Tag Archives: Education

The costs of an undergraduate education in the U.S.

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In last Wednesday’s post, we discussed the recent introduction in the House of Representatives of the Student Loan Forgiveness Act of 2012 by Hansen Clarke (D-MI); a bill that, if enacted, would provide student loan forgiveness, caps on interest rates on Federal student loans, and refinancing opportunities for private borrowers. To provide some background on where this bill came from and why student loan forgiveness should be considered despite the current fiscal environment, we wanted to use today’s post to look at the historical data showing the growing cost of an undergraduate education in the United States.

According to the U.S. Department of Education’s Digest of Education Statistics, the annual cost in 2008-2009 (including tuition, room and board) was $12,804 at public institutions and $32,184 at private institutions. In comparison, in 1980-81, a full-time undergraduate student paid on average (and adjusted to current dollars) $2,372 at public institutions and $5,470 at private institutions. And as the following chart makes clear, the cost of an undergraduate education has increased in every year in between, with no sign of letting up:

This significant rise in the costs of education wouldn’t be such a big problem if median incomes were also rising. But as we showed in a previous post, income levels have been remarkably stable since 1967, with the exception of the richest quintile of the population (see the charts below). For many college grads (e.g., the majority who do not end up in this richest quintile), this means that they exit college facing significant student loan debt and, for those lucky enough to find a job (let alone one in their field or requiring an advanced degree), a low median starting salary that makes it challenging to pay this debt back. (According to a 2011 study by the John J. Heldrich Center for Workforce Development at Rutgers University, median starting salaries for students graduating from four year universities fell from $30,000 in the period 2006-2008 to $27,000 in 2009-2010).

In short, it is this interplay between growing annual costs for college education and stagnant income growth that has led to the numerous proposals in Congress for some form of student loan forgiveness. And for the growing number of recent grads who are behind in debt and unable to do much about it as a result of on low starting salaries, it is certainly an idea that should be given serious consideration.

2012 State of the Union Address: Obama’s Specific Policy Proposals

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Last night, President Obama made his third State of the Union (SOTU) address, which focused in large part on the issue of economic fairness in the U.S. Like most SOTU addresses, much of his speech focused on broad goals for the coming year. However, perhaps more so than previous years, the President also called for a number of specific policies to be enacted. In this article, we provide a brief recap of these policies, dividing them by theme.

Tax Reform / Deficit Reduction

  • Remove tax deductions for companies that outsource jobs.
  • Introduce a “basic minimum tax” for every multinational company, so as to prevent them from evading taxes by moving jobs and profits overseas.
  • Double the tax deduction for high-tech American manufacturers that make their products in the U.S.
  • Make the tax code fairer, including the adoption of the Buffett Rule: if you make more than $1 million a year, you should not pay less than 30 percent in taxes.
  • End tax subsidies and deductions for individuals earning more than $250,000 a year.
  • Extend the payroll tax cut (set to expire in February 2012).

Trade

  • Create a Trade Enforcement Unit that will be charged with investigating unfair trade practices.

Jobs / Job Training

  • Tear down regulations that prevent aspiring entrepreneurs from getting financing.
  • Expand tax relief to small businesses.
  • Provide resources to community colleges to become community career centers.
  • Reduce the maze of confusing job-training programs and create one website where unemployed workers can go for information.

 Education

  • Grant schools more flexibility to keep good teachers on the job, reward the best ones, and replace ineffective ones.
  • Call on every state to require that all students stay in high school until they graduate or turn 18.
  • Extend the tuition tax credit for college loans.
  • Double the number of work-study jobs in the next five years.

 Immigration

  • If comprehensive immigration reform is unachievable this year, at least pass legislation that allows young people who “staff our labs, start new businesses, and defend this country” a path to citizenship.

Energy

  • Safely develop natural gas resources.
  • End subsidies for Big Oil.
  • Pass clean energy tax credits.
  • Allow the development of clean energy on enough public land to power three million homes.
  • Help manufacturers eliminate energy waste in their factories and give businesses incentives to upgrade their buildings.

 Infrastructure

  • Clear away red tape that delays construction projects and increase infrastructure spending (using money previous spent on the wars in Iraq and Afghanistan).

Housing Market:

  • Give every responsible homeowner the chance to save about $3,000 a year on their mortgage by financing at historically low interest rates. Pay for this by introducing a small fee on the largest financial institutions.

 Consumer Protection

  • Establish a Financial Crimes Unit of highly trained investigators to crack down on large-scale fraud and protect people’s investments.
  • Create a special unit of federal prosecutors and leading state attorneys general to expand investigations into the abusive lending and packaging of risky mortgages that led to the housing crisis.

Government Reform

  • Ban insider trading by Members of Congress.
  • Prevent those who bundle campaign contributions for Congress from lobbying Congress.
  • Reform Senate rules to force an up or down vote on all judicial and public service nominations within 90 days.
  • Consolidate the federal bureaucracy to improve the responsiveness of the Executive branch.

Foreign Policy

  • Prevent Iran from getting a nuclear weapon using all options available.
  • Pass legislation that secures the country from the growing danger of cyber threats.
  • Create a Veteran Jobs Corps that will help communities hire veterans as cops and firefighters.