Michigan wants to increase college enrollment, but student debt is holding them back
Prior to the COVID-19 pandemic, many city and state leaders set lofty academic achievement goals for the ‘future of work’ – a phrase that describes the potential impact of artificial intelligence (AI ) and robotics on jobs, skills and wages. . For example, in February 2019, Governor Gretchen Whitmer of Michigan set a state goal increase the percentage of adults over 25 with a university degree or high-quality certificate from around 44% to 60% by 2030.
However, many of these leaders are experiencing significant setbacks as colleges and universities faced an overall drop in enrollments in 2020 due to COVID-19 – down 2.5% from the previous year (a loss of about 400,000 students), according to the National Center for Student Research. Community colleges are experiencing the steepest declines, which is sobering given the vital importance of these institutions to disadvantaged students.
A new report of the Detroit Regional Chamber found that the region’s share of high school graduates who did not enroll in any post-secondary education in 2018 rose to 32% (and nearly 50% in the city of Detroit) compared to five previous years. These trends heralded a pandemic drop in students who filled out the Free Application for Federal Student Aid (FAFSA). The House reported that requests statewide declined 16% in the 2020-2021 academic year compared to the previous year. In the Detroit area, 23,297 students did not complete their FAFSA in the 2019-20 school year, leaving $ 224 million in federal aid unclaimed.
The Detroit-area black adult population has the lowest post-secondary completion rate at 26%, but it has the largest share of its area population with “some college, no diploma” ( 13%). It’s hard to see how states like Michigan can hit targets if its largest metropolitan area experiences a significant drop in enrollment and results.
Among the many structural problems existing in our economy that the pandemic has exposed and heightened are the barriers that hinder university graduation among disenfranchised groups. One of these is student debt.
Debt is an albatross for low-income students
While students’ access and preparation for college remain important factors in their enrollment decisions, the prospect of incurring significant loan debt can be an increasingly significant barrier. While face-to-face classes at university have certainly dropped in 2020, the number of online offers has exploded, theoretically increasing access to higher education. But people are deciding that the cost of attendance is too prohibitive, even as we see in real time the disappearance of many jobs that do not require a college degree.
“We didn’t have the money for that,” Brian Williams, a black high school student from Texas who decided not to apply to college, says NPR in December. “And I’m not trying to go into debt and pay for that for the rest of my life.”
College enrollments typically increase during economic downturns as workers try to retrain for higher-demand jobs. For example, between 2007 and 2010, post-secondary institutions experienced a 16% jump in registrations due to the Great Recession. This model has been verified for each recession dating back to the 1960s. But the COVID-19 recession may be different: Many families and individuals prioritize household budgets, and for low-income students, taking out student loans to prepare for an uncertain job market is not convenient.
Added to these debt problems is the fact that many low-income students are dropping out of college for economic, health and access reasons. And once the interest-free moratorium on federal student loan payments ends, borrowers who aren’t enrolled will have to start paying them back – and many will default.
A new Brooking report shows that canceling student debt could be a powerful tool in the Biden administration’s efforts to tackle racial inequalities in the country. We have found that debt forgiveness has the overall effect of narrowing the racial wealth gap, and the more debt is written off, the narrower the racial wealth gap. Our findings support proposals that would write off more student debt than the $ 10,000 per person President Joe Biden has floated– in line with Senator Bernie Sanders (I-Vt.) campaign proposal For Total Debt Cancellation, or up to $ 50,000 per person as proposed by Senator Elizabeth Warren (D-Mass. ).
Instead of a comprehensive federal policy, regions and cities should seriously consider debt forgiveness as a way to increase college graduation rates for black students and cut the albatross out of loans. students.
K-shaped recovery punishes unskilled workers
As the economy continues to hurt low-income workers, regional leaders like those in Michigan must do everything in their power to offer more free universities and debt cancellation if they are to get back on track. the right way to achieve their academic goals.
