Is There a Student Loan Crisis?

It’s become hard to pick up a newspaper (oops, age is showing) or go to a news site and not see an article about lives being destroyed by student loans or that they represent the new bubble that will soon burst. The citations are familiar: over a trillion dollars in student loans; low repayment rates among underemployed graduates; they’re responsible for tuition inflation (don’t get me started); Millennials who borrowed $250K to earn a PhD in 19th Century Greenlandic Philosophy and are now making pretty designs with the milk on cappuccinos at an artisan coffee shop in Bushwick.

That’s all much better click bait than “Student Loans Help People Continue Their Education and Lead Better Lives. And Most Borrowers Repay Them OK.”

Those who attended the NASFAA conference in 2015 will recall that when the question that gives this entry its title was put up for a vote and the “no” vote won, the backlash was swift; student loan activists who are struggling with their debt accused our profession of being some combination of oblivious, uncaring, greedy, and in general, the face of the problem. Many attendees voted yes, we do have a student loan crisis, but as the only response choices were yes and no, it perhaps obscured the thoughts of many that perhaps many individuals have their own student loan crises, but the nation does not.

Student loans have helped generations of students earn degrees that have led to higher paying careers and better lives. Even during periods of high default rates, most borrowers satisfactorily repay, and the current average debt of about $29,000 is only slightly more than I just spent on a Subaru. And no one has said the economy is going to collapse because of all of these Subarus.  A good education is a good thing to have, in our country it costs money, and student loans have been providing some of that money for decades.  Crisis?  Not if they’ve helped so many people.

So maybe yes/no is a matter of semantics, but that might be weak argument in an environment in which many have been promised a better life by continuing their education, only to see it all go wrong, with misrepresented claims, closed schools, no degree or career advancement, but plenty of student loan payments due. To someone who borrowed thousands of dollars for a bill of goods that turned out to be false but still carries burden of that debt, they’ve got a crisis on their hands no matter what meta-statistics anyone can cite.  Public opinion and public policy should both be formulated by facts and data, but we all know that they are too often informed instead by anecdotes and headlines.  If lots of people have very negative experiences with student loans, even if they’re in the minority, it can do irreparable harm to the program moving forward.

Where does the truth lie? What role do financial aid professionals play?  Are we subjecting a generation to too much debt?  What can we do to make sure that sensible borrowing remains – or becomes – the norm?

2+2=4, But So Does 3+1

Last week the Senate Education Committee held a pre-Reauthorization hearing in which the topics included…get ready, because you’ve never heard this one before…simplifying federal student aid.  Senator Lamar Alexander (R-TN), a former Secretary of Education himself, was quoted as saying “Let’s take the best ideas on simplifying the financial-aid application…Maybe the solution is simplifying to one grant, one loan, one tax credit,” and others called for colleges to provide more student outcome data.  All, by my count, for approximately the ten millionth time.

We’ve all discussed this, over and over and over.  But these are the people who could actually do it.  And I’ll repeat, Senator Alexander used to be Secretary of Education Alexander.  What did he simplify when he was in more of a position than anyone to do so?  Is this ever going to reach a point where it gets past discussions and action is taken?  Ever?

And that was the Senate talking about it.  Most of them are potty trained.  What are the chances of Congress doing anything about it?  They’re barely able to agree on bills more significant than renaming a Post Office somewhere in Nebraska.  As some wiseguy posted on the Chronicle article, the Tea Partiers’ idea of “simplifying federal student aid” is probably to eliminate it altogether.

There were other overhaul ideas tossed around…earlier award info, year-round Pell, one-size-fits-all award letters, but still, this call for Keeping It Simple Stupid.

But what would “simplification” look like?  The main targets of this Senate hearing were the usual suspects…the FAFSA and the fact that we do not have one loan/one grant.  I’m not even going to bother talking about simplifying regulations, because there isn’t an elected official in DC or elsewhere who loses any sleep over the fact that our jobs are more complicated than they need to be.  If I live to hear a Senator ask, “What can we do to make financial aid administrators’ jobs easier?” I’ll have had multiple birthdays recognized on the Today Show, because by then I’ll be about 114.  It’s not worth discussing.

So…pretend that anyone in DC would listen…what can and should be simplified for our students and their families?