This summer, two presidential candidates announced college affordability proposals in order to reign in college costs and reduce student loan debt. Bernie Sanders’ plan would essentially tax the rich to subsidize tuition at public colleges. Sanders’ plan would cost an estimated $70 billion and would eliminate tuition at all public 2- and 4-year colleges and universities. Hillary Clinton recently proposed a plan that would incentivize states to invest in higher education and implement low and no tuition policies at public institutions.
As I read news and commentary, the word “crushing” keeps coming up, as in “crushing loan debt.” See these pieces from Al Jazeera, Common Dreams, Salon, NPR, The New York Times…. you get the picture.
As a student myself, I am navigating my second round of loan debt. I paid off my undergraduate loans just a couple years ago. Now as a doctoral student I’ve managed to amass more debt in one year than I accumulated through my Bachelor’s and Master’s degrees combined. The times, they are a’ changin’.
But I propose that our student loan debt issues as a nation are not as bad as we like to make them sound, and to the degree that loan debt is a real problem, it disproportionately affects those already least able to pay their loans back.
The average student loan debt among 2015 college graduates who took loans was just north of $35,000, an amount that has nearly doubled since 2000. That is a lot of money, no matter how you slice it. But context is critical. Nearly half of all American households carry a monthly credit card balance, and they have nearly $16,000 in credit card debt each, on average. A new car, on average, costs over $33,500. It was recently estimated that it costs nearly $250,000 to raise a child to age 18.
Average student loan debt is not too dissimilar from the indebtedness of buying a new car. College will cost you about twice what the average family carries in credit card debt, but the returns on a college education are much better than on your credit card bill. And getting through college, it turns out, is a relative bargain compared to the nearly $55,000 it costs to raise a student for any other four years of their life. All that, and student loans offer much more flexible repayment options.
But I can’t be totally starry-eyed. There is a problem with student debt. A greater percentage of students are taking loans every year. In the class of 2015, over 70% of students took loans, up about 7% in the last decade. As student loan debt increases, so too does diversity on America’s college campuses. In 1976, 84% of all American college students were white. In 2014, white students accounted for under 60% of college students. Increasing numbers of women and returning or non-traditional students also are attending college today.
Taken together, it appears that it’s not college students in general who are suffering through this debt crisis, but historically underrepresented students, and economically disadvantaged students in particular. Federal Reserve Bank data show that the students most likely to default on their loans are not those with the most debt, but those with the least. Students with under $5,000 in loan debt were the most likely to default, even compared to those with $100,000+ in debt (who were the least likely to default!)
Debt is part of the American way of life. It should not be a surprise that we would expect students to invest in their education. But the growth in both percentage of students taking loans and the average amount of accumulated debt should be understood as more than a coincidence as our campuses diversify. Straddling these students with increasing levels of debt basically amounts to building our campuses on the backs of those least able to pay. It may not be criminal, but if nothing else motivates us to make college more affordable, perhaps our consciences will.
Photo credit: “cooperunion_dec08_DSC_0195” by Michael Fleshman (CC BY-SA 2.0)
Originally Published at cbeebe.com
