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College Dropouts Face Daunting Financial Future
Students who borrow to finance college degrees and drop out of school before graduating are facing an even steeper hill when attempting to pay back their loans.
One of the key issues that stand in the way of a solution for the college debt problem in the United States is figuring out how to make sure that, once students financially commit to a college education by taking on loan obligation, they have enough assistance to graduate in a reasonable period of time. At the moment, nearly one-third of young adults who enroll in college, and take out a loan to finance the tuition, drop out before receiving a degree. In the economy where even college graduates have difficulties discharging their student loans, ending up without a degree while still carrying the student loan obligations could be disastrous.
Ylan Q. Mui and Suzy Khimm, writing for The Washington Post, believe that the high drop-out numbers are a result of a public policy with skewed incentives that stresses the importance of getting into college at any cost, while at the same time not paying enough attention to what happens to students when they get there. Now, even higher education advocates are beginning to realize that far from being a leg-up in life, a college admissions letter that doesn’t come with a clear plan from matriculation to the degree can be a huge step backwards.
“They have the economic burden of the debt but they do not get the benefit of higher income and higher levels of employment that one gets with a college degree,” said Jack Remondi, chief operating officer at Sallie Mae, the nation’s largest private student lender. “Access and success are not linking up.”
At the moment, the problem is being addressed from few different angles. The Obama administration is touting a plan that would ensure that upon leaving high school, graduates are academically prepared for introductory college work. Although during the Republican primary, former Senator Rick Santorum accused President Obama of elitism for promoting college education, in reality, the administration policy hopes to encourage high schoolers to consider vocational alternative to a traditional college degree program.
The plight of “non-completers” has grown in magnitude as student debt tops $1 trillion, according to the Consumer Financial Protection Bureau. In addition, the sputtering economy has forced a growing number of students to make difficult choices between the benefits of a degree and the burden of paying for it. More students are balancing their studies with full- or part-time jobs or signing up for a reduced course load to save money, increasing the likelihood that they will not graduate.
It isn’t all bad news for those who complete some portion of a college program without completing the whole. According to Anthony Carnevale, director of the Center on Education and the Workforce at Georgetown University, the earning potential of the part-completers is still higher than those who stopped with the high school diploma. Still, that earnings potential drags significantly compared to that of college graduates and that differential can add up to a million dollars over the whole career span.
The cost to the economy is roughly half a trillion dollars, he said. Although college dropouts make more than those with only a high school diploma, he said they earn about a million dollars less than college graduates over their careers.
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