Higher Education Industry to Students: If You Are Crushed by Student Loans, It's Your Own Damn Fault

As Jimmy Buffet reminded us in Wasting Away in Margaritaville, some things are our own damn fault.  Apparently, this is the position of the higher education industry regarding the student loan crisis. 

Jimmy Buffett

When the New York Times published a front page story about students who have been crushed by the burden of their student loans, two higher education industry spokespeople wrote letters to the Times, basically saying everything is fine--thank you.  

Molly Corbett Broad, president of the American Council on Education, suggested that some students need to make better decisions when they take out student loans. “The reality is that every student and family must carefully weigh what they believe a degree is worth against the price of a particular institution.”  And, Broad acknowledged, “If students and their families borrow not with their heads but over them, dire consequences can easily follow.” Yuh think?

And David L. Warren, president of the National Association of Independent Colleges and Universities, pointed out that the default rate for borrowers at private colleges is only 4.6 percent. Both Warren and Broad acknowledged that students might need better counseling regarding their borrowing decisions, but other than that, Warren and Broad had no suggestions for solving the student loan crisis.

What I took away from these letters by the presidents of two high-profile higher-education industry groups is this: We are doing a fine job, higher education is worth the cost, and students who are swamped by their college loans made bad decisions. Or, to paraphrase Jimmy Buffett, if students are overwhelmed by their student loans, it’s their own damn fault.

But let’s look closely at what Broad and Warren said. Warren stated that the default rate at private colleges is only 4.6 percent.  Warren was citing the Department of Education’s figures, which only measures defaulters in the first two years of the loan repayment period. A study that examined the loan default rate for college graduates over a ten year period concluded that the default rate is about 10 percent. I think it is indisputable that the loan default rate for students who attended private colleges is nearly double the rate that Warren cited, when defaults are measured over the life of loan repayment period. And the default rate for students who attended for-profit institutions is absolutely unacceptable—probably at least 30 percent when measured over the entire life of the loan repayment period.

And Broad said that the average student debt load is only $23,000, which Broad seems to think is not particularly onerous. But even $23,000 in student-loan debt is a crushing burden for students who don’t have jobs, students who received no worthwhile skills from their educational experiences, or students who never completed their degrees.

As far as I know, the professional organizations for the higher education industry have not endorsed serious proposals to ease the burden on students who cannot pay back their loans. At a minimum, the National Association of Independent Colleges and Universities and the Council on Education should actively promote these reforms:

·         Legislation that will give insolvent students reasonable access to the bankruptcy courts. 

·         Legal prohibitions against the garnishment of student-loan debtors’ Social Security checks. 

·         More accurate reports from the Department of Education regarding student-loan default rates.

For two top spokespeople for the higher education industry to simply say a college education is a good value and students need to make better decisions about borrowing money is pretty lame. The nation’s colleges and universities need to accept some responsibility for the student-loan mess, and they need to support effective solutions.  

References

Broad, M. C. (2012, May 190. Letter to the Editor. New York Times, p. 18.

Choy, S. B, & Li, X. (2006). Dealing with debt: Bachelor’s degree recipients 10 years later.  Washington, DC: National Center for Education Statistics. http://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2006156

Fossey, R., & Cloud, R. C. (2011, November 24). From the cone of uncertainty to the dirty side of the storm:  A proposal  to provide student-loan debtors who attended for-profit colleges with reasonable access to bankruptcy court. West’s Education Law Reporter, 272, 1-18.

Martin, A., & Lehren, A. W. (2012, May 12). A generation hobbled by the soaring cost of college. New York Times, p. 1. http://www.nytimes.com/2012/05/13/business/student-loans-weighing-down-a-generation-with-heavy-debt.html?pagewanted=print

Warren, D. L. (2012, May 19). Letter to the Editor. New York Times, p. A18.