The threat of default on the federal debt is right around the corner and deficit hawks in Congress warn that unless we get federal spending under control, future generations — our children and grandchildren — will pay an enormous price. While intentions may be just, there is a touch of irony in the effort to protect the future generation from debt. The U.S. House of Representatives has approved austerity measures that expose this same generation to potentially unsustainable debt right now through increased student loans.
The tradeoff promises to not only undermine individual and national prosperity, but also make it less likely that the country will have the resources to meet its obligations in the years to come. Controlling our national debt is not, as they say, an academic exercise. Deficit reduction, like education policy, should focus on ensuring a stable and sustainable economy. If that is the goal, cutting funding to higher education and job training programs is the wrong approach.
Federal student-aid programs are wise investments that increase access to higher education and lead to greater wealth for individuals and society. Experts agree that college graduates may choose from a wider assortment of jobs and earn more over the course of a lifetime than a high school graduate. Higher-earning college graduates also pay more in taxes, are less likely to end up in prison or on welfare and, according to 2010 Department of Labor Statistics analyses, are more likely to give back to their community through volunteering.
The ironic outcome of reducing funding for student aid programs in the name of debt reduction is that young adults experience higher debt burden early in their careers when they are least able to afford it, or they are forced to opt out of education entirely, thereby lowering the nation’s collective ability to pay future obligations. Eighty percent of the fastest-growing jobs in the country now require training beyond high school. A college degree is practically a necessity in the 21st century and, yet, for many young adults, it is getting harder to afford.
College seniors completing college in 2009 carried an average of $24,000 in student-loan debt. The Pell Grant, the nation’s cornerstone aid program, provides invaluable offsets to the overall debt burden students face and is for many recipients the difference between sustainable and unsustainable debt. Students on the margin and the nation as a whole can ill afford to tip the scales in favor of unsustainable debt by approving shortsighted cuts to college aid.
For the 9 million students who currently receive a Pell Grant each year, the amount of aid is a deciding factor for college enrollment. In the 1980s, the maximum Pell Grant covered most of the cost of attending a four-year public college. Today, it covers less than 35%. Consider that nearly 75% of all Pell Grant recipients come from families with household incomes of less than $30,000 per year, according to the U.S. Department of Education. The median family income of Pell Grant recipients is just $16,300. We must not ignore when considering future deficits that a less-educated workforce carries a cost to our country, as these potential students will have lower lifetime earnings and pay far less in taxes.
Decreasing the number of students graduating is counterproductive to our long-term economic growth and short-term recovery. A Federal Reserve report released earlier this month found that despite the historically high unemployment rate, employers in information technology and other industries reported difficulties in finding skilled workers.
An educated workforce is critical to a prosperous economy. The investments in education, aid programs and job training benefit today’s students as well as tomorrow’s taxpayers. Cuts to these programs rob our country of future opportunity and success. Congress must not cut college aid programs in the name of staving off debt burdens for the next generation. When it comes to college access, we can either pay now or pay an even higher economic price in the years ahead.
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