Student Debt: A Growing Crisis

Caleb Hamman
chamman@butler.edu

Lately, with health care reform taking Washington’s center stage and Supreme Court cases and special elections filling the remainder, efforts to combat what is too often perceived as a “smaller issue” have gone widely overlooked. I am referring to the issue of student debt—one that, if left unchecked, will prove to be a potent driver of US decline.

The most recent action to address the issue is H.R. 3221, or the Student Aid and Fiscal Responsibility Act. The legislation would attempt to mitigate student’s exploding debt levels by reducing the role of private companies in servicing government loans. This would allow the government to cut back on subsidies to private firms and to give the resulting funds back to students, primarily in the form of Pell Grants to those from low income households.

The House passed H.R. 3221 last September, and the Senate is expected to take up companion legislation soon. Considering the current state of student borrowing, they should avoid delay.

According to the Project on Student Debt, nearly two-thirds of American students graduating from four-year colleges are indebted. For those who owe, the average amount exceeds $23,000. To put things in perspective, only 58 percent of American students were indebted upon graduation in 1996, and, on average, they owed only $13,200. (Note that all figures in this post are in current dollars.)

The historical trend is less than comforting. In 2008, The National Center for Public Policy and Higher Education (NCPPHE) found that the price of college tuition had increased by 439 percent since the 1980s, tripling the rise of family income over the same period and even surpassing the much maligned growth of health care expenses.

This explosion of student debt bodes ill for the United States, obviously because it jeopardizes American accessibility to higher education.

Students can only borrow so much—there will inevitably be a breaking point. Indeed, the NCPPHE’s study finds that “the continuation of trends of the last quarter century would place higher education beyond the reach of most Americans and would greatly exacerbate the debt burdens of those who do enroll.”

If large numbers of Americans become excluded from higher education, a multitude of problems are sure to follow.

From the callous perspective of economics, exclusion promises a poorly trained workforce, a risk for American competitiveness abroad.

From the perspective of politics, uneducated citizens threaten to summon the plagues of the Bush administration: susceptibleness to propaganda, disregard for global warming—all of the problems outlined by Dr. Mason in chapter four of The End of the American Century.

And, not least in importance, from the human perspective, an inaccessible system of higher education constitutes a certain path to lives of lessened potential for finding fulfillment and beauty.

Tragically, these are merely problems faced by those who are excluded from higher education.

Those actually able to attend colleges and universities face another set of obstacles. Not the least of these is the increasing likelihood of graduating with a mountain of debt, thus aggravating the already considerably problem of a heavily indebted citizenry, a topic discussed by Dr. Mason in his analysis of economic decline.

Stepping back, the growing necessity for student borrowing in the United States can be viewed as part of larger inequality trends. As shown in The End of the American Century, the United States has become exceptional among wealthy states in its high levels of economic inequality and in its relative failure to implement policies that would rectify the situation. If college continues to become increasingly unaffordable, education threatens to become a privilege afforded only to the wealthy. Not only will this provide a tragic demarcation of class along lines of knowledge (similar to an equally tragic demarcation of class along lines of health); rather, an exclusive system of education will also assist in keeping poor people poor and in keeping wealthy people wealthy. In other words, higher education will not simply distinguish class structures—it will help solidify them.

These are just a few of many reasons demanding student debt be brought under control.

Current proposals for reform should be passed and signed as soon as possible. And if we are serious about fixing this mess, we cannot stop there.