Higher Education

How Many Pinocchios for Common Beliefs about Student Debt?

A forthcoming book called Lesson Plan throws cold water on the fear that student debt may stunt the lives of college graduates.

Co-authors William Bowen and Michael McPherson are both scholars of higher education who have led colleges and educational foundations. In a recent interview with Scott Jaschik of Inside Higher Education, the two authors explained that the notion of a debt-plagued generation of students is misplaced:

Q: In the introduction, you discuss how “so-called crises” in higher education are “overblown.” What do you consider the fundamental incorrect critiques of higher education today?

A: Perhaps the dominant case is the supposed truth that all or most people who attend college are “drowning in debt” that threatens their future opportunities and livelihoods. The fact is that most people who successfully complete a B.A. degree borrow a manageable amount of money (at public institutions about 40 percent borrow nothing at all) and wind up substantially better off in financial and other ways than if they had forgone college. In fact, the people who are at greatest risk of getting in trouble with debt from college are those who spend time in college and emerge with no degree or certificate. But the fact is that even if you don’t borrow any money, spending time, often years, in college and emerging with nothing is a serious misfortune. Debt is a real problem for a limited subset of borrowers, and we need to do much better at helping people avoid this kind of problem and at solving the problem if it does emerge. But the central issue here is the dropout problem, and we shouldn’t let an obsession with debt blind our eyes to the need to focus on improving students’ prospects of success in school. Money is part of the equation, but it is far from the whole story.

Later in the article, the authors also throw cold water on a policy “solution” for higher education that is popular in the current U.S. presidential campaign:

Q: One of the most popular ideas in some circles today is free or debt-free public higher education. You write critically of this idea. Why?

A: A basic problem with making public higher education free in a society as unequal as ours is that the benefits of “free” will go disproportionately to people from higher-income families. Such students are more likely to go to college, they go to places like research universities that are more expensive to run and they go for more years because they are less likely to drop out. Making those advantages free is not the way to achieve greater equity! At the same time, making the colleges that low-income students are more likely to attend free isn’t good enough to meet their central needs. Eliminating tuition doesn’t solve the problem of covering living expenses, and we would rather see some of the money that would go to eliminating tuition for the affluent devoted instead to support for living expenses for disadvantaged students.Even more important, for the most part the public institutions that are most likely to serve low-income students don’t succeed in seeing enough of them through to graduation. It is in our view far more important to make these colleges more effective for the students they serve than it is to make them less costly. And the most promising ideas to strengthen community colleges and broaden access to four-year institutions will cost money to implement and sustain.

Exaggerated fears and imprudent “solutions”—what is askew in the way we think about the value of a college degree?

A higher education forum held at William and Mary last fall highlighted a discussion with Robert Archibald and David Feldman, professors of economics, whose 2010 book Why Does College Cost So Much? took a hard look at the real sources of college costs. Archibald remarked that “the future of higher education is going to be full of lots of change, but we don’t think that it’s going to lead to universities being relics.” And neither will cost lead well-prepared students to abandon the idea of going to college:

When people talk about the skyrocketing cost of higher education today, they are usually looking at the list price and not the average net price, which is what most students actually pay, said Feldman. However, the numbers reveal that there has been almost no change in the net price of private, four-year colleges over the past 25 years.

“I say that, and people’s mouths drop open,” Feldman said. “All they’re thinking about is that list price.”

How is this possible? Because unlike for-profit institutions, which keep raising prices to fit their profit-and-growth economic model, and unlike public institutions, many of which have been forced to raise prices due to the false economy of states’ disinvestment in public universities, independent colleges and universities have been greatly expanding financial aid to offset rising costs.

The fear of debt has been exacerbated by the effects of the Great Recession, and by the forty-year-long stagnation in middle-class income and decrease in lower-class income. When parents aren’t as well off financially as they once were, the debts seem more towering to them, and they communicate that feeling to their children.

But what about the $1 trillion student debt crisis we keep hearing about? The fact is that the vast majority of that debt is held by two types of borrowers: (1) graduate students, who presumably take on more debt in return for higher pay eventually; and (2) students who attended for-profit colleges, which are the principal drivers of the growth in student debt.

Graduates of private, independent colleges, on the other hand, end up averaging somewhere between $25,000 and $31,000 in student debt for their entire four-year degree. While this is a sizeable sum of money, if financed prudently over one’s working lifetime, it is a very manageable amount of debt in return for the benefits it confers.

The truth is that a solid college education—especially a liberal education—is an investment in yourself that continues to return financial dividends, even in today’s precarious economic conditions. (See this 2014 report from the Association of American Colleges and Universities.)

But far beyond that, it is a chance to shape yourself into the best person you can be, to learn how to teach yourself what you need to know for the rest of your life, and to begin living the life that is uniquely and fully your own.