Future college students and their families should be worried about saving money for college rather than betting on student loans to get them through, a new report says.
As detailed in the Chronicle of Higher Education, the report by the Assets and Education Initiative at the University of Kansas lays out a federal college savings program that includes “automatically enrolling every child at birth, publicly financing initial deposits in children’s savings accounts, providing public matching contributions, and allowing participants to withdraw from the accounts for pre- and postcollege expenses.”
While college costs can be astronomical, it doesn’t take much saving to greatly increase the likelihood a given student will enroll and graduate, as one chart from the report shows:
The report says the program should target lower-income students because they are both less likely to go to college and more likely to borrow huge amounts if they do enroll. But the proposal would make all would-be students eligible. The report notes that a student with a higher debt load is less likely to graduate on time or at all. Total student debt currently tops $1 trillion.
While Congress can’t come to a deal on interest rates for student loans, other politicians are looking to create new systems to increase access to higher education by shrinking the role of debt. Newark mayor and U.S. Senate candidate Cory Booker introduced a plan similar to the University of Kansas proposal, with the federal government contributing to a fund for families that receive the earned income tax credit. The Oregon legislature is investigating a proposal that would make all public universities “free” by having students pay back the cost via a tax on their salaries.