The recently revealed college admissions scam is a new low in a long-running saga of the mess we’re creating for our college-bound children. Hopefully this shock will trigger some necessary rethinking of our goals, behavior and higher-education policies.
Let’s start by agreeing to stop perpetuating the myth that the only path to a successful career is through the gates of an expensive four-year college. College is not for everyone. Forty percent of first-year college students do not graduate within six years. Two-thirds of student loan defaults are for loan balances less than $10,000 and 35 percent are for loans less than $5,000.
{mosads}With caps on federal student loans at $12,000 for the first two years of college, it’s clear that many of the defaulters are dropouts. Their dream of college became a nightmare: no degree and crippling student loan debt before many reached the legal drinking age.
The scandal highlights the oversized role parents think they should play in their children’s choice of college. For them, and too many students, the overriding obsession is admission to the “best” school on their college list. That’s the wrong goal.
Recently, Assistant Secretary of Education Scott Stump opened the College Savings Foundation’s Conference with an intriguing message: The goal should be career readiness, not simply going to college. Students focused on majors that interest them and have the skills employers seek will be better prepared for a career.
According to research from the Strada Education Network and Gallup, only 11 percent of employers believe colleges and universities are doing a good job of preparing graduates for the workforce.
The good news is that preparation for a meaningful career is currently available from what was formerly known as college “alternatives.” Less-costly, skills-targeted certificate programs, coding boot camps, community colleges and apprenticeships now provide mainstream pathways to lucrative employment.
There’s more good news: Employers are increasingly hiring these graduates. With the Bureau of Labor Statistics’ December report of 7.3 million unfilled jobs, it’s no surprise that marquee employers, such as IBM, Apple, Google and many others, no longer require four-year degrees.
To help students make more informed choices, the Department of Education will modify its College Scorecard to provide statistics such as level median earnings and student and parent loan default rates at the program level.
This transparency will permit students to evaluate with data, not just emotion, the path that best aligns their interests, financial situation and desired career.
No matter the road they chose, students will continue to need help financing their education. As viable alternatives to four-year colleges evolve, so should eligibility for federal student loans to include apprenticeships, coding boot camps and other skills-based programs that lead to career-ready graduates and jobs.
The time is also ripe to rethink incentives and subsidies baked into the federal student loan program created over 50 years ago. For new borrowers, follow the lead of video game and product marketers who have conditioned this generation of student-loan customers to expect stars, badges and other rewards.
It’s time for an incentive program, such as a tax-free grant or tax credit for some number of consecutive on-time payments, to reward on-time payers.
For currently delinquent borrowers suffering under the yoke of $1.5 trillion of student debt, let’s face the reality that too many have borrowed more than they will ever be able to repay. The current loan forgiveness programs may be well-intentioned, but they’re band-aids that don’t solve the problem.
It’s time to reset the clock with an amnesty program to rewrite their loans: Write off some of the interest that accrued during the delinquency, reset the principal amount and establish a repayment schedule based on the borrower’s ability to pay.
This admissions scandal uncovered very bad behavior but offers an opportunity for parents, students and policymakers to question some very basic premises. Let’s accept this challenge and make changes that will lead to better outcomes and less student debt for our children.
John Hupalo is the founder and CEO of Invite Education. Follow him on Twitter: @JohnHupalo.