Last month, the internet exploded in uproar when a new report from the Brookings Institution further fueled the student loan crisis debate, arguing that the conventional framing of escalating student loan debt burdens have been largely overstated by the media.
To recap, Brookings researchers analyzed more than two decades of data on the financial well-being of American households, drawing from the Survey of Consumer Finances (SCF) administered by the Federal Reserve Board. Researchers tracked incomes and education debt levels of young households (defined as households led by adults between the ages of 20 and 40) from 1989 to 2010, alongside multiple other data sources with which to pair their SCF data analysis.
Although the researchers found significant increases in average debt levels, they found little indication of a significant proportion of borrowers with the egregiously large debt loads that potential students, families, and the public hear and read about so often in the media.
More specifically, the researchers found that the average lifetime incomes of college-educated Americans have more than kept pace with increases in student debt loads. Between 1992 and 2010, the average household with student debt saw an increase of about $7,400 in annual income while incurring approximately $18,000 in total debt over the course of four years. Simply put, the increase in earnings that most students received over the course of 2.4 years would pay for the increase in debt incurred.
Finally, those burdensome monthly payments that supposedly impeded our economy’s crawl out of the recent recession have stayed about the same or even lessened over the past two decades. The researchers find that the median borrower has consistently spent about four percent of their monthly income on student loan payments since 1992.
Granted, the uproar was confined to a tiny corner of the web occupied by higher education policy wonks, media personalities, and commentators. Further, it was largely stimulated by a positively slanted New York Times review of the report. Nevertheless, the depth and degree of uproar was nothing short of enthralling.
Some researchers praised the sober analysis of student loan debt over time. Others thrashed the analysis for drawing broad conclusions based on a limited and relatively affluent sample size. Moreover, some appreciated the researchers for their valuable contribution to the public’s understanding of the student loan crisis, yet critiqued the authors for dismissing the all-too-real immediate and long-term effects student loan debt has had on households and the economy.
To be sure, the report dilutes the public’s steady helping of “student loan crisis” clichés. And, perhaps the highlighted flaws in the research methodology and the sample size are a bit problematic.
But while observers and commentators quibble back and forth about the enormity of the debt problem or the flaws in the report’s methodology, the most important facet of the study’s findings concern the student debt levels of those who do accumulate debt but do not graduate.
Research confirms what David Leonhardt of the New York Times rightly notes, “the degreeless-in-debt are precisely the ones who are most likely to fall into trouble with their loans, becoming delinquent or defaulting.” And more often than not, the degreeless-in-debt are not the ones with the $50,000 or $100,000 student loan tabs.
Research on the causes and effects of college student attrition is voluminous. The national drumbeat for the importance of a college degree has grown louder at a time when the costs associated with leaving college without one have never been higher.
The fiscal health of non-completers who borrow are dire. Buttressing the Brookings claim, a recent analysis of nearly two million borrowers entering repayment in between 2004 and 2009 concludes that most borrowers who left postsecondary education without graduating had difficulty in repaying their loans. One out of every three undergraduate borrowers left without a credential became delinquent and another 26 percent defaulted. The rates of delinquency and default are even higher among borrowers who depart within a year of starting college. This is compared with delinquency rates of 21 percent and default rates of 15 percent among borrowers who graduated with a credential.
Suffice to say, the public commentary on the recent Brookings report is aimed at the wrong target. The uproar shouldn’t challenge (or reaffirm) the validity of the student loan crisis. It should heighten our interest in the experiences of non-credentialed borrowers while galvanizing our commitment to ensuring that less of them leave our institutions of higher education.
As we’ve argued on these pages before, the response to these challenges must ultimately come from student affairs professionals. We know there is no one person responsible for keeping students in school and promoting the utilization of tools and supports that would mitigate attrition or even loan delinquency and default.
However, there is no campus professional better-positioned to describe to both students and policymakers what is needed from each to ensure successful matriculation into life after college. This calls for the creation and adaptation of financial literacy and career development programming that takes into the account the experiences students bring with them to college, accumulate while their there, and aspire to when they leave. Sound and effective fiscal literacy and career planning require grounding both concepts in the lived experiences of students. Education Loans often go from a paper abstraction for first year students to starkly real for graduates – student affairs professionals are well positioned to work with colleagues to ensure that transition is as smooth as possible for all involved.
Let’s be clear. According to a recent report from the interagency collective, Forum on Child and Family Statistics, the percent of borrowers is increasing, average loan balances are increasing, default and delinquency are increasing, and the share of non-credentialed borrowers is increasing; none of us in higher education should be happy about these trends. Yet, the Brookings report shows us that not every recent college graduate carries a $100,000 anchor around with them as they traverse America’s social and economic landscape.
Those atypical anecdotes often espoused in the media will keep coming in a steady stream as we approach the Higher Education Act Reauthorization later this year. Let’s be careful not to oversubscribe them; and let our actions, programs, and supports not understate them either.