9:59:59.000,9:59:59.000
Today 14 million Americans are indebted[br]for their passage to the new economy.

9:59:59.000,9:59:59.000
Too poor to pay their way through college,

9:59:59.000,9:59:59.000
they now owe lenders more[br]than one trillion US dollars.

9:59:59.000,9:59:59.000
They do find what jobs they can get

9:59:59.000,9:59:59.000
to pay off a debt that is secured[br]on their person.

9:59:59.000,9:59:59.000
In America,

9:59:59.000,9:59:59.000
even a bankrupt gambler[br]gets a second chance ...

9:59:59.000,9:59:59.000
but it is nearly impossible

9:59:59.000,9:59:59.000
for an American to get discharged[br]from student loan debts.

9:59:59.000,9:59:59.000
Once upon a time,

9:59:59.000,9:59:59.000
in America,

9:59:59.000,9:59:59.000
going to college did not mean[br]graduating with debt.

9:59:59.000,9:59:59.000
My friend Paul's father graduated[br]from Colorado State University

9:59:59.000,9:59:59.000
on the GI Bill.

9:59:59.000,9:59:59.000
For his generation,

9:59:59.000,9:59:59.000
higher education was free or almost free

9:59:59.000,9:59:59.000
because it was thought of[br]as a public good.

9:59:59.000,9:59:59.000
Not anymore.

9:59:59.000,9:59:59.000
When Paul also graduated[br]from Colorado State University,

9:59:59.000,9:59:59.000
he paid for his English degree[br]by working part time.

9:59:59.000,9:59:59.000
30 years ago,

9:59:59.000,9:59:59.000
higher education tuition was affordable,

9:59:59.000,9:59:59.000
reasonable,

9:59:59.000,9:59:59.000
and what debts you accumulated[br]you paid off by graduation date.

9:59:59.000,9:59:59.000
Not anymore.

9:59:59.000,9:59:59.000
Paul's daughter followed in his footsteps,

9:59:59.000,9:59:59.000
but with one difference:

9:59:59.000,9:59:59.000
when she graduated five years ago,

9:59:59.000,9:59:59.000
it was with a whopping debt.

9:59:59.000,9:59:59.000
Students like Kate have to take on a loan

9:59:59.000,9:59:59.000
because the cost of higher education[br]has become unaffordable for most --

9:59:59.000,9:59:59.000
for many if not most American families.

9:59:59.000,9:59:59.000
But so what?

9:59:59.000,9:59:59.000
Getting into debt to buy an expensive[br]education is not all bad

9:59:59.000,9:59:59.000
if you could pay it off

9:59:59.000,9:59:59.000
with the increased income[br]that you earned from it.

9:59:59.000,9:59:59.000
But that's where the rubber[br]meets the road.

9:59:59.000,9:59:59.000
Even a college grad earned 10 percent[br]more in 2001 that she did in 2013.

9:59:59.000,9:59:59.000
So ...

9:59:59.000,9:59:59.000
tuition costs up,

9:59:59.000,9:59:59.000
public funding down,

9:59:59.000,9:59:59.000
family incomes diminished,

9:59:59.000,9:59:59.000
personal incomes weak.

9:59:59.000,9:59:59.000
Is it any wonder that more than[br]a quarter of those who must

9:59:59.000,9:59:59.000
cannot make their student loan payments?

9:59:59.000,9:59:59.000
The worst of times[br]can be the best of times,

9:59:59.000,9:59:59.000
because certain truths flash up[br]in ways that you can't ignore.

9:59:59.000,9:59:59.000
I want to speak of three of them today.

9:59:59.000,9:59:59.000
1.2 trillion dollars of debts for diplomas

9:59:59.000,9:59:59.000
make it abundantly obvious

9:59:59.000,9:59:59.000
that higher education is a consumer[br]product you can buy.

9:59:59.000,9:59:59.000
All of us talk about education[br]just as the economists do now.

9:59:59.000,9:59:59.000
As an investment that you make[br]to improve the human stock

9:59:59.000,9:59:59.000
by training them for work.

9:59:59.000,9:59:59.000
As an investment you make[br]to sort and classify people

9:59:59.000,9:59:59.000
so that employers can[br]hire them more easily.

