The problem is obvious. Student loan debt is over $1.1 trillion nationwide, representing a serious problem for college students and higher ed institutions alike. And now, with interest rates on subsidized Stafford loans set to double on July 1, the problem is only about to get worse. President Obama knows this; he is urging lawmakers to pass a solution before the imminent deadline. Congressional leaders are currently debating how to fix the issue and while a new bipartisan bill holds promise, the legislation would still raise borrowing rates for students and their families.
Although this is playing out largely at a policy level, universities should be tracking these developments closely. It's no secret that higher education currently finds itself at crossroads. With ballooning tuition rates and the ever-declining value of a college degree, cheaper alternatives such as massive open online courses (MOOCs) have the potential to disrupt the traditional university model. For students thinking about attending a U.S. university, the question becomes: why would anyone go $200,000 in debt for a degree that won't return on its investment?
U.S. colleges and universities must reflect not only on what they can do to alleviate student debt, but on how they can showcase the value for their degrees. Students must be confident their investment is worth it, or they won't enroll. While the imminent rise in interest rates may seem like a small problem compared to the greater debt crisis at hand, it's in higher education's best interest to keep loan rates and student debt low. If the July 1 deadline passes with no legislative action, universities should take a hard look at themselves. They need take to a more proactive approach by lobbying more vocally for student interests, demonstrating the value of their degrees and realize the student debt crisis is their problem, too.
For more information on just how the bad the student debt crisis has become, take a look at this infographic from Democracy for America (click to see larger version):