0:00:00.975,0:00:06.435
Today 40 million Americans are indebted[br]for their passage to the new economy.

0:00:08.039,0:00:10.143
Too poor to pay their way through college,

0:00:10.167,0:00:14.509
they now owe lenders[br]more than one trillion US dollars.

0:00:15.709,0:00:17.948
They do find what jobs they can get

0:00:17.972,0:00:20.457
to pay off a debt[br]that is secured on their person.

0:00:21.201,0:00:23.249
In America,

0:00:23.273,0:00:28.804
even a bankrupt gambler[br]gets a second chance.

0:00:30.351,0:00:33.153
But it is nearly impossible

0:00:33.177,0:00:36.652
for an American to get discharged[br]their student loan debts.

0:00:40.421,0:00:43.141
Once upon a time in America,

0:00:43.165,0:00:45.815
going to college did not mean[br]graduating with debt.

0:00:47.299,0:00:52.585
My friend Paul's father[br]graduated from Colorado State University

0:00:52.609,0:00:53.759
on the GI Bill.

0:00:55.546,0:00:57.134
For his generation,

0:00:57.158,0:01:00.006
higher education was free or almost free,

0:01:00.030,0:01:02.427
because it was thought of[br]as a public good.

0:01:03.676,0:01:04.872
Not anymore.

0:01:06.171,0:01:10.267
When Paul also graduated[br]from Colorado State University,

0:01:10.291,0:01:13.664
he paid for his English degree[br]by working part-time.

0:01:14.164,0:01:15.315
30 years ago,

0:01:15.339,0:01:18.006
higher education tuition[br]was affordable, reasonable,

0:01:18.030,0:01:21.426
and what debts you accumulated,[br]you paid off by graduation date.

0:01:21.952,0:01:23.102
Not anymore.

0:01:23.829,0:01:27.203
Paul's daughter followed in his footsteps,

0:01:27.227,0:01:28.528
but with one difference:

0:01:28.552,0:01:31.044
when she graduated five years ago,

0:01:31.068,0:01:32.417
it was with a whopping debt.

0:01:33.179,0:01:36.521
Students like Kate have to take on a loan

0:01:36.545,0:01:39.744
because the cost of higher education[br]has become unaffordable

0:01:39.768,0:01:43.457
for many if not most American families.

0:01:44.427,0:01:45.577
But so what?

0:01:46.117,0:01:48.665
Getting into debt to buy[br]an expensive education

0:01:48.689,0:01:51.451
is not all bad if you could pay it off

0:01:51.475,0:01:54.609
with the increased income[br]that you earned from it.

0:01:55.266,0:01:57.379
But that's where the rubber[br]meets the road.

0:01:59.652,0:02:05.248
Even a college grad[br]earned 10 percent more in 2001

0:02:05.272,0:02:07.247
than she did in 2013.

0:02:07.984,0:02:09.134
So ...

0:02:09.779,0:02:11.438
tuition costs up,

0:02:11.462,0:02:12.985
public funding down,

0:02:13.009,0:02:15.446
family incomes diminished,

0:02:15.470,0:02:17.882
personal incomes weak.

0:02:18.241,0:02:22.646
Is it any wonder that more[br]than a quarter of those who must

0:02:22.670,0:02:24.677
cannot make their student loan payments?

0:02:26.852,0:02:29.829
The worst of times[br]can be the best of times,

0:02:29.853,0:02:33.731
because certain truths flash up[br]in ways that you can't ignore.

0:02:34.446,0:02:36.392
I want to speak of three of them today.

0:02:37.571,0:02:41.445
1.2 trillion dollars of debts for diplomas

0:02:41.469,0:02:43.934
make it abundantly obvious

0:02:43.958,0:02:47.696
that higher education[br]is a consumer product you can buy.

0:02:48.283,0:02:53.101
All of us talk about education[br]just as the economists do now,

0:02:53.125,0:02:57.606
as an investment that you make[br]to improve the human stock

0:02:57.630,0:02:59.371
by training them for work.

0:02:59.812,0:03:04.535
As an investment you make[br]to sort and classify people

0:03:04.559,0:03:07.327
so that employers[br]can hire them more easily.

