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The Next Big Debt Crisis Student Debt

The economy is improving, unemployment is down and people general feel more confident about their own futures so we’ve pretty much stopped talking about the national debt, a hot topic for your guest today, Lanny Davis. In fact, as you know, the public’s concern about the debt has declined so fast as so far that in recent polling less than 10% of people polled consider it a pressing issue that the government should address. As it happens, though, those same people are getting more and more concerned about another debt problem: I’m talking about the explosive growth of student debt, which now tops over $1 trillion.

Some people say that’s too easy to qualify for and get federal student, meaning that colleges and universities can increase tuition and other fees without fear that students won’t be able to afford them. On the other hand, others think that our current system of higher education is broken and needs to be completely overhauled.

It’s in this latter category that you’ll find a number of technology companies who are trying to reinvent education, so to speak, to make it cheaper and more accessible using the Internet. Most colleges already have many online education classes that students can take, mostly because there’s not enough class room space to accommodate the growing student population, but there are some very interesting initiatives under way that go beyond just supplementing the regular curriculum and, not surprisingly, one of the most innovative concepts is coming out of California, but it wasn’t created by a tech startup; it was the brainchild of Gov. Jerry Brown.

A couple of years ago, when the state was going through some rough financial times and California’s higher education system was taking some deep cuts in funding, the governor and his team looked to find ways to get more students through the early years in college in a much cheaper way by using the Internet and cloud-based systems to deliver an online-only curriculum. Now, this isn’t a unique concept and many for profit colleges like the University of Phoenix and Heald College have been providing online education for decades, up to and including doctorate degrees, but those programs are terribly expensive, with annual tuition rivaling the cost of a traditional college degree.

The state of California, on the other hand, drew inspiration from the open source initiative called Massive Open Online Course, or MOOC for short, to build their program, which they call the Open Education Initiative. Rebecca, we’ve talked about MOOCs before but to remind our listeners, it’s a concept that allows millions of students from around the world to take courses online for free, including courses offered by prestigious schools like Stanford and Harvard.

MOOCs are an amazing resource and it’s something that even we take advantage of at Alvarez Technology Group.  For example, we had one of our technicians take an online writing course offered by MIT that helps technically talented people learn to write in plain English. Although our guy is a terrific tech, he had a hard time communicating in writing so our clients could understand his work.  We let him attend this class, which took about ten hours over the course of a month, and his communication’s skills improved significantly.  And it cost us nothing.  In fact, he was so impressed with the experience that he’s gone on to take other self-improvement courses on his own.

California’s Open Education initiative is builds on the MOOC model, which requires that students really manage themselves to get through the coursework. The Initiative created a common course management system which will be adopted by all the public colleges in the state so that select course offerings from all of them would be available to students anywhere online to attend to eventually earn a two-year associate degree which they can then use to transfer to a four year college to complete their undergrad program. When fully deployed in the next few years, the system will offer a complete college education system online, including counselors, student forums and its own curriculum. Right now, it’s still in the pilot testing phase but it shows a lot of promise to increase the availability of higher education at a fraction of the cost.

Hopefully that will help reduce this huge burden of student debt that has become so worrisome and contentious that some people are protesting by not pay on their student loans.  Other high school grads are looking to skip college altogether to avoid being crushed by the debt for the rest of their lives.  It’s a huge issue and I think technology and innovation will play a big role in the next few years to change the educational landscape faster than we think.

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