America's unsustainable universities

When 15 per cent of graduates default in three years, there's problems with a system.

One of the oft-repeated claims made in favour of the Government's three-fold increase in the cost of university attendence is the fact that Britain's universities are being out-competed by better-funded American ones.

The broad strokes are true, and hard to argue with. While it remains impressive that Britain has three of the THE's top 10 world universities, and 32 of the world's top 200, the domination of the top-tier by the US is clear. The country produces more Nobel prizewinners, pays its staff more, (even when counting just public universities), and invests more in research and facilities.

But where does all that money come from? Fees from the students. And where do they get the money to pay the fees? Massive student loans. And what happens when costs increase but wages don't? People start to default. A lot.

The Washington Post's Dylan Matthews:

The big takeaways from the Senate HELP committee’s report on the for-profit college sectors were that the institutions (a) are expensive, (b) produce a whole lot of dropouts, and (c) are mostly financed by the federal government. If that weren’t bad enough, they only spend about 17 percent of their funds on actual instruction, and a whole lot more on marketing — including lobbying the feds to pay their bills. A new release (pdf) from Moody’s builds on these findings, and concludes that the situation is not only bad but getting worse. Students at for-profit colleges are defaulting on their loans sooner and sooner after entering:

It may be that Britain still needs to change to compete with the US. But mimicking a system in which 15 per cent of graduates are defaulting on their lowns just three years after entering repayment doesn't seem like the best plan.

Harvard University. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Word of the week: Michellania


Each week The Staggers will pick a new word to describe our uncharted political and socioeconomic territory. 

After brash Republican presidential nominee Donald Trump paraded his family at the national convention, the word of the week is:

Michellania (n)

A speech made of words and phrases gathered from different sources, such as Michelle Obama speeches and Rick Astley lyrics.

Usage: 

"I listened hard, but all I heard was michellania."

"Can you really tell the difference between all this michellania?"

"This michellania - you couldn't make it up."

Articles to read if you're sick of michellania:

Do you have a suggestion for next week's word? Share it in the form below.