0:03:08.396,0:03:11.794
The U.S. News & World Report[br]ranks colleges

0:03:11.818,0:03:15.071
just as the consumer report[br]rates washing machines.

0:03:15.095,0:03:18.858
The language is peppered with barbarisms.

0:03:18.882,0:03:22.263
Teachers are called "service providers,"

0:03:22.287,0:03:24.040
students are called "consumers."

0:03:25.509,0:03:29.390
Sociology and Shakespeare[br]and soccer and science,

0:03:29.414,0:03:31.009
all of these are "content."

0:03:33.318,0:03:34.699
Student debt is profitable.

0:03:34.723,0:03:35.873
Only not on you.

0:03:37.961,0:03:41.564
Your debt fattens the profit[br]of the student loan industry.

0:03:42.040,0:03:44.477
The two 800-pound gorillas of which --

0:03:44.501,0:03:46.564
Sallie Mae and Navient --

0:03:46.588,0:03:51.794
posted last year a combined profit[br]of 1.2 billion dollars.

0:03:52.568,0:03:55.140
And just like home mortgages,

0:03:55.164,0:03:58.350
student loans can be bundled[br]and packaged and sliced and diced,

0:03:58.374,0:03:59.624
and sold on Wall Street.

0:04:00.369,0:04:01.965
And colleges and universities

0:04:01.989,0:04:05.289
that invest in these securitized loans

0:04:06.170,0:04:07.321
profit twice.

0:04:07.735,0:04:09.156
Once from your tuition,

0:04:09.180,0:04:11.560
and then again from the interest on debt.

0:04:13.108,0:04:15.474
With all that money to be made,

0:04:15.498,0:04:21.085
are we surprised that some[br]in the higher education business

0:04:21.109,0:04:23.181
have begun to engage in false advertising,

0:04:23.205,0:04:24.362
in bait and switch ...

0:04:26.585,0:04:30.680
in exploiting the very ignorance[br]that they pretend to educate?

0:04:32.144,0:04:33.294
Third:

0:04:33.678,0:04:35.067
diplomas are a brand.

0:04:35.741,0:04:38.092
Many years ago my teacher wrote,

0:04:38.116,0:04:40.657
"When students are treated as consumers,

0:04:40.681,0:04:43.806
they're made prisoners[br]of addiction and envy."

0:04:47.794,0:04:52.335
Just as consumers can be sold and resold[br]upgraded versions of an iPhone,

0:04:52.359,0:04:55.301
so also people can be sold[br]more and more education.

0:04:56.807,0:04:58.673
College is the new high school,

0:04:58.697,0:05:00.021
we already say that.

0:05:01.408,0:05:02.807
But why stop there?

0:05:02.831,0:05:06.308
People can be upsold[br]on certifications and recertifications,

0:05:06.332,0:05:08.688
master's degrees, doctoral degrees.

0:05:11.436,0:05:15.149
Higher education is also marketed[br]as a status object.

0:05:16.634,0:05:17.785
Buy a degree,

0:05:17.809,0:05:20.996
much like you do a Lexus[br]of a Louis Vuitton bag,

0:05:21.020,0:05:22.814
to distinguish yourself from others.

0:05:22.838,0:05:25.289
So you can be the object[br]of envy of others.

0:05:26.669,0:05:28.400
Diplomas are a brand.

0:05:29.034,0:05:35.629
But these truths are often times[br]hidden by a very noisy sales pitch.

0:05:36.535,0:05:38.171
There is not a day that goes by

0:05:38.195,0:05:43.232
without some policy guy[br]on television telling us,

0:05:43.256,0:05:45.280
"A college degree is absolutely essential

0:05:45.304,0:05:48.021
to get on that up escalator[br]to a middle-class life."

0:05:48.890,0:05:52.568
And the usual evidence offered[br]is the college premium:

0:05:52.592,0:05:57.839
a college grad who makes on average[br]56 percent more than a high school grad.

