Tuition: the new road to perdition

Students need a tuition-free funding model, before it’s too late.

Robert Katz, Guest columnist

We live in a society besieged by warnings. Plastic bags carry warnings informing us that they are not toys. Peanut butter jars caution us that they may contain nuts. The typical prescription drug lists enough horrendous side effects to provide plot lines for an entire season of TV medical dramas. Still, I propose one more caveat, to be carved above the entrance to Morrill Hall and to be included in acceptance letters to in-coming freshmen: “Warning: This university may ruin your life.” Among the 100 public universities rated by Kiplinger, the University of Minnesota has the seventh highest average college loan debt of graduating seniors: $25,000. The median income of someone working full time with a bachelorâÄôs degree is about $52,000. At that income level such a debt load, while burdensome, is hardly ruinous. But âÄî even in Minnesota âÄî not everyone is above the median. The six-year graduation rate at the U is 60%. Chances are that most students who have not graduated after six years will never get a diploma. They will have college debt without college graduate income. For those who do manage to graduate, one quarter will be making less than $36,000. Not everyone will be able to find steady full time work; many students will graduate with significantly more debt than the average. And then things happen. Medical conditions might limit our ability to work or saddle us with crippling expenses. Some of us will end up as single parents. One neednâÄôt wander far off the path to prosperity before entering on the road to ruin. Unpaid student loans accrue interest charges, penalties and collection fees, which can transform a daunting level of debt into one that can never realistically be repaid. Collection fees alone can add 40% to a loan every time it goes into default. Internet forums and blogs abound with tales of woe from the lost souls who have been ruined by student loans. Here is a posting from a John OâÄôBrien: ” âĦmy student loans with interest, collections and original note, went from $24,000 to just over $90,000. I cannot pay this, I told them so, they have stated they are going to garnish my check if I do not pay, I told them that I would most likely lose my job if that were the case and asked for a settlement, I was told noâĦ.” Another post reads: “My loans have more than doubled since graduating 12 years ago. I have suffered severe depression, anxiety and lost out on job opportunities and even a place to live because of my student loan status. All I wanted was an education and my âÄúeducationâÄù has done nothing for me. I canâÄôt even get my transcripts.” For many, a college education has meant a life sentence in debtorsâÄô prison, albeit with work release. A recent National Center for Education Statistics study on student default rates tracked the debt status over ten years of students who graduated in 1993. The study found that 20% of those who had borrowed over $15,000 (this is equivalent to $23,000 in 2009 dollars) had defaulted over the course of ten years. If you could stand on the steps of Northrop Auditorium and watch the students milling back and forth across the mall, but see them as they will be ten years from now, you could only sadly shake your head and say, âÄúI had not thought debt had undone so many.âÄù Universities are supposed to be the gateway to the American dream, but due to steep tuition increases, they have become, for many, portals to hell. University of Minnesota tuition has more than doubled over the last ten years, leaving students with no choice. They must rack up huge debts or drop out. It doesnâÄôt have to be this way. There is a solution which will enable students to pursue a college education without running the risk of financial ruin: eliminate tuition. Instead, students would sign an agreement that they would pay 15% of their annual earnings above $30,000 for 15 years after they graduate. Two additional benefits would result from this tuition-free funding model. First, the U would be forced to limit its spending to what students can afford. Second, the U and its students would become in effect partners. The U would be more likely to spend money on increasing the quality of education if the improved earning potential of its graduates would translate into increased revenue for the U. Scaffolding could then be set up in front of Morrill Hall for one final change. This time the inscription could simply read, âÄòWelcomeâÄô. Robert Katz University staff