Free College Won’t Fix Low Graduation Rates, College Graduate Underemployment
Posted By Donna Fuscaldo on March 14, 2016 at 9:30 am
With the debate raging over whether or not college is worth it and presidential hopefuls from both sides of the aisle calling for free or cheaper college, new data from The Manhattan Institute for Policy Research shows only 52 percent of students who enroll in college graduate within six years. Of those that do graduate, 44 percent are underemployed or are holding a job that doesn’t require a college degree in the first place. What’s more, the policy think tank argues offering free college to everyone will only serve to make the problem worse.
“Bernie Sanders wants to make tuition free at public colleges and universities and Hillary Clinton wants to make community college free,” says Preston Cooper, policy analyst at The Manhattan Institute for Policy Research and author of the research. “I’m not confident these free college proposals are going to address the central problem of low graduation rates or high unemployment rates.”
Cooper points to Denmark and Norway for evidence. Both countries have free college and while more students graduate, they only earn 12 percent in Denmark and 7 percent more in Norway than those with a high school diploma or equivalent.
Free college alone won’t improve graduation rates, underemployment
With the nation collectively owing $1.3 trillion in student loan debt, how to address this growing problem is front and center in this presidential election season. Both Republicans and Democrats agree it’s at crisis levels and have all sorts of ideas to fix the problem. There are calls for free college, refinancing existing student loan debt and a complete overhaul of how aid is given. And that’s only a few. Making college affordable is particularly important since student loan debt impacts everything from homeownership to saving for retirement. It’s the reason so many are calling for free college, including presidential hopefuls Bernie Sanders and Hillary Clinton.
But, Cooper says what free college won’t fix is the poor graduation rates and the underemployment of those who do graduate. “It’s a matter of accountability,” says Cooper. “A lot of these colleges get money from the Federal government in the form of student loans or Pell grants and have no incentive to ensure the student graduates and no incentive to guide students on their career paths.”
One of the knocks on higher education is that schools are churning out graduates without giving much guidance to the students in terms of pursuing the right degree. Enrollment drives revenue and it doesn’t matter what degree a student earns. At the same time, students are choosing degrees that while popular, don’t necessarily translate into high-paying jobs in the future. Cooper points to the Federal Reserve Bank of New York, which found only 20 percent of recent engineering students were underemployed while 63 percent of leisure and hospitality students were.
“Colleges get paid regardless of whether they churn out degrees in English or engineering, creating little incentive to guide students toward career-friendly study paths,” says Cooper in the report. “Reforms to higher education must address how colleges equip their students for the job market, not simply subsidize the printing of diplomas.”
Free college may not be the right fix to high education costs
While unemployment is a big issue with those that graduate, the cost of earning a degree is another huge problem. As is the delinquency rate among student loan borrowers that didn’t graduate college but are stuck with thousands of dollars in student loan debt. By offering a free or greatly subsidized college education, more people will have access and will thus be able to get a higher paying job. It’s increasingly important with the Center on Education and the Workforce at Georgetown University predicting 65 percent of jobs will require some postsecondary education by 2020.
Still, Cooper says lowering the cost of a college education will only serve to exasperate a big problem and, at the same time, create a huge tax bill. He says more students will enroll in college but a high percentage will continue to drop out and the schools that are reporting bad outcomes will still have little incentive to reform. Not to mention the more graduates there are for slow growing fields, the less income they will earn. “Flooding the system with more federal subsidies will considerably worsen, not improve the situation,” says Cooper.
Accountability, affordability go hand in hand
Cooper says there are a number of good ideas out there including making the colleges more accountable for a portion of the student’s loan debt. That gives the school incentive to encourage their student to graduate and pursue degrees that will earn them a good income. He also says there should be more options for private investors to finance a student’s education in exchange for a percentage of their future earnings and for changing the way student loans are disseminated.
“There’s a lot of very fundamental issues with the higher education system in terms of low graduation rates and students not getting jobs that require a college degree,” says Cooper. “It’s all about college affordability but college accountability matters too.”
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