10/01/2014 06:06 pm ET Updated Dec 01, 2014

What Do We Talk About When We Talk About College Debt?


Americans talk a lot about college. Eavesdrop on almost any conversation -- in a restaurant, an airport, even the local pub. Chances are, it won't be long before it becomes clear that the folks you're overhearing met in college. Or college basketball takes over the conversation. Or the topic turns to whether the kids will get into good colleges. We ask, "Where did you go to college?" We "give it the good old college try." We instantly understand the age cohort meant by "college kids." Seniors (NOT those in college) think about retiring to "college towns." Even without speaking, we proclaim our college allegiances on ubiquitous T-shirts and gear.

But what do we really mean by the word, "college?" The fact is, we use this generic term for the whole, broad spectrum of very different kinds of higher education institutions that America can boast: research universities and their graduate programs, community colleges, and the growing sector of for-profit institutions. All of these, different as they are, are subsumed under the useful, catch-all term.

But "college" most specifically names the traditional, four-year, residential college. The distinction is clear in our nation's oldest institution of higher education. The four-year, undergraduate program is officially, "Harvard College." The larger amalgam of graduate programs and schools, research centers, and the like are "Harvard University."

Is this a distinction without a difference? No, it's not. Calling all of higher education "college" can lead to quite misleading beliefs about those traditional, four-year colleges. A report recently published by the Council of Independent Colleges on student debt (perhaps the "college" topic MOST discussed these days) illustrates the issue.

Recently, America's attention has been riveted on "college debt." And virtually all of that attention -- in the media, among policy makers, and no doubt in living rooms around the country -- is focused on undergraduate degrees. After all, we are now a nation where more than two-thirds of all high school graduates enroll in post-secondary studies.

A far smaller percentage of students continue on to graduate school. But, in fact, America's "college debt" is actually highly concentrated in graduate programs. Graduate students account for 40 percent of student debt, although they make up only 15 percent of student borrowers. Characterizing loans for these advanced degrees as "college" debt can easily mislead prospective students to far over-estimate the costs they may incur for an undergraduate degree. Seldom do we hear, for example, the fact that more than one-quarter of the graduates of private colleges graduate with no debt at all.

Medical students, law students, and those in PhD or other graduate programs may indeed take on relatively high debt. And that's certainly a problem in itself. But calling it "college debt" is misleading. President Obama has spoken frequently of the debt that he and Michelle Obama carried for their education. Yet data they have released shows that more than two-thirds of their indebtedness was for Harvard Law School. And, typically, those who attain a Harvard law degree realize a substantial earnings premium on their investment.

But let's look at indebtedness for undergraduate education. The "trillion dollar" figure that we hear about so much is a cumulative figure, representing all the outstanding debt incurred over time by students and graduates. That is, the recent graduate of a community college is included here, as well as that Harvard Law grad, who may be whittling away at substantial debt a number of years after graduation. Misplaced emphasis on "college" debt may lead many to assume that students at America's private, undergraduate colleges incur a substantial part of that debt. In fact, only about 16 percent of the total is for attendance at undergraduate, independent colleges.

As student indebtedness is highly clustered in graduate education, so is it in the for-profit sector. Although for-profit programs enroll only half as many undergraduates as do private colleges, the amount of federal loan monies going to that sector is equal to the disbursements to private college students. In other words, indebtedness in the for-profit sector is twice that in the private colleges.

Because we don't distinguish among types of higher education, many students don't know that undergraduate colleges can be much more affordable -- and lead to much less indebtedness -- than they realize.

More broadly speaking, calling all higher education experiences "college" can foster other misconceptions about the traditional small, four-year undergraduate colleges. For example, a number of books and studies in recent years have indicted "colleges" for various faults. These include claims that faculty are only concerned about research, not teaching, or that students are herded into huge lecture classes and taught mainly by graduate students. These may well be issues in some higher education settings; they are not in small, undergraduate colleges. Faculty members in these institutions are centrally focused on teaching. They are hired, evaluated, and rewarded professionally for their ability to teach undergraduate students. Classes are small, and the vast majority of colleges don't even have graduate students, let alone delegating instruction to them.

I'm not expecting or even suggesting, that, in casual conversation, "college" be replaced by finer distinctions among, say: community colleges, undergraduate colleges, for-profit programs and research universities. But when it's a matter of clarifying costs, qualities, and outcomes to prospective students, it's important for them to know that this is a distinction with a difference.