9:59:59.000,9:59:59.000
The U.S. News & World Report[br]ranks colleges

9:59:59.000,9:59:59.000
just as the consumer report[br]rates washing machines.

9:59:59.000,9:59:59.000
The language is full --

9:59:59.000,9:59:59.000
peppered --

9:59:59.000,9:59:59.000
with barbarism.

9:59:59.000,9:59:59.000
Teachers are called service providers,

9:59:59.000,9:59:59.000
students are called consumers.

9:59:59.000,9:59:59.000
Sociology and Shakespeare[br]and soccer and science,

9:59:59.000,9:59:59.000
all of these are content.

9:59:59.000,9:59:59.000
Student debt is profitable.

9:59:59.000,9:59:59.000
Only not on you.

9:59:59.000,9:59:59.000
Your debt fattens the profit[br]of the student loan industry.

9:59:59.000,9:59:59.000
The two 800-pound gorillas of which[br]Sallie May and Navient,

9:59:59.000,9:59:59.000
posted last year a combined[br]profit of 1.2 billion dollars.

9:59:59.000,9:59:59.000
And just like home mortgages,

9:59:59.000,9:59:59.000
student loans can be bundled[br]and packaged and sliced and diced,

9:59:59.000,9:59:59.000
and sold on Wall Street.

9:59:59.000,9:59:59.000
And colleges and universties that invest[br]in these securities loans ...

9:59:59.000,9:59:59.000
profit twice.

9:59:59.000,9:59:59.000
Once from your tuition

9:59:59.000,9:59:59.000
and then again from the interest on debt.

9:59:59.000,9:59:59.000
With all that money to be made,

9:59:59.000,9:59:59.000
are we surprised that some[br]in the higher education business

9:59:59.000,9:59:59.000
have begun to engage in false advertising,

9:59:59.000,9:59:59.000
in bait and switch?

9:59:59.000,9:59:59.000
In exploiting the very ignorance[br]that they pretend to educate.

9:59:59.000,9:59:59.000
Third,

9:59:59.000,9:59:59.000
diplomas are a brand.

9:59:59.000,9:59:59.000
Many years ago my teacher wrote,

9:59:59.000,9:59:59.000
"When students are treated as consumers,

9:59:59.000,9:59:59.000
they're made prisoners[br]of addiction and envy."

9:59:59.000,9:59:59.000
Just as consumers can be sold and resold[br]updated versions of an iPhone,

9:59:59.000,9:59:59.000
so also people can be sold[br]more and more education.

9:59:59.000,9:59:59.000
College is the new high school,

9:59:59.000,9:59:59.000
we already say that.

9:59:59.000,9:59:59.000
But why stop there?

9:59:59.000,9:59:59.000
People can be up-sold on certifications[br]and recertifications,

9:59:59.000,9:59:59.000
masters degrees,

9:59:59.000,9:59:59.000
doctoral degrees.

9:59:59.000,9:59:59.000
Higher education is also marketed[br]as a status object.

9:59:59.000,9:59:59.000
Buy a degree,

9:59:59.000,9:59:59.000
much like you do a Lexus[br]of a Louis Vuitton bag,

9:59:59.000,9:59:59.000
to distinguish yourself from others.

9:59:59.000,9:59:59.000
So you can be the object[br]of envy of others.

9:59:59.000,9:59:59.000
Diplomas are a brand.

9:59:59.000,9:59:59.000
But these truths are often times hidden[br]by a very noisy sales pitch.

9:59:59.000,9:59:59.000
There is not a day that goes by

9:59:59.000,9:59:59.000
without some policy guy[br]sitting on the television

9:59:59.000,9:59:59.000
telling us,

9:59:59.000,9:59:59.000
"A college degree is absolutely essential

9:59:59.000,9:59:59.000
to get on that up escalator[br]to a middle-class life."

9:59:59.000,9:59:59.000
And the usual evidence offered[br]is the college premium:

9:59:59.000,9:59:59.000
a college grad who makes on average[br]56 percent more than a high school grad.

9:59:59.000,9:59:59.000
Let's look at that number more carefully,

9:59:59.000,9:59:59.000
because on the face of it,

9:59:59.000,9:59:59.000
it seems to belie the stories we all hear

9:59:59.000,9:59:59.000
about college grads working[br]as baristas and cashiers.

