Debt-Free: An Unrealistic Expectation
A Vice-President at Dickinson College complained about the move by wealthier schools to eliminate student loans as part of the aid package, arguing that such a move creates the "unrealistic expectation that students should graduate debt-free." He points out that people borrow for cars and homes, and that education is just like any other big-ticket purchase. In effect, rich people can buy it for cash and those with less money should finance it over time.
If education is like a Hummer--cash or credit--then why stop with college? Why not shut down the public schools K-12, and let those whose parents want them to learn to read and write pay cash or take on loans? (Maybe we're heading that way with failing schools in some cities.)
n thWe support public schools with tax dollars because we believe we'll all be better off if more people learn to read and write--even for those of us who don't have children in the public schools. Why isn't the same true for college?
The GI Bill helped 2.2 million returning soldiers become engineers, scientists, entrepreneurs, and business leaders, fueling the economy and raising the standard of living. It cost $7 billion (about $240 billion in today’s dollars), but for every dollar invested, nearly five dollars were returned over thirty-five years in higher productivity and tax revenues. We all benefit when a smart person gets a good education.
Undergraduate borrowers leave school with an average of $20,000 in debt, and average graduate borrowers owe $45,000. Defaulted student loans now top five million. Debt now affects career choices, purchasing decisions (can you afford health insurance, a car or a home?) and even the decision to marry.
My coauthor Ganesh Sitaramen and I have worked on a proposal called Service Pays. We think the federal government should make money available to pay the equivalent of four years of college at a state school (money could be used at a state or private school). For every year after graduation that a student spends in public service (military, Peace Corp, Teach for America, etc.), a year of debts would be erased. Four years of service would pay off four years of college--a sort of reverse GI bill.
This isn't a gift--it's there only for those who want to work in public service. But for anyone who wants to work, regardless of family income, the option to pay for college through service is available.
But our proposal starts from the premise that education is not like a Hummer. It presupposes that we're all better off if young people have access to education. And it assumes that starting adult life deep in a hole of debt is not a good idea. I realize those are pretty controversial ideas in some circles.
The colleges that are moving away from debt believe that those who need aid should get outright gifts, not big debt loads. Of course, many of the schools moving in this direction have big endowments (Harvard, Yale, Princeton). But some schools of more modest means have moved in this direction too (Swarthmore, Bowdoin, Colby). Other schools might like to make their aid packages debt-free, but they are simply too constrained financially. Ganesh and I want to develop a way for students to help pay for their educations without taking on debt.
But the Dickinson VP advances a contrary thought: It isn't right to make college available at lower or no cost to students with less money. Instead, they should expect to take on debt. For some, paying for an education is like buying a fancy car.