0:05:58.425,0:06:00.473
Let's look at that number more carefully,

0:06:00.497,0:06:01.823
because on the face of it,

0:06:01.847,0:06:05.191
it seems to belie the stories we all hear

0:06:05.215,0:06:09.603
about college grads[br]working as baristas and cashiers.

0:06:10.545,0:06:15.696
Of 100 people who enroll[br]in any form of post-secondary education,

0:06:15.720,0:06:18.768
45 do not complete it in a timely fashion,

0:06:18.792,0:06:21.858
for a number of reasons,[br]including financial.

0:06:22.275,0:06:24.188
Of the 55 that do graduate,

0:06:24.212,0:06:26.260
two will remain unemployed,

0:06:26.284,0:06:29.014
and another 18 are underemployed.

0:06:30.058,0:06:33.733
So, college grads earn more[br]than high school grads,

0:06:33.757,0:06:36.750
but does it pay for the exorbitant tuition

0:06:36.774,0:06:39.165
and the lost wages while at college?

0:06:39.661,0:06:42.257
Now even economists admit

0:06:42.281,0:06:47.511
going to college pays off[br]for only those who complete it.

0:06:48.095,0:06:52.127
But that's only because high school wages[br]have been cut to the bone,

0:06:52.151,0:06:53.591
for decades now.

0:06:55.369,0:06:57.258
For decades,

0:06:57.282,0:06:59.639
workers with a high school degree

0:06:59.663,0:07:03.766
have been denied a fair share[br]of what they have produced.

0:07:04.480,0:07:07.385
And had they received as they should have,

0:07:07.409,0:07:11.362
then going to college would have been[br]a bad investment for many.

0:07:11.386,0:07:13.512
College premium?

0:07:13.941,0:07:15.695
I think it's a high school discount.

0:07:16.688,0:07:21.092
Two out of three people who enroll[br]are not going to find an adequate job.

0:07:21.756,0:07:24.867
And the future, for them,[br]doesn't look particularly promising --

0:07:24.891,0:07:26.613
in fact, it's downright bleak.

0:07:26.637,0:07:29.041
And it is they who are going to suffer

0:07:30.541,0:07:33.224
the most punishing forms of student debt.

0:07:34.002,0:07:35.153
And it is they,

0:07:35.177,0:07:36.558
curiously and sadly,

0:07:36.582,0:07:40.391
who are marketed most loudly[br]about this college premium thing.

0:07:41.986,0:07:44.383
That's not just cynical marketing,

0:07:44.407,0:07:45.557
that's cruel.

0:07:47.277,0:07:48.427
So what do we do?

0:07:49.279,0:07:54.888
What if students and parents treated[br]higher education as a consumer product?

0:07:56.199,0:07:57.738
Everybody else seems to.

0:07:58.686,0:08:00.948
Then, like any other consumer product,

0:08:00.972,0:08:03.471
you would demand to know[br]what you're paying for.

0:08:03.495,0:08:04.710
When you buy medicines,

0:08:04.734,0:08:06.649
you get a list of side effects.

0:08:06.673,0:08:08.785
When you buy a higher educational product,

0:08:08.809,0:08:10.443
you should have a warning label

0:08:10.467,0:08:12.659
that allows consumers to choose,

0:08:12.683,0:08:14.062
make informed choices.

0:08:14.838,0:08:16.030
When you buy a car,

0:08:16.054,0:08:18.665
it tells you how many[br]miles per gallon to expect.

0:08:19.188,0:08:20.634
Who knows what to expect

0:08:20.658,0:08:24.372
from a degree say, in Canadian Studies.

0:08:24.806,0:08:26.465
There is such a thing, by the way.

0:08:28.989,0:08:31.044
What if there was an app for that?

0:08:34.402,0:08:39.270
One that linked up the cost of a major[br]to the expected income.

0:08:40.208,0:08:42.574
Let's call it Income-Based Tuition or IBT.

0:08:42.598,0:08:44.120
One of you make this.

0:08:44.144,0:08:45.683
(Laughter)

0:08:45.707,0:08:47.439
Discover your reality.

0:08:47.463,0:08:49.772
(Laughter)

0:08:49.796,0:08:51.225
There are three advantages,

0:08:51.249,0:08:53.930
three benefits to Income-Based Tuition.

