Sep 14, 2009
College Affordability Spurs Economic Growth
At a recent event with Vice President Joe Biden, Treasury Secretary Tim Geithner reaffirmed his strong belief in the economic benefits of college affordability:
"College affordability is central to two key economic trends. Over the past generation, we have gone from a nation of savers to one of borrowers. We have devoted too many resources to consumption and not enough to investment. During this same period, we have also lost our global educational lead. While we once outpaced all other advanced economies in the percentage of our population that graduated from high school and college, much of the rest of the economically developed world has now caught up or surpassed us."
Secretary Geithner was speaking about 529 plans, education saving programs operated by states or educational institutions that help families set aside funds for future college costs. Washington State's GET (Guaranteed Education Tuition) program is an exemplary model of a 529, allowing parents to make tuition payments today so that they are protected from massive tuition hikes when their children attend college in ten or twelve years.
These programs are essential to college accessibility. To augment this point, the pervasively dire statistics respecting rising college costs are worth repeating. The average student borrower graduates over $20 thousand in debt, tuition hikes of 20-30 percent are a dime a dozen, textbook prices are quadruple the rate of inflation and cost an annual average just shy of $1 thousand, and books and supplies are now 10 percent of community college students' total budgets. The availability of 529 plans and other measures to hinder the skyrocketing cost of college, such as the Student Aid and Fiscal Responsibility Act, will help mitigate these financial barriers.
Equally ubiquitous are the benefits of a college degree, which are also worth reiterating. A college graduate, either 2- or 4-year, has much greater lifetime earnings than a high school grad, generating a larger tax base for public revenue and spurring economic growth through increased purchasing power. Crime and incarceration rates are significantly lower in highly educated communities, trends which are collaborated with drops in welfare dependency and health care needs. It seems like investment in college affordability programs is a near silver-bullet for many of the nation's domestic problems.
The U.S. House of Representatives will vote on the Student Aid and Fiscal Responsibility Act later this week, let's hope Members of Congress reach the same conclusion as Secretary Geithner and pass this historic piece of legislation.