This is especially important now because the rapidly changing pandemic labor market presents a significant challenge for workers without college degrees. According to Congress Research Service, the April 2020 unemployment rate was 21.2% for workers without a high school diploma, compared to 8.4% for workers with a bachelor’s degree or above.
The pandemic has accelerated what experts predicted before the crisis: downsizing in many low-paid and low-skilled occupations. According to the Federal Reserve Bank of New York, 57% of high-wage workers have jobs suitable for teleworking, compared to 7% of low-wage workers. As a result, low-wage workers saw their jobs shrink by 14% while high-wage workers saw a 1% increase, appealing to the “K-shaped” recovery as described by economists.
A college degree is directly linked to higher salaries. In 2018, the hourly wage for the average high school graduate was $ 18.45, compared to $ 33.36 for college graduates. Despite this, individuals and families are increasingly grappling with how student debt mitigates these higher incomes. Soaring debt both hamper wealth building and discourage students (including returning adults) from starting or completing their education. States and regions that wish to improve their talent pool must find ways to eliminate debt.
Models from Detroit to Increase Enrollments and Reduce Debt
To renew efforts to increase graduation, including support for students categorized as ‘a bit of college, not a degree’, we need to embrace solutions that reduce debt and deliver real benefits. opportunities for wealth creation. The Detroit area, despite the recent drop in enrollment, has existing programs and initiatives focused on debt relief or cancellation that other cities can learn from.
In 2015, the Detroit Regional Chamber announced the Detroit Regional Talent Compact, a collective impact initiative bringing together key players in business, philanthropy, government, and elementary and secondary and higher education to achieve two common goals: increase the post-secondary pass rate to 60% and reduce the racial equity gap by half by 2030. The initiative garnered widespread attention and led the Lumina Foundation to appoint Detroit a Talent Hub model for other cities. *
Improving the wealth profiles of low-income residents and increasing investment in existing programs that eliminate debt are essential to achieving these goals. In Detroit, such initiatives include:
- Detroit Promise: A tuition-free route to two- and four-year graduate programs. This program can increase the share of college graduates without heavy debt, allowing the workers of tomorrow to build up wealth more quickly.
- The Detroit Path of Promise: Part of Detroit Promise, this program features a network of coaches on campus to provide psychological support to students as well as monthly financial assistance to offset unforeseen expenses.
- Detroit Regional Chamber Debt Cancellation: A partnership between the House and three post-secondary institutions in Michigan (Henry Ford College, Oakland University and Wayne State University) that remits unpaid institutional debt among students who have attended these colleges but never graduated.
- Detroit reconnect: A service for adults who have completed college or want to attend college for the first time. Detroit Reconnect offers adults with “a bit of college, not a degree” enrollment assistance in area debt relief programs.
In 2019, there was 44 million American borrowers who collectively owed $ 1.5 trillion in student debt. Local initiatives like the ones above are taking small steps towards recognizing the need for debt-free university options. But without a strong federal debt cancellation policy, regions and cities might not be able to slow the decline in enrollments and will only reduce debt edges.
Prepare students for a future that is already here
There are more black students enrolled in post-secondary education now than at any time in our country’s history – a direct result of the hard work of previous generations to break down barriers steeped in systemic racism.
But the COVID-19 pandemic is rolling back many of those gains, illustrating the fragility of progress and underscoring the need for structural change. As with other economic downturns, we need to help college-aged adults who have seen their job prospects diminish in this K-shaped recovery acquire the skills and knowledge that will allow them to stay in paid employment.
Michigan and Detroit’s goal of achieving 60% post-secondary outcomes is within reach. But the “future of work” is already here. Today, the country has the opportunity to propel more people into college through a major debt cancellation program and a free college strategy that recognizes the importance of higher education in an economy. knowledge, as well as debt hindrance in talent development.
* The Brookings Institution receives funding from the Lumina Foundation, which has made the goal of 60% post-secondary education nationwide a primary goal of the organization.