The following letter has been submitted to the Detroit News:
While Jane McNamara’s call for better financial literacy for prospective and current college students (A Simple Solution to the Student Debt Crisis) would be a help for many people, it is not a solution to the student debt crisis. This crisis was not caused by a lack of financial literacy or money management skills. Many of us can remember a time when a part-time summer job covered the cost of college at a public college or university. What changed?
This biggest change has been that our state legislatures have deeply – as in “to the bone” – cut funding for public higher education. As a result of significantly reduced state appropriations, the general fund budgets of Michigan’s 15 state universities have increasingly relied on tuition and fees, with these revenue sources going up from 43.5 % in FYI 1994 to almost 71% in FY 2013. Tuition has increased over 240% in the last 20 years, and massive student debt has followed.
Another large source of student debt comes from the proliferation of predatory, for-profit colleges. These fly-by-night “schools” lure in disadvantaged students with the promise of a credential and better employment prospects, and they help these students enroll and finance their education through educational loans. After that, few of these institutions offer supports to help students graduate, and many students who do make it through find themselves with a credential that’s not recognized by any employer. Better financial literacy would do nothing to help these students.
Teaching students to manage their finances is, of course, beneficial, but it does nothing to get at the root of a $1.2 trillion dollar problem. We can only start tackling that problem by reinvesting in our students and our public institutions of higher education and by cracking down on predatory bad actors in higher education.
American Federation of Teachers Michigan