9:59:59.000,9:59:59.000
Of 100 people who enroll in any form[br]of post-secondary education,

9:59:59.000,9:59:59.000
45 do not complete it in a timely fashion

9:59:59.000,9:59:59.000
for a number of reasons,[br]including financial.

9:59:59.000,9:59:59.000
Of the 55 that do graduate,

9:59:59.000,9:59:59.000
two will remain unemployed

9:59:59.000,9:59:59.000
and another 18 are underemployed.

9:59:59.000,9:59:59.000
So,

9:59:59.000,9:59:59.000
college grads earn more[br]than high school grads,

9:59:59.000,9:59:59.000
but does it pay for the exorbitant tuition

9:59:59.000,9:59:59.000
and the lost wages while at college?

9:59:59.000,9:59:59.000
Now even economists admit

9:59:59.000,9:59:59.000
going to college pays off[br]for only those who complete it.

9:59:59.000,9:59:59.000
But that's only because high school wages[br]have been cut to the bone,

9:59:59.000,9:59:59.000
for decades now.

9:59:59.000,9:59:59.000
For decades,

9:59:59.000,9:59:59.000
workers with a high school degree

9:59:59.000,9:59:59.000
have been denied their fair share[br]of what they have produced.

9:59:59.000,9:59:59.000
And had they received as the should have,

9:59:59.000,9:59:59.000
then going to college would have been[br]a bad investment for many.

9:59:59.000,9:59:59.000
College premium?

9:59:59.000,9:59:59.000
I think it's a high school discount.

9:59:59.000,9:59:59.000
Two out of three people who enroll[br]are not going to find an adequate job.

9:59:59.000,9:59:59.000
And the future for them doesn't look[br]particularly promising,

9:59:59.000,9:59:59.000
in fact downright bleak.

9:59:59.000,9:59:59.000
And it is they who are going to suffer

9:59:59.000,9:59:59.000
the most punishing forms of student debt.

9:59:59.000,9:59:59.000
And it is they,

9:59:59.000,9:59:59.000
curiously and sadly,

9:59:59.000,9:59:59.000
who are marketed most loudly[br]about this college premium thing.

9:59:59.000,9:59:59.000
That's not just cynical marketing,

9:59:59.000,9:59:59.000
that's cruel.

9:59:59.000,9:59:59.000
So what do we do?

9:59:59.000,9:59:59.000
What if students and parents treated[br]higher education as a consumer product?

9:59:59.000,9:59:59.000
Everybody else seems to.

9:59:59.000,9:59:59.000
Then,

9:59:59.000,9:59:59.000
like any other consumer product,

9:59:59.000,9:59:59.000
you would demand to know[br]what you're paying for.

9:59:59.000,9:59:59.000
When we buy medicines,

9:59:59.000,9:59:59.000
we get a list of side effects.

9:59:59.000,9:59:59.000
When you buy a higher educational product,

9:59:59.000,9:59:59.000
you should have a warning label

9:59:59.000,9:59:59.000
that allows consumers to choose --

9:59:59.000,9:59:59.000
make informed choices.

9:59:59.000,9:59:59.000
When you buy a car,

9:59:59.000,9:59:59.000
it tells you how many[br]miles per gallon to expect.

9:59:59.000,9:59:59.000
Who knows what to expect

9:59:59.000,9:59:59.000
from a degree say, in Canadian Studies.

9:59:59.000,9:59:59.000
There is such a thing by the way.

9:59:59.000,9:59:59.000
What if there was an app for that?

9:59:59.000,9:59:59.000
One that linked up the cost of a major[br]to the expected income.

9:59:59.000,9:59:59.000
Let's call it Income Based Tuition or IBT.

9:59:59.000,9:59:59.000
One of you make this.

9:59:59.000,9:59:59.000
(Laughter)

9:59:59.000,9:59:59.000
Discovery of reality.

9:59:59.000,9:59:59.000
There are three advantages,

9:59:59.000,9:59:59.000
three benefits to Income Based Tuition.

9:59:59.000,9:59:59.000
Any user can figure out

9:59:59.000,9:59:59.000
how much money he or she will make[br]from a given college and major.

