Student debt recently surpassed total credit card debt. Payments can be delayed through graduate school enrollment; and the accrual of more debt.
“Making loans accessible to millions of the previously unbankable customers is a noble goal. Getting them hooked to such loans isn’t.”
College debt is erroneously thought of as a burden of the undergraduate student alone. But, in a March 2014 Policy Brief from the New America Education Policy Program, “The Graduate Student Debt: The State of Graduate Student Borrowing,” Jason Delisle outlines an ominous picture of the debt borne by graduate students studying everything from anthropology to zoology, with a stop at medicine. The total student debt for all borrowers tops a trillion dollars, and over 7 million students are in default according to the Consumer Financial Protection Bureau.
A recent New Yorker cartoon depicts two “wise guys” at the front door of an unsuspecting student borrower’s home captioned, “We’re from student loans – we came to repo your B.A.” But that won’t happen. Student loans survive bankruptcy because the “product” can’t be repossessed. It is an experience. As my father-in-law used to say as an encouragement, “An education can never be taken away.” This was not intended to be a bulwark against a credit agency but a well intended and, until 30 years ago, accurate perspective of the value of an education.
And these burdened borrowers are not just undergraduates. The truth, according to Delisle, is that in 2012 the combined undergraduate and graduate debt of the highest 10% of the debt encumbered population avergaes over $153,000, and the median balance is $57,600. The increases since 2004 are dramatic when the top 10% owed $118,442,000 and the average was $40,209.
The relationship between various degrees and debt accrued is not in line with economic reality. For example, Delisle shows that degree debt for a master of education, usually leading to a relatively modest paying job as a school teacher, averages $50,879. But, for an MBA, which traditionally led to higher paying employment in the private sector, the average was $42,000. Clearly some of the differences are attributable to the amount of financial aid and assistantship support to students in diverse fields of study.
The debt in medicine averages $162,000, but traditionally such debt yielded a high-paying job as a physician. Five percent of all graduate degrees fall into medicine and health sciences, 11% in MBA programs, and 16% in the Master of Education.
The typical monthly payments on these debts are shocking to the uninitiated. For example, the average borrower for a master of education pays back a thankfully modest $259 per month, but it climbs quickly to over $1,000 a month for those with a degree in medicine: In both cases with monthly payments for a professional lifetime.
And what about the cost-benefits?
The debt for an educational experience is not the individual’s alone. Study in medicine is heavily subsidized. In 1995 a military medical education costs at the Uniformed Services University of the Health Sciences was $3.3 million for each physician, according to a June 22, 2012, report by Mark Thompson on Time.com. Maybe military educational effectiveness is 50% compared to the state university near your home. Even at 1995 rates, $1.65 million is high. The average cost to the student to become an M.D. in a civilian setting is $275,000, a fraction of any total cost — public, private, or military. It is difficult to find reliable facts precisely because the costs are so alarmingly high to both individual and state.
Transparency regarding the accumulation of debt, and honesty regarding costs and benefits to student and state for undergraduate and graduate education, is essential.
Social understanding of cost/benefit must be part of the graduate education cost equation.
The looseness of politically motivated, cost-indifferent, loan programs carries a share of the blame. Endless optimism on the part of students and parents adds fuel to the fire. Policy pronouncements regarding the ultimate long-term value of a college degree, while sometimes well-intended, are too frequently campaign promises founded on partially incomplete analysis and understanding, and buoyed by the intoxicating combination of hype and hope.
Our universities owe both students and the greater community more. They have a social obligation for full disclosure of costs and benefits in educating professionals who eventually tend to the needs of society.