We know that student loan debt was a problem long before the Occupy Wall Street protesters added it to their list of grievances. The recession has hit the younger end of the workforce particularly hard. Instead of looking to student loans as the only way to access a post-secondary education, we need to do a better job helping families save for college.
That was one of the main takeaways from Willie Elliott III’s recent series “Creating a Financial Stake in College.” A growing body of compelling research has illuminated the connection between savings and educational outcomes. Even modest-sized savings and asset holdings have the potential to alter the way people think about the future, which can lead to productive changes in behavior.
Willie and I followed up with an opinion piece for Inside Higher Ed, a go-to site for those in the education policy world. We argue that:
…scores of students never make it to college because they perceive it as financially out of reach. Others bail when they realize the debt burden will be too high. The cost proportionality of getting an education compared to the amount of borrowing necessary to finance it is way out of line. Students need a way to finance college without compromising their future financial well-being. Beyond efforts to limit tuition growth and create affordable educational options, there are significant advantages for placing a greater emphasis on savings.
If we think of children's savings accounts as a way to reduce ever-rising public expenditures on student loans, we can envision a more efficient, more hopeful, and more productive strategy for funding higher education. Instead of going into debt, young people could save money in advance.
Check out the full piece here.