March 14, 2022

Student Debt, the Racial Wealth Gap, and (the lack of) Investment in Public Higher Education

Colby King author photoBy Colby King

In late December of 2021, President Biden extended the pause on student loan repayment for 90 days, until May 1, 2022. People with student debt breathed a sigh of relief, knowing that they would have at least a few more months of the needed financial flexibility this pause has provided.

The pause was extended amid an ongoing debate about what should be done about student debt, which has become a substantial social problem. What is the scope of this problem? The Student Debt Crisis Center maintains a twitter account that regularly updates about the total amount of student debt. Their most recent tweet as of this writing showed that student debt had accumulated to $1,885,848,223,792.

Individuals are of course concerned about their own debt, but student debt also exacerbates other social inequalities, including the racial wealth gap. Before the COVID-19 pandemic, the Century Foundation released a report explaining how both student debt and the racial wealth gap reinforce each other. As Josh Mitchell explains in his book The Debt Trap, black student loan borrowers take on a disproportionate debt burden.

In Lower Ed, sociologist Tressie McMillan Cottom explains how one reason for this is disparity is the way in which for-profit colleges sell risky educational opportunities often to the most vulnerable students. As she explains in this interview, students at for-profit institutions often pay more for the same credentials available at non-profit institutions, and students at for-profits are much less likely to complete their degrees.

Another factor contributing to this problem is the rising costs of college. At non-profit, and even public, institutions, tuition and fees have risen steadily since the 1970s.  In fact,  2021 being the first year in quite some time that tuition costs did not increase as much as inflation.

As I’ve written about here before, one reason for these rising costs is the ongoing disinvestment from public higher education, as states across the U.S.  have reduced their funding for their public higher education institutions. As that funding declines, institutions become more dependent on enrollment and tuition to make their budgets work. In 2019 the Center on Budget and Policy Priorities reported that funding cuts were pushing costs to students, worsening inequality. The report noted, for example, that “Annual published tuition at four-year public colleges has risen by $2,708, or 37 percent, since the 2008 school year.”

The pandemic has exacerbated these problems. Vox report Sean Illing explained that, “The pandemic accelerated these trends and forced colleges — especially smaller private colleges and a ton of mid-level state schools — to gut their budgets and lay off workers to offset revenue losses.” The Hechinger Report found that more than 500 higher education institutions across the country showed warning signs in two or more of their stress test metrics. If you’re interested, you can put your school through a financial stress test, with their interactive tool, here.

At the Working-Class Perspectives Blog, Sherry Linkon illustrates how inequality in higher education has widened, using examples from Youngstown State University (a public regional comprehensive university where she worked previously, the kind of institution Illing described as a “mid-level state school,” above) and Georgetown University (a private and more exclusive institution in Washington, D.C. where she now works). At YSU, she explains, they, “’sunsetted’ 26 programs and retrenched 9 tenure-line faculty. That included two endowed chairs who led programs in Islamic Studies and Judaic and Holocaust Studies.”

This is quite different from Georgetown, where, as Linkon explains, “a hiring freeze has been partially lifted, retirement contributions have resumed, and early and mid-career tenure-line faculty are being offered extra research leave and tenure-clock pauses to make up for pandemic disruptions to scholarly productivity.” Since Linkon’s piece posted, another seven YSU faculty have been notified that their contracts will not be renewed.

In the meantime, some institutions have drawn on Cares Act and American Rescue Plan funds to cancel their students’ debt. Connecticut State Colleges and Universities pledged to cancel $17 million in student debt for community college students. Here in South Carolina, South Carolina State University, the state’s only public Historically Black University, cancelled $9.8 million in student debt for 2,500 students.

Last November on an episode of The Ezra Klein Show, sociologist Tressie McMillan Cottom talked with sociologist Louise Seamster about Seamster’s research on racial disparities in student debt. They highlighted how student debt cancellation would reduce the racial debt gap and provide more relief to poorer households.

For example, they noted a recent paper from the Roosevelt Institute which concluded "if the federal government decided to forgive up to $50,000 in student loan debt, the average person in the 20th to 40th percentiles for household assets would receive more than four times as much debt cancellation as the average person in the top 10 percent."

They also discussed how Seamster’s research inspired Elizabeth Warren’s plan to provide $50,000 of debt relief to every person with student loan debt in the US. Jean Marie Maier wrote in The Society Pages how Seamster and other sociologist’s research inspired Warren’s plan.

Student debt and faculty lines are both connected to public funding for public higher education. The problem is multifaceted, of course, but recognizing higher education as a public good means noticing that public disinvestment from higher education has also devalued this public good. As state funding for public higher education has fallen, students, especially those with limited resources, have personally taken on a greater share of the financial burden of college costs.

To better meet the mission of public higher education, our public higher education institutions need reinvestment from their state and the federal government. This reinvestment would help reduce those costs into the future and improve the value of higher education for students. In the meantime, relieving student loan debt for those students who have already personally shouldered the costs of this public good would help better deliver on the promise of higher education while also closing the racial wealth gap.

Comments

Also worth talking about parking tickets being given to students parked on the campuses and if remains unpaid they can take students to courts and get a court judgement which is considered a debt.

Student debt is a very fast-growing issue and also to address the above, if there is a parking ticketing scheme on a student campus then the drivers need to read the signs and comply with the parking restrictions. They will only be given a PCN if parked in breach of the parking conditions which they can they either pay or appeal the PCN online.

Thank you so much for covering such an important topic. I am a student and I understand what you are talking about.

Important post. thanks

Great article keep sharing.
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