The subject of the mounting debt of graduating college and university seniors has been much publicized and discussed - from front-page New York Times stories to The Economist. Data from most sources reflect the reality that student debt has increased dramatically, and in the case of more than just a few students, to shocking levels, evidencing societal concern and legislative alarm.
These discussions hit home as I was someone who needed to borrow extensively during the politically and economically unstable 1960's and 1970's for my bachelor's, master's, law degree, and doctorate. I didn't want to borrow but there was no other option. I looked at student loans as priority investments to help achieve career goals over 40 years or so of productive service, not as taking on more consumer debt. As I saw it, the decision to take on student debt involved a strategic choice, a choice reflecting values more important than things like the expenses of a new car payment, more credit card debt, or a home mortgage payment.
In today's culture, students are often counseled to stay away from student debt for college because of future job uncertainty. And providers of student loans and much of traditional higher education have been cast as the bad actors in this drama. Universities are often accused of irresponsibly driving up costs for no reason and then encouraging their students to simply borrow, and borrow still more. But I wonder - is something missing in this debate? Is there another perspective?
First, borrowing for college is not new and students have been borrowing money for college for decades, starting with National Defense Student Loans decades ago. The informal borrowing guideline for families then was that overall annual college costs and cumulative student debt should approximate what it would cost to buy a new Chevrolet Impala.
Older generations, including mine, didn't necessarily see indebtedness for college as a negative. As a result, there was more of a willingness to forgo or postpone other significant expenditures in order to pay off student loans. And postponement and deferral of other worthy options were not seen as bad choices. So the used car was driven further and rent was paid longer.
Second, articles about student debt usually don't nuance nearly enough the realities of institutional difference. For instance, at Taylor University where I serve as president, for the class of 2013, 61% of our students graduated with student debt, and the average four-year debt was $26,367, less than the price for a 2014 Chevy Impala with a web announced price starting at $26,725. Also, according to the government's most recent Affordability Index, more than 80% of our students graduate within 4-6 years. And our two-year student loan default rate is under 5%. So our graduates, for the most part, are handling their student loans responsibly and graduate on time. They do not incur additional opportunity costs, such as an extra year in school.
While no one likes debt upon graduation, I certainly didn't, might the more responsible university focus be for us to continue to provide families with better and more timely information about the value received from an educational investment? That includes counsel to students to consider other options to avoid irresponsible debt. And is it necessarily a wrong thing if the resulting family decision, as in generations past, is to responsibly invest in their family's future and the establishment of foundational life-long values through the use of student debt?
Finally, colleges and universities do have the responsibility to think creatively and responsibly about cost reduction and elimination of unnecessary expense. Like every other societal sector, higher education is not immune from tradition or doing things the way they have always done them. So the call for discussion about student debt and a host of other higher education reforms is fully appropriate. As Jeffrey Selingo notes in College (Un) Bound (2013), there are multiple change options being pursued on multiple campuses, including on our own. These changes will help provide greater choices for students and families, even as a better education is provided.
The discussion and the concern about student debt is an important one. But let's make sure that the discussion involves more than just the argument that higher education student debt is bad per se. Is it not a fair question to ask whether one's investment in higher education, even with responsible levels of student debt, contributes positively in the long run (perhaps more positively?) to the quality of life within society at large, than say would incurring other types of consumer debt?
Let the discussion continue.