We Cannot Focus on Student Debt Alone

The U.S. Supreme Court has ruled on the constitutionality of President Joe Biden’s student loan forgiveness program. The U.S. House of Representatives and Senate already voted to block the program.  

When it comes to the cost of college, neither action will move the needle. In fact, debt forgiveness will not solve the college affordability crisis at all. That’s because the student debt crisis is just a symptom of a larger problem: lack of innovation. 

The average student loan borrower owes more than $37,000, but there also are 39 million Americans who are stuck with loans even though they tried college, but never graduated. Additionally, 3 in 5 working adults say getting a 4-year degree is too time-consuming and expensive and half of employers say job applicants lack the relevant skills or experience for open jobs. 

Our inflexible education system may work for the 35% of Americans who earn a four-year or advanced degree, but it does not work for the rest.  

Education should unlock an individual’s potential and help them find purpose in their life and work. To do so, postsecondary education must meet each learner’s unique needs and learning must be lifelong.   

What we have now is a one-size-fits-all model built upon the notion that a college degree is the only path to success.  

We cannot focus only on the small fraction of Americans who go to college or university. Higher education leaders, employers, philanthropists, and lawmakers need to improve opportunity for all learners by taking an all-of-the-above approach that supports multiple pathways, from college to employer-based upskilling programs.  

There are some innovations in the marketplace that are worth scaling and replicating. 

Per Scholas works with employers to create tuition-free training programs that combine business skills development and hands-on technical instruction. More than 20,000 graduates have used the pathway to start or advance in their careers. SkillUp has provided more than one million workers with scholarships, accelerated advancement programs, and a web platform that unlocks career growth. Backed by the Google Career Certificates Fund, Merit America combines technical education with coaching and peer support to help workers in low-wage roles move into the technology sector. More than 1,800 learners have completed Merit America programs. Their new salaries, on average, are $19,000 higher than the pay from their last jobs.  

By building new and interesting options that give individuals the opportunity to find a program or pursuit that best fits their interests and talent, these programs respect the dignity of every learner. 

Competition matters. Over the long term, a proliferation of options will address the student debt problem. Having a dynamic marketplace will create opportunity and improve outcomes while driving down costs. 

We also need innovative financing models to ensure learners can access programs that meet their individual needs. Matched education savings plans, skills savings accounts, income-share agreements, and outcomes-based loans can narrow opportunity gaps by removing financial barriers to post-secondary education. By asking schools or programs to undertake some of the financial risks, these models ensure educators bear some of the responsibility if their learners do not finish. 

There is a role for employers here too. A 2022 New America Foundation survey found 81% of employers believe their organizations should hire based on skills not degrees. Three-quarters of employers do not find a college degree to be a reliable predictor of work success, but hiring managers continue to show a bias toward workers with college degrees. In the process, they keep individuals who have experience but no degree from accessing jobs. Degree requirements will continue to drive workers toward college and student debt when, in reality, learners could go elsewhere to acquire the skills and experience they need to do a job well. 

We cannot afford to continue to think about the student debt crisis only as a binary question — whether we forgive past debt or not. If we do, we will only end up right back where we are now. We’ll end up contemplating loan forgiveness for some students while failing millions more Americans and the job creators who want to hire them.

There is a better way.