Obama, and the cost of college

If only President Barack Obama were here today to talk about a real solution to the cost of a college education.

I don’t mean to suggest that the interest rate on student loans isn’t a big deal — it’s huge.

If the interest rate on federal loans doubles (to 6.8 percent), it will cost 7.4 million students $1,000 per year.

But as a problem for young people and rest of the country, it’s just a tiny part of much bigger issues: the soaring cost of college and the challenges faced by graduates entering the labor market.

One can certainly understand the focus on the loan rate subsidy, since it’s clear and achievable.

It would cost $6 billion — the equivalent of two new attack submarines (the U.S. is building 30 of them), or just less than one quarter of the projected $25 billion profit from the 2008 bank bailout. If Congress can agree, then the problem is solved, for another year at least.

But while better than nothing, it’s no more than a Band-Aid to the seemingly inexorable rise in the cost of college.

In the past decade, tuition and fees grew at a rate of 5.6 percent more than that of inflation at public universities and 2.6 percent more than inflation at private universities.

To put that into perspective, college costs are growing even faster than health care costs, and it’s been that way since the 1980s.

So student debt is at an all-time high: Seniors who graduated in 2010 had just over $25,000 in debt on average; at more than $1 trillion, total student loan debt is greater than total credit card debt.

But the cost increases aren’t translating into an education of greater value to graduates.

Lifetime statistics may suggest that a college education offers an earnings premium of hundreds of thousands of dollars, but try telling that to the more than half of all graduates under the age of 25 who either are unemployed or work in jobs that don’t require a degree.

UNC students are fortunate that many of these challenges hardly apply to them: As a top research university with an average graduate debt of just $15,472, a UNC education would remain a worthwhile investment even at increased cost.

But if the cost of college continues to rise, and college attendance remains the primary hope for success, more and more Americans will end up with a huge debt burden to attain a degree with no guarantees of its value.

So that’s the real challenge for the president: how to arrest educational inflation, not merely ease the burden through loan subsidies.

The college cost strategy Obama announced in January had some good ideas, like tying federal aid to affordability.

But it also relied on some unlikely premises, like a $1 billion Race to the Top competition effectively incentivizing states to reform higher education, when they can collectively get far more by raising tuition. (Last year’s increase by the University of California system alone raised $200 million.)

For the president in an election year, it may seem like a good bet to focus on the short-term issue of loan subsidies.

But what America needs is a broader and more sustained focus on the real issues behind college affordability — for today’s students, and those of the future.