0:08:55.232,0:08:57.121
Any user can figure out

0:08:57.145,0:09:00.349
how much money he or she will make[br]from a given college and major.

0:09:01.105,0:09:02.447
Such informed users

0:09:02.471,0:09:06.416
are unlikely to fall victim[br]to the huckster's ploy,

0:09:06.440,0:09:07.850
to the sales pitch.

0:09:07.874,0:09:09.580
But also to choose wisely.

0:09:09.604,0:09:12.006
Why would anybody pay more for college

0:09:12.030,0:09:15.056
than let's say, 15 percent[br]of the additional income they earn?

0:09:17.040,0:09:19.756
There's a second benefit[br]to Income-Based Tuition.

0:09:19.780,0:09:22.740
By tying the cost to the income,

0:09:22.764,0:09:27.185
college administrators would be forced[br]to manage costs better,

0:09:27.209,0:09:29.549
to find innovative ways to do so.

0:09:29.573,0:09:30.727
For instance,

0:09:30.751,0:09:34.811
all of you students here pay roughly[br]the same tuition for every major.

0:09:35.478,0:09:39.525
That is manifestly unfair,[br]and should change.

0:09:40.295,0:09:44.216
An engineering student uses more resources

0:09:44.240,0:09:46.649
and facilities and labs and faculty

0:09:46.673,0:09:48.351
than a philosophy student.

0:09:49.581,0:09:51.685
But the philosophy student,[br]as a consequence,

0:09:51.709,0:09:53.899
is subsidizing the engineering student.

0:09:54.300,0:09:56.991
Who then, by the way,[br]goes on and earns more money.

0:09:57.015,0:10:00.722
Why should two people[br]buy the same product,

0:10:00.746,0:10:01.921
pay the same,

0:10:01.945,0:10:04.722
but one person receive[br]half or a third of the service.

0:10:06.448,0:10:10.519
In fact, college grads, some majors,

0:10:10.543,0:10:14.163
pay 25 percent of their income[br]servicing their student debt,

0:10:14.187,0:10:15.860
while others pay five percent.

0:10:17.510,0:10:22.026
That kind if inequity would end[br]when majors are priced more correctly.

0:10:23.042,0:10:25.201
Now of course, all this data --

0:10:25.225,0:10:27.299
and one of you is going to do this, right?

0:10:27.323,0:10:29.170
All this data has to be well designed,

0:10:29.194,0:10:31.292
maybe audited by public accounting firms

0:10:31.316,0:10:33.268
to avoid statistical lies.

0:10:33.292,0:10:35.137
We know about statistics, right?

0:10:36.766,0:10:37.989
But be that as it may,

0:10:38.013,0:10:42.394
the third and biggest benefit[br]of Income-Based Tuition,

0:10:42.418,0:10:47.847
is it would free Americans from the fear[br]and the fact of financial ruin

0:10:47.871,0:10:50.037
because they bought a defective product.

0:10:50.813,0:10:53.132
Perhaps, in time,

0:10:53.156,0:10:55.404
young and old Americans may rediscover,

0:10:55.428,0:10:57.625
as the gentleman said earlier,

0:10:57.649,0:10:59.688
their curiosity, their love of learning --

0:10:59.712,0:11:01.149
begin to study what they love,

0:11:01.173,0:11:02.352
love what they study,

0:11:02.376,0:11:03.759
follow their passion ...

0:11:04.577,0:11:07.046
getting stimulated by their intelligence,

0:11:07.070,0:11:10.507
follow paths of inquiry[br]that they really want to.

0:11:10.848,0:11:15.298
After all, it was Eric and Kevin,

0:11:15.322,0:11:16.490
two years ago,

0:11:17.498,0:11:20.930
just exactly these kinds of young men,

0:11:20.954,0:11:22.976
who prompted me and worked with me,

0:11:23.000,0:11:24.561
and still do,

0:11:24.585,0:11:28.271
in the study of indebted[br]students in America.

0:11:29.272,0:11:30.803
Thank you for your attention.

0:11:30.827,0:11:35.391
(Applause)