9:59:59.000,9:59:59.000
Such informed users

9:59:59.000,9:59:59.000
are unlikely to fall victim[br]to the [Huckster's] ploy,

9:59:59.000,9:59:59.000
to the sales pitch.

9:59:59.000,9:59:59.000
But also to choose wisely.

9:59:59.000,9:59:59.000
Why would anybody pay more for college

9:59:59.000,9:59:59.000
than let's say, 15 percent[br]of the additional income they earn?

9:59:59.000,9:59:59.000
There's a second benefit[br]to Income Based Tuition.

9:59:59.000,9:59:59.000
By tying the cost to the income.

9:59:59.000,9:59:59.000
College administrators would be forced[br]to manage costs better,

9:59:59.000,9:59:59.000
to find innovative ways to do so.

9:59:59.000,9:59:59.000
For instance,

9:59:59.000,9:59:59.000
all of you students here pay roughly[br]the same tuition for every major.

9:59:59.000,9:59:59.000
That is manifestly unfair[br]and should change.

9:59:59.000,9:59:59.000
An engineering student uses more resources

9:59:59.000,9:59:59.000
and facilities and labs and faculty

9:59:59.000,9:59:59.000
than a philosophy student.

9:59:59.000,9:59:59.000
But the philosophy student,

9:59:59.000,9:59:59.000
as a consequence,

9:59:59.000,9:59:59.000
is subsidizing the engineering student.

9:59:59.000,9:59:59.000
Who then,

9:59:59.000,9:59:59.000
by the way,

9:59:59.000,9:59:59.000
goes on and earns more money.

9:59:59.000,9:59:59.000
Why should two people[br]buy the same product --

9:59:59.000,9:59:59.000
buy the same product --

9:59:59.000,9:59:59.000
pay the same,

9:59:59.000,9:59:59.000
but one person receive half[br]or a third of the service.

9:59:59.000,9:59:59.000
In fact,

9:59:59.000,9:59:59.000
college grads,

9:59:59.000,9:59:59.000
some majors,

9:59:59.000,9:59:59.000
pay 25 percent of their income[br]servicing their student debt

9:59:59.000,9:59:59.000
while others pay five percent.

9:59:59.000,9:59:59.000
That kind if inequity would end[br]when majors are priced more correctly.

9:59:59.000,9:59:59.000
Now of course,

9:59:59.000,9:59:59.000
all this data --

9:59:59.000,9:59:59.000
and one of you is going to do this right?

9:59:59.000,9:59:59.000
All this data has to be well designed,

9:59:59.000,9:59:59.000
maybe audited by public accounting firms

9:59:59.000,9:59:59.000
to avoid statistical lies.

9:59:59.000,9:59:59.000
We know about statistics, right?

9:59:59.000,9:59:59.000
But be that as it may,

9:59:59.000,9:59:59.000
the third and biggest benefit[br]of Income Base Tuition,

9:59:59.000,9:59:59.000
is it would free Americans from the fear[br]and the fact of financial ruin

9:59:59.000,9:59:59.000
because they bought a defective product.

9:59:59.000,9:59:59.000
Perhaps,

9:59:59.000,9:59:59.000
in time,

9:59:59.000,9:59:59.000
young and old Americans may rediscover,

9:59:59.000,9:59:59.000
as the gentleman said earlier,

9:59:59.000,9:59:59.000
their curiosity,

9:59:59.000,9:59:59.000
their love of learning.

9:59:59.000,9:59:59.000
Begin to study what they love,

9:59:59.000,9:59:59.000
love what they study,

9:59:59.000,9:59:59.000
follow their passion.

9:59:59.000,9:59:59.000
Getting stimulated by their intelligence.

9:59:59.000,9:59:59.000
Follow paths of inquiry[br]that they really want to.

9:59:59.000,9:59:59.000
After all,

9:59:59.000,9:59:59.000
it was Eric and Kevin,

9:59:59.000,9:59:59.000
two years ago,

9:59:59.000,9:59:59.000
just exactly these kinds of young men,

9:59:59.000,9:59:59.000
who prompted me and worked with me --

9:59:59.000,9:59:59.000
and still do --

9:59:59.000,9:59:59.000
in the study of indebted [br]tudents in America.

9:59:59.000,9:59:59.000
Thank you for your attention.

9:59:59.000,9:59:59.000
(Applause)