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Debt
December 4, 2013 - 10:05pm

A new report on student loan debt from The Institute for College Access and Success is generating quite a bit of press with its statistics on student loan burdens. The headline claim is that “Seven in 10 college seniors who graduated in 2012 had student loan debt, with an average of $29,400 for those with loans. “ 

The report goes on to name (and shame) high debt colleges and high debt states, and to contrast them with the presumably more honorable low-debt colleges and states. It ends with a note on for-profit colleges, saying that too few of them report anything close to the amount of data needed for meaningful comparisons.

A few thoughts.

I only gave the report a quick read, but I didn’t see it define “average.” Is that the mean or the median? That matters, because if it’s a mean, it could be skewed by a few spectacular outliers.  If Warren Buffett came by for dinner, the mean individual wealth in my house would skyrocket, but I wouldn’t be any richer. 

And it’s a little odd, intuitively, to derive the average only from the 70 percent who took out loans. If you factor in the 30 percent who didn’t, the average would drop significantly.  Just writing off that large a group may help goose your headline number, but it distorts the truth. 

That becomes clear when you notice the next great distortion.  It defines “college” graduates as bachelor’s degree graduates, and it looks only at bachelor’s-granting institutions.  It assumes, implicitly, that students are first-time, full-time, degree-seeking, and probably traditional age.  In other words, as with so much commentary, it generalizes from the top.

Over forty percent of American undergraduates attend community colleges, nearly all of which would fall into the “low debt” category.  At HCC, for example, the median debt of a graduate is zero.  Most don’t borrow.  That’s because the tuition and fees for a year of full-time study is less than the maximum Pell grant, and has been for years.  (What this suggests about the Bennett hypothesis -- that colleges will raise prices to capture all available aid -- I’ll leave as an exercise for the reader.)  Students with money can pay cash on the barrel; students without get Pell.  Yes, there are students in between, and some of them borrow.  But even there, the borrowing for educational costs is quite low, because the costs are quite low.

Strikingly, the report makes no mention (at first blush, anyway) of community colleges or of transfer students.  Savvy students and their parents have figured out that they can save significant money by starting at a community college and then transferring to a four-year college; they wind up with the same highest degree, but at far less cost.  Given the implied agenda of the report -- getting the very real student loan issue under control -- I would have expected at least a glancing reference to a well-established alternative. 

Looking at four-year colleges in isolation, with no consideration of the larger ecosystem of higher education or of state politics, can lead to some unhelpful conclusions.  Many students now get caught between escalating tuition driven in part by “austerity” and a tight job market driven largely by that exact same austerity.  Yes, some four-year colleges (and especially some for-profits) need to rethink what they’re doing.  But let’s not let a focus on a headline number lead to a deficit of options.  Options are out there; we just need to include them in the discussion.

 

 

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