Student Debt: An important issue?
- Is the cost of college and debt from student loans an important issue to you? If so why?
It is certainly a big issue for students and their families around the country:
- Americans owe over 1 trillion dollars on student loans. (Check out this debt counter.)
- Over 40 million people in the U.S. have student loans - including many people who have been out of college for many years.
- 58% of college graduates have debt.
- 57% of millennials see student debt as a major problem. (This view holds for both Democrats and Republicans.)
- Paying for college is the top financial worry of parents with under-18 children.
- The average debt among 2015 graduates who took out loans is over $35,000.
- Over 700,000 senior citizens are still paying off their student loans.
Tell students that college students and their allies have organized themselves to change U.S. policies on student debt and access to higher education. A list of national organizations, with links, is at the bottom of this lesson.
Where the 2016 presidential candidates stand
Candidates for president have taken a range of positions on the issue of student debt. Democratic contender Bernie Sanders has made student debt and access to college a major issue in his campaign. At Sanders' rallies, his proposals for reform often earn him the most applause. Several Republican candidates, on the other hand, barely mention student debt.
Ask volunteers to read the thumbnail descriptions below of the candidates' positions on student debt.
Marco Rubio (Republican)
Sen. Rubio (who ended up with over $100,000 in student debt himself) has co-sponsored legislation that would:
- give students more information about the costs of college and terms of education loans
- make repayment of loans more flexible for low-income students
- allow students to apply for a "Student Investment Plan" funded by private investors
Hillary Clinton (Democrat)
Former Secretary of State Clinton proposed a $350 billion plan that would:
- reward states that successfully reduce overall student debt
- allow students to refinance their loans at lower interest rates
- expand AmeriCorps and the tuition forgiveness for participants
Donald Trump (Republican)
Trump has not released a formal plan for making college more affordable but he has stated his opposition to the federal government making a profit on student loans. He also says he will make more high-paying jobs available for college graduates so they can pay off their loans.
Bernie Sanders (Democrat)
Sen. Sanders has proposed the most far-reaching plan to reduce student debt. Sanders says that it could be paid for by enacting a small tax on Wall Street speculation. The plan would:
- make all public colleges tuition-free
- reduce interest rates for student loans and allow borrowers to refinance their loans
Ben Carson (Republican)
Dr. Carson has not said much about college costs or student debt. In the past he has emphasized being financially responsible and not taking on more debt that you are able to pay back.
Jeb Bush (Republican)
Former Gov. Bush has not announced any specific proposals for reducing student debt. His thoughts on the issue include encouraging students to graduate on time and work while in college. He supports for-profit colleges and technological advances which would lower college costs.
Carly Fiorina (Republican)
Fiorina has had little to say about student debt other than suggesting that the federal government leave educational loans to private institutions, arguing that private competition will lower costs.
- What do you observe about the range of views held by the candidates?
- Did any of the proposals stand out for you? Why?
- Free tuition would obviously benefit studentsespecially low-income students. How would removing the cost barrier to college benefit society as a whole? What would be the downside of such a policy, in your view?
- Should the federal government make a profit on their loans to students?
- If you had to vote for one of the candidates based on our brief look at their positions on student debt, which candidate would you vote for? Why?
- What additional information would you want before making a final decision?
True or False Quiz
- The federal government spends over $1 billion annually to collection agencies to get money from students defaulting on their college loans.
- Most countries provide free higher education.
- The state of Tennessee provides tuition-free community college for its high school graduates.
- In Mississippi, students who default on their loans are not permitted to obtain a marriage license.
- False. However, some do, including Argentina, Denmark, Finland, France, Norway, Germany, Scotland, Turkey and Brazil.
A critical look at the numbers
The issue of college loans is largely about numbers. As with any controversial issue involving statistics, not all numbers are equally significant. Broad averages sometimes mask crucial distinctions. The definitions that the statistics are built on are often as important as the statistics themselves. Writers trying to prove a particular point may "cherry-pick" specific figures and ignore those that don't support their theses.
Let's take one statistic that serves as an example for two of the above misuses:
The official default rate among student borrowers (that is, the percentage who are behind in their loan payments) is commonly reported as about 14%. But that percentage depends on the definition of "borrower." The official rate is based on the total number of borrowers, not on those who are supposed to be paying the loans back. Many borrowers are still in their repayment grace period or have permission to suspend payment because of unemployment. The actual default rate, according to a study by the Federal Reserve Bank of St. Louis, is over 30%.
In addition, the broad overall average does not give a clue that graduates of 4-year liberal arts colleges are much less likely to default on their loans. In 2011, about 50% of students with loans attended community colleges or for-profit colleges, but they accounted for 70% of defaults.
- How might your knowledge of these little-understood numbers affect the kind of policy you would support on student debt and access to college?
- Examine the "issues" section of any 2016 presidential candidate's website. Find a statistic cited by the candidate that is in any way misleading, wrong, or incomplete enough to require correction. Support your argument with facts from a reliable source.
- Bernie Sanders proposes to make college tuition at public institutions free. Is this affordable? How? Assign the class to research the question. Ask half of students to be prepared to argue for the proposal, and the other half to argue against the proposal.
- Find out about one of the student organizations below and report back to the class on what the organization does, whether or not you support the effort, and why.
- Higher Ed Not Debt is a coalition of organizations working to make college affordable: http://higherednotdebt.org/
- StrikeDebt.org encourages students to resist paying back loans. Debt Collective is an offshoot of strikedebt dedicated to providing information to the public at large: https://debtcollective.org/. Rolling Jubilee (another initiative of strikedebt) buys students' loans cheaply after they are in default and erases the debt: http://rollingjubilee.org/
- Student Debt Crisis organizes, counsels and lobbies for reform: http://studentdebtcrisis.org/
- United States Student Association was formed in 1978 and organizes students around numerous issues related to social justice: www.usstudents.org
- Student Labor Action Project is a collaboration between the United States Student Association and Jobs with Justice: http://studentlabor.org/