Wherefore Art Thou, Higher Education Act?

This week’s guest post is contributed by Marie Vanderbilt, a 3L at American University Washington College of Law.  Marie breaks down the past, present and future of the Higher Education Act, the umbrella statute for most federal aid.

Will Congress manage to reauthorize the Higher Education Act of 1965 (HEA) before it sunsets at year’s end? The HEA formed one of the main pillars of the Johnson Administration’s War on Poverty (watch LBJ deliver the 1964 State of the Union, minute 20:20.)  The goal was to ensure that no one would be denied an education because of their financial situation.  The HEA removed financial barriers to higher education by authorizing a program of need-based grants and student-support programs. Since 1965, the HEA has been repeatedly reauthorized, most recently in 2008. Each time, the HEA has been amended, edited, and expanded. However, the foundational belief in the importance of access to education remains.

With Congress deadlocked over the budget, it is hard to imagine a serious conversation about how we should fund our system of higher education.  The Senate HELP Committee held new hearings this past month, at least a glimmer of activity.  The last time, Congress didn’t manage to reauthorize until five years after the deadline.  The purpose of having laws sunset is to open up programs for inspection and debate.  In the case of higher education, that moment will soon be overdue.

Does student debt reduce lifetime wealth?

Last week an economist asked me for my most impressive fact about student debt (yep, people in DC really do ask that sort of thing over dinner.  Maybe that’s why they don’t let us outside of the Beltway.)

Student debt swims in facts and figures, but the one that I tend to pull out a parties filled with young urban professionals is that a dual income young couple with bachelor’s degrees and an average amount of debt ($53,000) will lose over $200,000 of lifetime wealth compared to a comparable couple without debt (read the study, by Demos, here.)  A huge chunk of this loss is in retirement savings, despite the higher incomes that go with higher education.  This fact tends to bring the conversation about “why is student debt bad” home in ways that talking about the possibility of default might not.  Then people are usually better primed for the most important part of the story:  that 200K is the best case scenario.  Low-income students, students of color and students of for-profit schools — especially those who default– will see even larger lifetime losses.