Higher Education In Crisis
United States higher education is facing an unmistakable crisis. By 2025, the nation will require 11 million more postsecondary credentials than we are currently on track to produce — and too many students who do earn their degrees are graduating with crippling levels of student debt.
The roots of this two-pronged crisis are numerous, including the last decade’s economic challenges; disinvestment in postsecondary education by states; and college costs rising faster than ever before.
Average college costs have doubled in the last two decades. Demand for postsecondary credentials is at an all-time high, but state investment has been slashed: since the start of the Great Recession, states have reduced their per-student appropriations to postsecondary education in half, and the federal Pell Grant is now covering barely 30 percent of college costs at public four-year institutions. (It covered more than 75 percent 40 years ago.)
The Loan Bubble
At more than $1.2 trillion, national student loan debt is second only to mortgage debt, consuming Millennials’ economic well-being and impeding new graduates’ ability to start families, pursue advanced degrees, contribute to their children’s’ education, save for retirement or invest in their futures — home ownership rates for this age group are currently the lowest in recorded history.
Some economists predict that student loan debt will contribute to the next financial crisis, comparing the student loan situation to the subprime mortgage crisis that led to the most recent national recession.
The Completion Gap
Research continues to show substantial income and racial inequalities in college attendance and completion. Equally talented and meritorious low-income students are 30 percent less likely to go to college than their higher-income counterparts. Students from high-income families who enter college are now six times more likely than those from low-income families to complete bachelor’s degrees by age 25.
Closing the college achievement gap and growing a competitive global economy is dependent upon the postsecondary success of low-to-moderate income students.
A Need For New Solutions
Today’s student looks very different than he or she did when most federal postsecondary policies were created. The “traditional” student — 18-22 years old, attending a residential campus full-time — is now a minority among all postsecondary attendees. And this demographic shift, combined with pronounced inequality and an escalated demand for a more educated workforce, means the nation needs to reconsider whether the financial aid system is working for today’s students.
Smart investments in postsecondary education can help students, especially those from lower-income families, stay in school and complete their degrees. Because these students are traditionally left out of postsecondary education and experience significant barriers on the path to and through college, the public and private sectors need to partner more aggressively to ensure effective support. In our Policy Agenda, Scholarship America explores how best to build these partnerships, helping us build systems that work for students, institutions and the workforce.