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By Sandy Baum
August 9, 2016

Headlines about crushing student debt appear frequently in newspapers, on television news, and in opinion pieces. Stories of individual students who are struggling to repay the loans they took to pay for college pull at our heartstrings. Members of Congress on both sides of the aisle and Democratic presidential candidates take it as a given that relieving the burden of student debt is high on the list of social and economic problems that deserve attention.

But as documented in my new book, Student Debt: Rhetoric and Realities of Higher Education Financing, this widely held image of the impact of borrowing for college does not accurately represent reality.

It’s not that the individual stories we hear are untrue. But most of them describe situations that are far from typical. And many report on situations that the borrowers—if they had good information or put more thought into their decisions—could have avoided.

A few examples can illustrate this point.

Anecdotal evidence

A young woman who earned a bachelor’s degree from a public university after transferring from a community college graduated with $40,000 in debt. This certainly happens, but only about 12% of bachelor’s degree recipients from public institutions graduate with this much debt—even though most spend all of their time at four-year institutions instead of starting at lower-price community colleges.

Acknowledging that very few students leave their undergraduate colleges with more than $40,000 in debt does not diminish the burden on the few who do, because of their difficult circumstances, borrow this much. But finding those few people and suggesting that their situations are representative of college graduates is very misleading.

Another borrower earned a master’s degree in history, with $110,000 in debt. Not surprisingly, he is having trouble finding a job that will support his debt.

If a student with a bachelor’s degree chooses—presumably with his eyes open—to borrow a large amount of money to earn a master’s degree that leads to no clear career path, should his plight motivate the taxpaying public to open their pockets?

And a young man graduated from a highly selective private college in the Northeast with $30,000 of debt—a pretty typical debt level for bachelor’s degree recipients who borrow. However, his dream is to be an organic farmer, so he makes only $12,000 a year (after taxes). How can he possibly repay his loans? But should the taxpayers further subsidize his choices or should he find a way to balance his dreams and his responsibilities?

Moreover, most of the students in these stories—or at least those who relied on federal student loans instead of going to the bank for a private loan—are eligible for income-driven repayment. They will never actually have to pay more than a small percentage of their incomes to retire their debt. And if they don’t manage to repay what they owe in 20 or 25 years, the balance will be forgiven.

The real problems

This is not to say that we don’t have a student debt problem. We do. Older adults who go back to school to improve their labor market opportunities tend to borrow much more than typical traditional-age college students. Many of these students, as well as too many younger college students from low-income families, enroll in postsecondary institutions with very poor records of supporting student success. Data indicate that African-American students are particularly vulnerable to this risk.

Too many students borrow and then drop out without earning a degree. Particularly for those who attend for-profit institutions, the debt can mount quickly and trying to pay it off without a college degree is a real challenge.

The income-driven repayment plans are not automatic. Borrowers have to jump through bureaucratic hoops to get into them. Student debt—including private loans from banks—is very difficult to discharge in bankruptcy. Debt collectors violate all sorts of standards of reasonable treatment.

There is a lot that should change.

But we should stop focusing on the image of middle-class students in their mid-twenties who have bachelor’s degrees and are working at Starbucks. Very few of them work there at all and if they do, it’s not for long. And they are far from the neediest group in our society. Median earnings for young adults with bachelor’s degrees are about $20,000 a year higher than median earnings for their peers with only high school diplomas. Given that earnings differential, is it so unrealistic to ask them to make some loan payments instead of asking the taxpayers to foot the whole bill?

We have to stop giving students loans to attend institutions from which almost no one graduates and gets a good job. We have to prepare high school students better academically so they will be ready for college. We have to provide stronger financial, academic, and social support systems for low- and moderate-income college students so they can achieve their goals and earn degrees. If they do earn degrees, they will be able to repay some amount of debt.

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Cheering any public policy proposal that reduces the burden of student debt on those who have borrowed is not the best approach. Rather, we should find the real problems, the students who are most at risk, and focus on the policies and practices that are responsible for the hardship.

But we should remember that access to federal loans has made it possible for millions of people who could not otherwise afford college to realize their dreams. We should provide ample public support for colleges and universities and their students and strong insurance for student borrowers whose education, through no fault of their own, does not pay off well. But most students who borrow and succeed in earning a college degree end up much better off than those who don’t go to college. They might have to make some sacrifices for a few years after college, but they have made a valuable investment in their futures and most will not be crushed by their debt repayment responsibilities.

Sandy Baum is a senior fellow at the Urban Institute. She has written extensively about the economics of higher education.

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