Articles / Rubric: Global

A Country of Unlearned Lessons
October 2013 | Global

Princeton, Harvard, Yale, and Stanford – these are names associated with the best universities in the United States. Universities in this country have long been respected and prestigious, and it wasn’t long ago, back in the 1990s, that no one could imagine the educational system in such a deadlock.

Multiple reports from the Department of Education, speeches by President Obama, teacher strikes at the beginning of the school year, and frequent discussions on the pages of American newspapers all say that the educational system is in a deadlock.

At the root of this long process are the country’s financial problems. The 2008 crisis unsettled university funding. Professor Roger Geiger from Penn State writes in an article: “The wealthiest colleges and universities, normally immune to the tempests besetting other institutions, suffered significant financial damage in this crisis. With all classes of financial assets plunging, their diversified portfolios of alternative investments were hit from all directions. The losses of 2008–2009 will be felt for years to come, and many institutions have announced permanent budget reductions of 10 percent. Cuts of this magnitude can only be achieved by firing people, since salaries comprise roughly three-quarters of university expenditures. Institutions have also instituted hiring freezes and cancelled building plans. Still, these ‘hardships’ should be put in perspective.”

According to Geiger, before 2008, universities were financed mainly by endowments. After the crisis, the status of these endowments changed, affecting important factors such as professor salaries, the cost of an education, and other educational expenditures.

A new trend has been emerging in recent years with only 46% of American students completing a degree. According to the U.S. Department of Education, the country is losing its rating on the number of graduates and is no longer first in the world as before, but 16th.

The reason for this is the high cost of education and the inability to quickly pay off student loans. According to data from the first half of 2013, American debt on student loans was $1 trillion, surpassing credit card debt.

According to the U.S. Department of Education, 60% of students who enrolled but didn’t graduate from a university, left early in order to work to pay off their loans. These people either do not receive their bachelor’s degree at all or take their final exams not after the traditional four years, but in six. They provide for themselves without seeking support from family. Each year, 2.8 million youth drop out of college. On average, by the end of college, in addition to their bachelor’s degree in their suitcase, graduates leave with $26,000 of debt, and it’s still growing.

Professor Geiger writes: “Public universities in virtually every state have resorted to substantial increases in student tuition. As these hikes do help to buttress revenues, this trend is good news, at least for university budgets. However public tuitions have been rising steeply, especially since 2000. Increases of 9 to 10 percent for 2009/10 will increase public tuitions by around $400 to $500. California will add another 30 percent hike. More students will require larger student loans to meet these fees.”

The problem extends beyond financial problems to informational ones as well. Many dropouts knew little about the colleges or universities where they went to study. More often than not, U.S. high school graduates choose colleges not based on desired vocation, but rather on distance from home. Still, they understand that a degree will give them a different status and a different salary in the future. According to Professor Geiger, the economic downturn has forced students to lower their educational ambitions and cut costs on education. Students have started choosing public schools over private, regional schools over nationally ranked top universities, and prefer two-year programs over four-year ones, enrolling in community colleges. This shift towards lower costs has led to an increased demand for admission to regional public universities and community colleges, at a time when their resources have been cut.

In a study done by, participants in the focus groups suggested two opposite solutions. The first was to provide financial support and improve the quality of education, and the second was to reform the system from the bottom up, with state support.

In a recent speech reported by the New York Times, President Obama said he hoped for positive changes. Beginning in 2018, according to Obama’s proposal, students at colleges with high ratings will have the chance to receive federal grants, and loans will be more affordable. But this is only draft proposal that still has to find support in the government. An administration official said, “There is bipartisan support for some of these ideas, as we’ve seen in states where the governors have been working on them.” Ohio, Tennessee, and Indiana have already started working on linking aid to educational outcomes, the newpaper reports. But it is not clear how much backing there would be in Congress for such proposals..

In the U.S., more than $150 billion per year is allocated for student aid. The President urged colleges to think about how to reduce costs. Topping the agenda isn’t the number of hours students spend in classrooms, but how much knowledge each student gains. Emphasis could also be made on online education. Grants will be awarded to colleges that use innovative teaching methods.

As for the issue of repaying loans, the President says he would like for borrowers to be able to cap their payments at 10% of their discretionary monthly income.
The only thing that could help to increase the country’s educational rating is an influx of foreign students who aren’t tied to the U.S. financial system.

Text: Ann-Marie Vidal


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