A Crooked Look at Student Debt

This article shows the deluded and smug attitude of administrators and policy makers in higher education who profit from the current system. Notice the manipulation of numbers, the half-truths, and the logical errors. There is also the constant attempt to sound wholesome, rational and centrist while eliding dark realities.



The Chronicle of Higher Education

 A Straightforward Look at Trends in Student Loans

November 14, 2011, 8:04 am

By Sandy Baum and Michael McPherson

When a public-policy matter becomes an intense focus of ideological controversy, facts often become inconvenient obstacles to upholding an already determined view, instead of being received as instruments for refining one’s views. Unfortunately, there is reason to worry that this kind of ideological warfare has overtaken the important national discussion of the role and the management of student debt. Is the total amount of student debt bigger or smaller than $1-trillion? Do students right now owe more to banks and the federal government than Americans owe to credit-card companies? By what standard should we judge these numbers?  We can’t think of any social or ethical judgment or any practical decision that turns on the answers to these two numerical questions.

Our aim in this post is not to contribute to advocacy on one side or the other of the student-debt question—a formulation which itself belies the many dimensions of this matter. Rather, we present for your consideration (or if these facts are inconvenient, your dismissal) the following items of information, gleaned from the College Board’s recently released Trends in Student Aid 2011.

    In 2010-11, the federal government issued $104-billion in education loans to parents and students—a 139 percent increase in inflation-adjusted dollars over a decade. Federal grant aid increased by 249 percent in constant dollars over the decade, to $49-billion.
    Between 2009-10 and 2010-11, total borrowing from federal education loans increased by 3 percent after adjusting for inflation.
    Some of the increase in borrowing reflects higher debt levels for individual students, but much of it is attributable to increases in the number of students enrolled in postsecondary education and in the percentage of those students relying on federal loans.
    Average federal loans per full-time equivalent postsecondary student declined from $6,431 (in 2010 dollars) in 2009-10 to $6,367 in 2010-11.
    Both federal loans and total grant aid from all sources per student have increased at an average rate of about 6 percent per year over the past 5 years.
    Borrowing for education from nonfederal sources peaked at about $24-billion in 2007-8, but had declined to about $8-billion by 2010-11. If both federal and nonfederal education loans are included, the average annual rate of increase in borrowing per student over the past five years declines from about 6 percent to about 2 percent. The increase in availability of federal loans has allowed students to substitute them for private loans that are not eligible for federal loan repayment protection and that generally carry higher interest rates over the long term than federal loans.
    Student-debt levels vary considerably across types of programs and types of institutions.  For example, 57 percent of students who received bachelor’s degrees from for-profit institutions in 2007-8 graduated with $30,000 or more in debt, compared to 12 percent of public four-year college graduates.  Over 60 percent of those receiving associate degrees from public two-year colleges were debt-free, compared to 2 percent of those receiving associate degrees from for-profit colleges.
    About 56 percent of 2009-10 public four-year college graduates had borrowed. Their average debt was $22,000—7 percent higher (in constant dollars) than the debt of borrowers who graduated five years earlier.  If all graduates are considered, including those with no education debt, average debt in 2009-10 was $12,300 per student.
    About 65 percent of 2009-10 private nonprofit four-year college graduates had borrowed. Their average debt was $28,100—8 percent higher (in constant dollars) than the debt of borrowers who graduated 5 years earlier.  If all graduates are considered, including those with no education debt, average debt in 2009-10 was $18,300 per student.

This is just a small amount of the data available to inform discussions of students borrowing. Many thoughtful, evidence-based analyses of the impact of this borrowing are also available. We look forward to a time when drawing implications from informative data and analyses like these might play a bigger role in assessment and advocacy of public-policy options.

Sandy Baum is an independent higher-education-policy analyst and a senior fellow at the George Washington University School of Education and Human Development, and Michael McPherson is president of the Spencer Foundation.