For the first time, national data reveals the hidden costs of financing U.S. higher education…and it’s horrifying
They’re the kind of statistics, spanning a decade and across the entire U.S., that as you read them, your jaw takes on additional gravity—dropping lower and lower—as you set your coffee cup down and yell to your coworkers that “you won’t believe this.”
Most of us in education know that there’s a debt problem happening in higher education: student loans are insane, debts can’t be repaid, for-profits are pretty much the scourge of the Earth, and the price of traditional four-year colleges is becoming less and less justifiable in today’s economy.
But these are blanket ideas—worrying but without substantial depth; think of it as knowing that the weather is changing but not actually standing on a melting ice shelf.
Welcome to the ice shelf, otherwise known as “Borrowing Against the Future: The Hidden Costs of Financing U.S. Higher Education,” an American Federation of Teachers (AFT) sponsored report “…expos[ing] the ‘Wall Street skim’ on higher education and to call for corporate accountability on student debt, higher education institutional debt and abuse by for-profit institutions.”
The report, conducted by The Center for Culture, Organizations, and Politics (CCOP), estimates, for the first time, the total cost to the American higher education system of reliance on capital from student loan markets, municipal bond markets, and equity investors. The report covers the years for 2002 to 2012—the only years for which adequate data are available.
For student loans, the report estimates the total interest paid annually on all outstanding student loans—both private and federal. For institutional borrowing, the report describes total interest payments on college and university debts—the largest share of which went to funding amenities.
In the case of for-profits with capital from equity markets, the report estimates the costs to students and taxpayers of profits made by these institutions—and the vast share of revenue they brought in from federal student aid programs.
(Next page: 10 stunning facts from the report)