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The Student Debt Crisis Is Bigger Than Your Loans

It's not the loans that need fixing. It's the education itself.

The U.S. jobs report might have just posted a surprising bump, and corporate America continues to whiz forward with the Dow Jones hitting 23,000 for the first time ever, but the reality is that one in 10 U.S. borrowers is at least 90 days behind on their student loan payments, which boast a higher rate of delinquency in the country than any other form of borrowing. On a macroeconomic scale, mushrooming student-loan debt is forcing a generation to postpone significant life milestones.

Even in Canada, where many colleges and universities receive more government support, and tuition is significantly lower, student debt levels are rising and a recent study revealed about 77 per cent of Canadian graduates under 40 have some regrets about the money spent on their education. But I don't need to hit you over the head with more data around the student debt crisis. We're far past that.

Observers and policymakers have recently touted a number of solutions to the problem, from more favourable repayment plans to free tuition, in order to reduce student debt loads and their carrying cost. But student debt is not confined to geopolitical borders and many graduating university students across the continent are still stuck with low-wage jobs that often don't require degrees. Tech entrepreneurs have leapt headfirst into coding bootcamps, dev academies, and massive open online courses (MOOCs) — hoping prospective college students would see the light and abandon all dreams of a four-year degree.

But none of these proposals get to the heart of the problem, namely, the rapidly deteriorating value proposition of higher education. University campuses today are hardly worth the cost of admission because they fail to produce the dividends required to make student borrowing viable. It's not the loans that need fixing. It's the education itself.

1. Learn from the alternatives

The past years gave rise to an influx of coding academies and stories about doubling salaries, but it's not all smooth sailing. Two high-profile camps, The Iron Yard and Dev Bootcamp, recently announced plans to shutter their doors and the long-term benefit of a bootcamp degree versus a college degree is still uncharted territory. However, the rate at which people jumped at the chance to pursue alternate, less-costly alternatives is worth noting. It's perfectly rational decision making: the value of a college degree simply isn't what it once was, or what it should be, and newer alternatives are offering a better return on investment.

The classroom experience can do much more to mirror what life will be like after graduation in the workplace and prepare students for post-university success.

We shouldn't get rid of institutions who have been successful for hundreds of years, and instead should draw lessons from what these bootcamps got right: preparing students with a very specific skill set for an industry in need of workers. So with more and more bootcamps closing their doors and needing to answer to costly investor demands, we need to combine the best of their approach with that of higher-education experience. For example, the EQUIP program created by former U.S. President Barack Obama took the best of both worlds by allowing established higher-ed institutions to partner with innovative programs to increase access to new models of education and training. It helps sometimes to shake things up a bit.

2. Build a classroom experience that mimics the real world

The only way for colleges and universities to address their declining value proposition is to improve outcomes, reduce student costs, and buttress the credentials that come with any bachelor's degree. The best way to accomplish those goals is to embrace the technological innovation and disruption of their nano-competitors. Despite the ubiquity of laptops, tablets and free on-campus Wi-Fi, the typical classroom experience remains defined by a pulpit-bound lecturer and theatre-style student seating. As the world beyond campuses continues its digital transformation, the college classroom environment is increasingly anachronistic.

The classroom experience can do much more to mirror what life will be like after graduation in the workplace and prepare students for post-university success. Indeed, one of the most marked advantages of coding bootcamps is that they also offer digital learning in a digital environment, for the digital age that today's students have lived and worked in since childhood — something university classrooms still find challenging to emulate.

3. Give the power back to the true innovators: teachers

Professors should have more freedom to customize the way they teach and take approaches they know to be effective and useful for students. Administrations should more actively encourage new pedagogical models like the flipped classroom, in which students view lecture-style videos at home and then come to class prepared to apply what they've learned in case studies and problem-solving exercises in class with their peers.

Institutions should also take a hard look at their continued reliance upon the textbook industry. The publishing sector has been upended in recent years. Newspapers and magazines now publish online, often free of charge. Novels can be purchased for e-readers at a discount over their hardcover price. Disruption is underway now in textbook publishing. Classroom content no longer needs to cost students as much as it does.

Student loans have long been sentimentally touted as "an investment in yourself." But student debt is also, at its core, a form of leveraged investing: students borrow to purchase an education, rightly expecting that the resulting degree will produce decades' worth of substantial returns on investment. That value proposition is broken. The agents of its repair are universities themselves. And the fix is not a less onerous payment regime, but a better-credentialed, technology-enabled and more affordable education.

Mike Silagadze is the CEO and co-founder of Top Hat, the all-in-one teaching platform for professors.

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