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No Problem With Student Debt?

cross-posted from howtheuniversityworks.com

In this week’s lead story at The Chronicle of Higher Education, Robin Wilson has a spread of four pieces scoffing at the notion of a national problem with undergraduate debt: A Lifetime of Debt? Not Likely.

Splashed above the fold on the front page — during Congressional hearings regarding major reforms in student lending — this story flies in the face of massive public and legislator concern about the funding of higher education, including a longrunning series of scandals in student lending: corruption among state and federal education officials, predatory lending, abusive collections, lax oversight, outrageous executive pay, perks, and bonuses.

While acknowledging that what she dubs a vocal minority of undergraduate borrowers have “very real” problems with the system of college financing, Wilson asserts that students in loan trouble are “more often” the victims of their own bad choices, especially those “determined to attend their dream college, no matter the cost.”

The hero of Wilson’s piece is a 2007 graduate of a Roman Catholic college who lives rent-free with her mother, foregoing “for now” such unrealistic expectations as her eventual plan to “live in an apartment in Boston with a friend.”

This young woman’s story, Wilson claims, is emblematic of a “silent majority” of borrowers paying off car-loan-sized debt “without much complaint.” For those who need more convincing, Wilson helpfully provides three more tales — all of young, married, well-employed couples with children making small middle-class sacrifices to pay down their debt. It’s all very Ozzie and Harriet, in low-cost-of-living locales like Iowa and West Virgina — the most coastal of the couples lives a 40-minute commute from Philadelphia.

Wilson defends the one-dimensionality of her sidebars as a necessary corrective — a “stark contrast” — to the several thousand stories of student loan woe told by the nearly 200,000 members of a new Facebook group, Cancel Student Loan Debt to Stimulate the Economy, or at The Project on Student Debt, or Generation Debt, or Student Loan Justice, among others.

Wilson seems particularly disturbed that the gullible folks at CNN, USA Today, and The New York Times appear to have been taken in by these complaints (not to mention three or four years of scandal and public outcry). There’s “confusion” about the issue, Wilson says, because many people, like the founder of the Facebook page, are counting graduate-school debt.

So — to help us out with our confusion — Wilson artificially separates out the grad-school debt and then invites us to share her pose of mystification that so many people appear to be complaining angrily about what amounts to a new-car loan.

Among the many inconvenient facts that Wilson leaves out is that present trends suggest that 40 to 50 percent of all persons with bachelor’s degrees in 2009 will eventually go on to graduate or professional school.* Those debts can be enormous, and when one acknowledges the real chances that any individual with a B.A. will go on to grad school the “lifetime of debt” is indeed more “likely.”

(Even if we accepted Wilson’s rhetorical carving-off of undergraduate debt from other debt — and further accepted her definition of borrowers with real problems as in the range of 8 or 10 percent — that would still be many millions of people affected by the student loans carried by someone in their family — a spouse, parent, or child.)

Wilson ignores that students also carry thousands of dollars in credit-card debt, often with the complicity of the campus.

Their parents are also borrowing more, and in some cases parents out of the workforce are going back to work primarily to help pay for tuition. (Fifteen percent of graduating seniors have parents that take PLUS loans; the average is approaching $20,000).

Students are working more too, and most of those who are employed are working longer hours than is compatible with academic success and persistence.

Equally relevant is the trajectory of debt — that many more people are borrowing, and borrowing much more; the average debts has recently doubled under Bush-era policies and without policy change may well double again.

Students with lower incomes borrow more and work more, and have less success. Does taking on larger and larger undergraduate debt provide a barrier to graduate school for persons of disadvantaged backgrounds?

The piece could have considered the consequences of education debt for those who don’t persist, or don’t go in the first place. It could have considered the rising default rate (or the lousy way we’ve been calculating default rates), or the different default rates for different kinds of schools, like the especially high default rates in the for-profit sector.

But even if we accept the focus on those who get degrees and find employment, and ignore what for many is the inevitability of grad-school debt, what about those in the current graduating class — who aren’t finding jobs with employers planning on hiring 20 percent fewer college grads and offering lower salaries to 20 percent of those they do hire? Even recent grads from good schools with econ degrees are going on food stamps. Hard stats on this are going to take a while, but one of the good indicators is this one from the National Association of Colleges and Employers (hat tip to Anya Kamenetz):

ACE’s 2009 Student Survey shows that just 19.7 percent of 2009 graduates who applied for a job actually have one. In comparison, 51 percent of those graduating in 2007 and 26 percent of those graduating in 2008 who had applied for a job had one in hand by the time of graduation.

For that matter, it would have been worthwhile to consider how the so-called going-to-college bonus in wages is:

1) more of a going-to-grad-school bonus, and
2) not so much a bonus as a penalty.

Yup, a penalty — for staying out of college. Since the 1970s, the gap between those with a sheepskin and those without has grown, but not because the wages of the B.A.-educated have risen.

Far from it. They’ve just stagnated less than the wages of those without a B.A., whose wages have been driven down in the era of Reagan, Clinton, and the Bushes.

Absent from the piece are the voices of the indebted or their spokespeople, like Kamenetz, Tamara Draut, or Jeffrey Williams.

Also absent is any consideration of most of the core contemporary policy issues about student loans. Even USA Today — under the subhead Helping Gamblers, Not Students — managed to explore the policy universe of student loans more thoughtfully, raising the issue of bankruptcy reform.

Loans aren’t the only thing that are broken about higher education, but an article like this one (“No problems here!”) does the conversation little good. Robin Wilson is entitled to her opinion, but this front-page lead story wasn’t presented as an editorial — and it lends credibility to Cat Warren’s concerns about fair coverage. I don’t mean to be a grouch here, and I know I’ve been a little tough on the higher-education press lately, but The Chron loses credibility when it gets out-thought on student loan issues by USA Today.

*Educational Attainment in the United States, 25 years and over: 2008, US Census (excel file)

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