How We Lose Perspective on the Problem of Student Debt

A while back, the odd fact emerged that, at least by some measures, student-aid debt exceeds credit-card debt. Although this development is in large part the product of the decline in credit-card debt occasioned by consumer response to the financial crisis—an event quite independent of student borrowing—it put a kind of punctuation mark on widespread and rather diffuse worries about student-aid indebtedness. A search for the phrase “student debt exceeds credit card debt” yields 2,460,000 hits on Google. This explosion of interest may qualify as a minor example of what Cass Sunstein and Timur Kuran have labeled an “availability cascade,” in which the salience of a particular example gives it disproportionate weight in people’s thinking.

As Daniel Kahneman describes it in his wonderful recent book, Thinking, Fast and Slow,

An availability cascade is a self-sustaining chain of events, which may start from media reports of a relatively minor event and lead up to public panic and large-scale government action. On some occasions, a media story about a risk catches the attention of a segment of the public, which becomes aroused and worried. This emotional reaction becomes a story in itself, prompting additional coverage in the media, which in turn produces greater concern and involvement. The cycle is sometimes sped along deliberately by “availability entrepreneurs”, individuals or organizations who work to ensure a continuous flow of worrying news. The danger is increasingly exaggerated as the media compete for attention-grabbing headlines. Scientists and others who try to dampen the increasing fear and revulsion attract little attention, most of it hostile: anyone who claims that the danger is overstated is suspected of association with a “heinous cover-up”. The issue becomes politically important because it is on everyone’s mind, and the response of the political system is guided by the intensity of public sentiment. The availability cascade has now reset priorities. Other risks, and other ways that public resources could be applied for the public good, all have faded into the background. (p. 142)

Excessive student debt does indeed qualify as a major problem for a minority of students, and the existence of a law preventing the discharge of student debt in bankruptcy is indeed a serious problem in urgent need of correction. But the disproportionate focus on the dangers of student debt in the context of the larger issues facing the finance of American higher education seems to us to have some of the negative side effects Kahneman notes above.