Some try to defuse the increasing costs of college and subsidized student debt as an overreaction. Can that be?
“Debt is the fatal disease of republics, the first thing and the mightiest to undermine governments and corrupt the people.”
Wendell Phillips, Harvard, 1831, Harvard Law, 1833
My experience in dealing eyeball-to-eyeball with thousands of students and parents — no abstractions — tells me a recent, provocative Brookings Institution report twists a national nightmare into a day dream.
The report, written by Beth Akers and Matthew M. Chingos at Brookings’ Brown Center on Education Policy, asserts “the impact of student loans may not be as dire as many commentators fear.” It says that 25 percent of the student debt burden is caused by more people getting degrees. Additionally, because Americans live longer their ability to “keep pace with increases in debt loads” eases concerns. Further, the writers argue, monthly payments for debt service over the last 20 years are a shrinking portion of a graduate’s income.
But, what about the 30% – 40% (estimates vary) of debt bearers who don’t graduate? Are they statistical detritus?
The 10 schools in the United States where students have the highest average graduation debt — ranging from $50,000 at Wheelock College to $42,000 at Utica College — are a stratospheric group distilled from over 1,000 colleges, according to December’s US News and World Report. Not everyone borrows, but those at these 10 who do, range from 67% at Quinnipiac University on the low-end to a chart-topping 95% at Becker College in Massachusetts. Many graduates have heavy hearts and light wallets. And remember, 30% to 40% of the debt-burdened will have heavy hearts, light wallets, and no degree.
Akers and Chingos argue that 58% of the graduates owe less than $10,000: not pocket change in my neighborhood. Graduates owing more than $50,000 are less than 10% of the population says the Brookings/Brown brigade. Frequently, studies don’t track the astronomical student debt from for-profits (they refuse to report). Many proprietary institutions are grossly over encumbered themselves. The giant Corinthian Colleges is going belly-up. Some point to Corinthian’s freshcarcass as evidence of regulatory assault. It may also have something to do with “building a better mouse trap” (taxpayer subsidized)… or not!
According to a Libby Nelson VOX post last week, “… a generic recent college graduate and a generic student loan borrower are two very different people. To give just one example, the average monthly payment on a student loan for the class of 2012 is $312. For student debtors overall, the average is about 25 percent lower — $242.” Nelson says 30% of the students who carried debt dropped out of college and those figures may not include community colleges. All of this is assuaged by a deceptively popularized frame of mind — any degree is better than no degree.
Universities spend too much money providing a mirage of opportunity to too many students who are unprepared or unmotivated to study and who incur more debt than the experience is worth to finance externalities and prestige – supposed benefits — for university and elected leaders, not borrowers, a.k.a. students.
It’s not just undergraduates either. According to The Atlantic’s recent article by Jordan Grisman Ph.D., debt incurred in attaining advanced degrees is historically high too. While 63% of the Ph.D. graduates have no debt according to the National Science Foundation, 20% have more than $30,000 in loans: small potatoes for an MIT graduate in engineering, but serious business for a mid-major university graduate in literature. The NSF Survey of Earned Doctorates shows social science graduates carry $25,000 in debt on average. For engineering and the physical sciences it’s about $6,000. But, debt levels in all fields are increasing.
Akers and Chingos can argue their reality that student debt is an exaggerated concern. Why and by whom I ask? Universities on the “republic’s” support — and all are through tax incentives, aid, grants and/or appropriations — create an economic reality that won’t be orchestrated out of existence through contorted statistical analysis. Anybody with a payment book and no job knows the reality. It’s a travesty; an expensively empty promise.
Our universities need to be honest and transparent about costs and benefits. Prevarication, by omission or commission, is immoral, and fritters away the hard-won trust of the republic.