If it seems like college is more expensive than ever before — and with less return on investment than in previous generations — it’s not your imagination. Consider this: today, a degree is a requirement for more entry-level jobs than before. This will be even truer in the future. In fact, according to the Committee for Economic Development, in 1965, just 11 percent of jobs required postsecondary training, but by 2020, 65 percent of U.S. jobs will require postsecondary training.
The problem is that those degrees are much more expensive than the degrees of 10 or 20 years ago. This is even after taking inflation into account. What’s happening? Are colleges inherently worth that much more than they have been in the past? While it’s true that the demand is higher, the truth is that there are many factors driving the costs of higher education in America. Here, you’ll see some of what’s going on behind the scenes. You will find out exactly what’s leading more students (and their parents) to take on hefty loans for a chance at success in life.
Is the USDOE partly to blame?
According to Sen. Elizabeth Warren, the government is partly to blame. In 2015, she wrote a blistering letter to U.S. Department of Education Secretary John King regarding how the department handles student loan fraud. In the letter, Warren accuses the department of not having a proper handle on student loan contractors, and specifically cites its relationship with Navient, formerly known as Sallie Mae.
In 2014, the Department of Education and Navient reached a settlement of $100 million due to Navient’s role in violating a federal law that pinches interest rates at 6 percent for service members. Warren’s issue isn’t necessarily with the settlement; it’s that the department has failed to oversee its relationship with Navient. As the company holds millions of student loans, the department’s relationship with Navient hasn’t been impacted even as the company was found to have broken the law.
Moving forward, Warren not only wants the department to reassess its position with Navient, but wants to know why the company hasn’t been penalized further. To put some fears to rest, the department launched an internal investigation into Navient’s loan practices and found that a small percentage of those who borrowed were not receiving the federally mandated rate.
Warren notes the Department of Education’s inspector general revealed that the department’s internal investigation into Navient was flawed and erroneous. Toward the end of the letter, Warren writes that the findings of an independent review of the department’s handling of student aid are that companies that are responsible for supervising student loan debt receive protection from the Department of Education when they break the law.
