Monday, August 8, 2016

What's Missing in the Student Debt Debate

Inside Higher ED
By Mark Huelsman
August 8, 2016

Since student debt, free tuition and debt-free higher education have emerged as presidential campaign-level issues, a narrative has begun to emerge among elite news media that the rising price of college and ever-increasing student debt are phantom problems given the overall lifetime benefits of a college degree. Unfortunately that narrative, which has been highlighted over the past few weeks to varying degrees by major media outlets, including NPR and Vox, rests on a pretty narrow set of assumptions about college and its benefits. And, in fact, it misunderstands the entire point behind the push for debt-free public college.

For instance, a recent editorial in The Washington Post titled “Democrats’ Loose Talk on Student Loans” makes the case that we have more of a nuisance than a crisis on our hands. It argues that bold reforms to address student debt -- including the plan offered up by Hillary Clinton’s campaign -- are overkill and that we should presumably make large investments in other areas (like paying down the national debt). Unfortunately, however, like other news media these days, the Post editorial board appears to have overlooked some crucial facts, many of which have been reported by its own newspaper.

It is absolutely true that some form of postsecondary education and training has become more important, and nearly essential, in today’s workforce. Unemployment rates for college graduates are consistently low, and the average lifetime earnings boost remains high relative to a high school degree. Anyone who argues that college “isn’t worth it” is doing so with anecdotal examples or bad data.

But the reason college is so important is not because earnings for college graduates keep rising. In fact, bachelor’s degree holders earn about the same amount as they did 30 years ago. Earnings for everyone else -- including those with only some college experience -- have gone down rapidly. In effect, a degree has become more a necessary insurance policy than an investment.
This matters because students are now on the hook for financing more and more of their own education than ever before. As a result, graduates are taking on rising levels of debt while contending with stagnant incomes and the rising cost of health care and child care, all while attempting to save for retirement or for their own child’s education.

And they are some of the best-off of the bunch -- they’re able to stretch and make their minimum monthly payments. The true crisis in student loans is among those who take on student debt but do not graduate, many of whom attend high-cost for-profit institutions. Those students are more likely to default or become delinquent on student loans, potentially setting themselves up for a lifetime of economic hardship. But while some argue that what we really have is a “completion crisis,” college completion is no better or worse than it’s been in decades.


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