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Is the $1 trillion student loan debt really a crisis? — Part 2

(By Andrew Harrer / Bloomberg)

Earlier this month I published a post titled “Is the $1 trillion student loan debt really a crisis?” by Donald E. Heller, dean of the College of Education at Michigan State University, which sparked a lot of comments and questions. It started out this way:

For the last couple of years, ever since the outstanding volume of student loans exceeded the $1 trillion threshold — and simultaneously passed both car loans and credit card debt  –  the media have been on a rampage about the student loan “crisis.”
The fact that student loans passed $1 trillion is nothing more than that — a fact.  There is nothing about that level that should give us pause any more than when the volume of loans hit $842 billion or when it will surpass $1.445 trillion.  It is simply a marker that caused the media to pay an inordinate and generally misplaced amount of attention on student loans.

In the following post, Heller addresses some of the questions and concerns raised by readers.

By Donald E. Heller

This month Valerie Strauss agreed to post in The Answer Sheet blog my article questioning whether we really have a student loan debt crisis in our country.  The article generated a number of comments, and many more people commented on Facebook and in the Twitter sphere.  Valerie has generously allowed me to respond to some of the comments people have made.

First, I hope that people understand that issues related to college costs, prices, and access are far-reaching and complex, and it is impossible to address all of them in the space of a blog like this.  Entire books, numerous articles, and a great volume of reports have been written, by me and others, about why the rising price of college has outpaced inflation over the last three decades.  There are many actors who need to take responsibility for this, and yes, colleges and universities are among them.

While many higher education institutions have found ways to try to control the growth of their costs, and thus the tuition prices they charge, there is still more that we in higher education can do to try to make a college degree as affordable as possible to all students, no matter what their family’s circumstances are.  And there is certainly much more that the federal and state governments can do to help keep college affordable as well.

But that was not the purpose of my post.  My motivation was to try to counter what I believe is a misinformed message that I am afraid is reaching more and more families out there.  That message is something along the lines of, “Borrowing to pay for college is bad for you, and all it is going to do is get you in debt with nothing to show for it.”  My fear is that those families who are least knowledgeable about higher education, what the potential benefits are of earning a college degree, and the options for paying for college, will be those who will be dissuaded from attending college at all.

Some commenters felt that by saying $1 trillion in student loan debt is not a “crisis,” that I was trivializing the struggles and difficulty some are having in paying back their loans.  I will be the first to agree that the recession has made the burden of paying back loans a challenge for many former students, and they have had to make compromises in important life decisions, such as buying a home, the kind of job they take, and even marrying and starting a family.  But the recession has made life more challenging for lots of Americans, even those who never borrowed to attend college, and many have struggled to find good-paying jobs, hold on to their houses, and find a good education for their children.

We do need to work harder to get better information about attending college and how to pay for it into the hands of first-generation college students.  We know that many students are confused about the difference between grants and loans, and what is a reasonable amount students should borrow in relation to the degree they will be earning.  And we do need to make it easier for students who have borrowed to be able to pay back their loans.  The Obama administration’s push to get more borrowers into income-based repayment plans, which protects them from defaulting on their loans should they not have sufficient resources to pay them back, is an important step in this direction.  Another important action would be to once again allow student loans to be discharged in bankruptcy, just as can other forms of consumer debt, including home mortgages and car loans.

At the end of the day, the question people need to ask themselves is, “Will I better off throughout the rest of my life with a college degree, or without one?”  And for the vast majority of Americans, the answer to that question is very clear: You are much better off, both in terms of economic reasons as well as social ones, to have that college degree.

The odds are very great that college prices will continue to rise, so it is unlikely that waiting to go to college at a later point will make the investment any cheaper.  The research on college access is very clear that those students who delay going to college until later in life have much lower odds of ever completing a bachelor’s degree.  Yes, some manage to beat those odds by returning to college and juggling class, work, and family responsibilities, but the odds of earning that diploma are much greater if students enter college shortly after graduating from high school and persist straight through to the degree.

In the ideal world, we would not need student loans.  College would be affordable enough for all qualified students to attend the institution of their choice and earn a degree in their chosen field, but that is not the political reality in which we are living today.  Some say we need “big ideas” which they believe would turn the system on its head, and return to an era of decades ago when college prices were not the barrier to attendance that they are today.  But until those big ideas are enacted, student loans will continue to be a fact of life, and we have to ensure that people have accurate information so that they can make good decisions about investing in education, decisions that will benefit not just them but the nation as a whole.