The pursuit of higher education in Texas has never been more daunting, and as tuition and fees at our public universities continue to climb, the dream of attaining a college degree is becoming a nightmare for more and more Texas students.
In 2003, the Texas Legislature voted to deregulate tuition and allow universities to set their own tuition rates free from legislative oversight. At the time, supporters of the move argued that deregulation would drive students to consider which university offered the best educational value for their dollar and force schools to compete on the basis of quality and affordability. While the underlying concept of deregulation makes sense in more traditional free markets, proponents of the law in Texas failed to take a key factor into account: the explosion of readily accessible student loan debt.
Student loans now represent the nation's second largest source of debt, surpassing credit card debt and second only to mortgages. Federal student loan disbursements in Texas have nearly doubled over the past decade, and the average student borrower in Texas now graduates with over $24,000 of student loan debt. Since these loans are so difficult to discharge in bankruptcy, they’ve become one of the safest investments a lender can make.
Student loan companies are well aware of the insatiable demand for their product and, absent the hazard of losing money on a bad investment, are motivated to issue as much debt as a student is capable of assuming.
These easily accessible student loans can disassociate students from the true cost of their education and prevent them from appropriately scrutinizing the realistic value of that education. When you couple a limitless demand for higher education with a limitless supply of money to finance that education, you're no longer dealing with a free-market system.
To be clear, there's nothing inherently wrong with taking on some amount of student debt to help pay for education. Student loans serve a valuable purpose in higher education and, when used responsibly, can help provide greater access to educational and career opportunities that might otherwise be out of reach. The problem comes when the cost of higher education balloons to the point where student loans represent the only realistic option to pay for college and pursue a better life. Unfortunately, a growing number of Texas students today find themselves in that very situation.
The unintended consequences of tuition deregulation continue to shortchange Texas students. By providing public universities the flexibility to set their own rates, the Texas Legislature has essentially given them a perverse incentive to increase tuition and fees as the simplest means of expanding their own operating budgets. In the fall of 2003, a resident undergraduate attending class full time paid $1,934 per semester in tuition and fees. A decade later, the same student owed an average of $3,951 per semester. Since 2003, tuition and fees at Texas public universities have more than doubled, and designated tuition (the portion of tuition set directly by the universities) has increased an astounding 222 percent. Are we really expected to believe that the value of an undergraduate degree is worth twice what it was only a decade ago?
As students struggle to repay the exorbitant cost of higher education, they have less money to purchase a home, start a small business or otherwise contribute to the Texas economy. A survey conducted earlier this year by the consulting firm Accenture found that 46 percent of recent U.S. college graduates consider themselves underemployed, working jobs that do not require a college education. Perhaps unsurprisingly, the survey also revealed a significant disparity between what students had expected to earn and their actual starting salary: While only 18 percent of graduating students believed they would earn less than $25,000 a year, over 40 percent of recent graduates indicated they made that amount or less.
This broken system is leaving an entire generation of students mired in debt and frustrated by a lack of opportunity while supplying universities with extravagant budgets to fund special projects and ever-expanding administrations.
The Texas Legislature must reassess how we manage our public universities and consider whether the deregulation policies enacted over a decade ago still make sense for our students. Texas simply cannot maintain a strong economy without also maintaining a strong workforce, and we cannot maintain a strong workforce without affordable access to higher education. Attending one of our world-class public universities shouldn't be a luxury afforded only to the wealthy or those willing to mortgage their futures by assuming massive student loan debt. It's time to demand that our public universities live within their considerable means and work to provide affordable and attainable higher education for Texas students.
Disclosure: Accenture is a corporate sponsor of The Texas Tribune. A complete list of Tribune donors and sponsors can be viewed here.