For its part, The Wall Street Journal reports this morning on studies by George Washington University, the Treasury Department and Third Way. Now it seems that policy makers in this country, who have already succeeded in distorting the economic model for higher education, are becoming alarmed at what they have wrought.
Graduation rates have stalled in the area of 50%, even after six years. Student loan borrowing is up 25% in the last decade, with a total of some $1.2 trillion owed today and many borrowers in default. Dropouts from for-profit schools are making less than they did when they entered. Fully 40% of non-profit college graduates are earning just $25,000 — the average income for a worker with only a high school diploma.
Without a doubt, colleges and universities should be able to predict with a fair degree of certainty those admitted students who are likely to drop out, with accumulated debt and nothing to show for it. That analysis is not difficult, and it seems to me that the desire to attract additional government-backed student tuition is overriding any sense of honesty and transparency.
If schools continue to keep admissions standards low to stay solvent, the least they can do is to present every accepted student with a disclosure form that the student must sign — to acknowledge the high likelihood of not receiving a degree, the average accumulated debt for students today, and the possibility that — even with a degree — career earnings are not guaranteed to exceed those that would be attainable without a degree.
Disclosure forms are common in all sorts of transactions. Let’s include them here.
With no way to repay their student loans, many borrowers will become a drag on the economy. This is what has policy makers worried, and rightly so.