The costs of a college degree are rising. This should come as no surprise. But for the first time last year, student loan debt outpaced credit card debt. And that should be a red flag.
Consider the following statistics:
- Total outstanding student loan debt surpassed $800 billion in 2010.
- The average debt of 2010 college graduates was $24,000.
- 67% of bachelor’s degree recipients in 2008 graduated with debt compared with 50% in 1993.
- Of the college students who borrowed at least $22,000 in 2003-04, more than 30% had no college degree or certificate six years later.
Rising college costs raise a serious question for organizations: Do spiraling education costs present a risk to the private sector?
Businesses Suffer When College Costs Rise
The rising cost of education is a challenge for businesses. The likely consequences of spiraling college costs are significant:
Students Opt Out of College. An aversion to debt may lead qualified students to opt out of college. Students who forgo a college degree have diminished earning potential, and employers risk a workforce less equipped for leadership, innovation, and a global economy.
Higher Default Rates. Borrowers who default on a federal student loan lose their eligibility for loan forgiveness or payment relief and suffer credit restrictions that limit their borrowing potential. This hampers everything from homeownership and automobile sales to entrepreneurship.
Decreased Diversity. Minority populations are disproportionately affected by poverty, availability of credit, and access to college education. Rising costs will further affect these populations, making it even more difficult for minorities to high-paying, white-collar jobs.
Public-Private Innovation Could Slow Rising College Costs
We need bold solutions. But who will pioneer a new path? Where will the innovative solutions come from?
I suggest the private sector needs to be more involved. I’m not suggesting we need privatized education; rather, that public-private partnership offers the best chance to find creative solutions to the policy, financial and cultural factors contributing to rising college costs.
What role do you think the private sector could play in tackling rising college costs?