmet need they face in attending college. Unmet need is the amount needed to cover expenses after all loans, grants and work study wages are accounted for. On average, the annual unmet need of low-income families has reached historic levels. In academic year 2007-08, the average low-income family faced $6,480 in unmet need for a public 2-year institution; $9,030 for a public 4-year institution; and $10,400 for a private non-profit 4-year institution.6 Unmet need has forced low- and moderate-income students to abandon the most successful recipe for obtaining a college degree: full-time, on-campus study.
As a result of unmet need, the highest achieving students from poor backgrounds attend college at the same rate as the lowest achieving students from wealthy backgrounds. Or to put it more coarsely: the least bright wealthy kids attend college at the same rate as the smartest poor kids.
A four-year college degree is not the only way to achieve a middle class standard of living: associates degrees and one- and two-year credentials, especially in high-demand fields like engineering and health care, can also represent a path to economic prosperity, in some cases opening the door to earnings that outpace the salaries of some bachelors degree holders.7 The Contract for College would not only provide grant and loan assistance to community college students, but would strengthen the nation’s network of open-enrollment community colleges by reviving President Obama’s plan for the American Graduation Initiative, investing $12 billion in community colleges over the next decade with the aim of producing 5 million additional community college graduates.
Finally, the Contract for College expands college access for one particularly disadvantaged group of students: young people who have grown up in the United States and flourished academically at American high schools but do not have legal immigration status because of immigration decisions made by their parents, often when they were small children. An estimated 65,000 unauthorized immigrant students graduate from high school every year.8 They are excluded from most scholarships, are barred from receiving federal financial aid, and cannot work legally to pay for college. Even a college degree will not guarantee them the opportunity to enter the legal workforce. Instead of making these young people a part of our future middle class, the nation squanders the talent and ability of unauthorized immigrant students by forcing them to remain in the shadows. The Contract for College includes provisions similar to the proposed federal DREAM Act which would offer a path to citizenship to unauthorized students who complete high school and agree to attend college.
- “Employment pays…” Bureau of Labor Statistics Employment Projections (Accessed 3 March 2012). http://www.bls.gov/emp/ep_chart_001.htm
- “Student Debt and the Class of 2009,” The Project on Student Debt (October 2010). http://projectonstudentdebt.org/files/pub/classof2009.pdf
- “Digest of Education Statistics,” National Center for Education Statistics (2010). http://nces.ed.gov/programs/digest/d10/tables/dt10_389.asp
- U.S. Department of Education, National Center for Education Statistics, 2009 Beginning Postsecondary Students
- Sandy Baum and Marie O’Malley, “College on Credit: How Borrowers Perceive their Education Debt. Results of the 2002 National Student Loan Survey,” Nellie Mae Corporation (February 2003).
- “Trends In Higher Education: College Pricing,” College Board Advocacy and Policy Center (2010). http://trends.collegeboard.org/downloads/College_Pricing_2010.pdf
- Jennifer Wheary and Viany Orozco, “Graduated Success: Sustainable Economic Opportunity Through One- and Two-Year Credentials,” Dēmos (2010). http://www.Dēmos.org/pubs/graduated_success_Final.pdf
- Jeffrey S. Passel, “Further Demographic Information Relating to the DREAM Act,” The Urban Institute (2003).
- A fourth strand of federal student aid – income tax credits – are not discussed extensively here.
- “College Pricing,” College Board (2010). http://trends.collegeboard.org/downloads/College_Pricing_2010.pdf
- “Is College Worth It? College Presidents, Public Assess Value, Quality, and Mission of Higher Education,” Pew Social Trends (May 2011). http://pewsocialtrends.org/files/2011/05/higher-ed-report.pdf
- John Immerwahr et al, “Squeeze Play 2010: Continued Public Anxiety on Cost, Harsher Judgments on How Colleges Are Run,” Public Agenda (February 2010). http://www.publicagenda.org/pages/squeeze-play-2010
- “How America Saves for College: Sallie Mae’s National Study of Parents with Children Under 18,” Sallie Mae (2010). https://www1.salliemae.com/NR/rdonlyres/460220b6-bb1d-4ae7-803d-c87bbf3b...
- “Is College Worth It?,” Sallie Mae, 2010. http://www.publicagenda.org/pages/squeeze-play-2010