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Would it be fairer to make college debt-free for the poor?

March 19, 2013|By Karin Klein
  • Students at the UCLA campus.
Students at the UCLA campus. (Los Angeles Times )

Does it make sense for two students, one from a poor family, one from a middle-class family, to graduate from college with different levels of debt? I was surprised to find myself in a hot debate recently with a policy person at the Education Trust, a very pro-reform (as in, supporting making test scores count for a big part of teacher evaluations, fans of parent trigger) group whose main goal is improving educational circumstances for impoverished black and minority students and closing the proverbial achievement gap.

We share that interest, including a sense that even public colleges can be too much of a financial burden for poor families. California does its best to fix that by offering a free ride on tuition for students whose families earn less than $80,000 a year, at all of the three systems — University of California, California State University and the community colleges. But books and living expenses can still be beyond many families’ ability to pay. And many other states have not been as helpful to their needy students.

The Education Trust is working on a plan to fix this, and given the situation with the federal budget, to do it without raising the cost of financial aid. Partly this would rely on agreements with states to keep funding at certain levels, which might or might not work because many states aren’t in particularly wonderful shape budget-wise, and some of it would involve taking money from programs that are underutilized.

But some of it would come from President Obama’s tax credit for college expenses, up to $2,500 for families making up to $80,000 for single filers, or $160,000 for joint filers. Families making that much money shouldn’t be getting money, he said. And he might have a point, though middle-class families, who don’t get financial aid, have their own tough time affording college.

Where we really split, though, was on his plan for the debt that students should incur. His idea was that the government would provide robust enough aid to each poor and modest-income family — earning up to about $50,000 or a little more — so that they could pay only what they could afford. The student would earn money through work-study, but would graduate debt-free. Middle-income students would graduate with interest-free loans.

But hold it. If we have provided enough financial aid for a low-income student to attend school without smashing the family budget, at the point where that student graduates, hasn’t he or she now reached the point of being able to pay off a loan? If two students, one from a modest-income family and one from a family with a some what higher income, both go to the same college, major in the same field, take the same degree — don’t they now have the same ability to get a job?

It’s true that too many young people leave college with crushing loans, a problem that threatens to yank the dream of college away from them. But that shouldn’t mean that students from poor families can’t afford to pay a certain portion out of their salary for some period of years after college graduation, especially if other students are doing the same.

We should be reversing the thinking, to my mind, by first figuring out a formula that allows students, all students except the genuinely affluent, to pay off college loans in a reasonable time. Then that amount is deducted from the financial aid given to the family — which should meet their ability to pay. That removes the obstacle to college.

The response was that Latino families tend to be debt-averse and that any debt amount of more than $2,000 or so is likely to make them decide against college. The appropriate way to deal with that, it seems to me, is to help families understand how the loan will be paid off — if it’s just a percent of the new graduate’s future income, that should alleviate a lot of worry—and the value of the investment. It seems reasonable for students -- all students -- to bear some of the financial responsibility for their college education.

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