Perspective: The problem that’s getting left out in conversations about student debt
Few students are earning diplomas within four years, if they earn them at all. But there’s no time limit on accruing student loans
Lost in the bipartisan outrage over President Joe Biden’s student-loan forgiveness plan is a small detail that could help some families out of the debt morass. It’s that the erasure of $10,000 in debt (double that for Pell Grant recipients) is being offered to students whether or not they earned a degree.
Why does this matter?
It matters because so many students go to college and do not graduate, or if they do, take an astonishingly long time to get a diploma. Fewer than 60% of college students have earned a degree six years after enrolling, making six years now the standard, not four.
Fewer than one-third graduate in four years, and one report put that number even lower: 19%. Students are not simply dropping out after four or five years. Many are continuing to take classes and are accruing more debt. Conveniently, there’s no time limit on taking out federal loans for college.
Colleges and universities have few incentives to graduate students in four years. But families do. The fewer years a young person goes to college, the less that diploma will cost.
There are other ways to reduce the cost of college that doesn’t involve a total revamping of higher education, which does not seem to be on the horizon. Students can, for example, first attend a community college and then apply to transfer to their college of choice, and live at home instead of on campus if the college allows it. But that takes away from the collegial aspect that so many young people enjoy, the immersion into campus social life. For some, a better way to make a college education cheaper is to earn a degree in three years instead of four by getting AP credits in high school, choosing electives that count toward degree requirements and taking summer classes if necessary.
What’s necessary is a single-minded focus on graduating, and soon — what Dave Ramsey would call “gazelle intensity.”
This is something that many of today’s college students seem to lack.
There’s so much wrong with the Biden plan that it seems like piling on to take issue with the forgiveness being given to almost everyone with student debt, parents and students alike, regardless of whether or not the matriculation resulted a degree. It’s certainly the case that people who have college debt and no degree are more likely be financially struggling than those who left school with a diploma in hand.
But there is also something quietly troubling about this in the signal that it sends. It is a continuation of the “trophies for everyone!” mindset that is so prevalent these days, the idea that rewards will be equally distributed even when there is unequal work.
Would Biden’s proposal have been more palatable to conservatives if it forgave $20,000 in debt for people who had earned degrees, $10,000 for those who did not?
No, it’s too small a distinction and would have even further enraged those who rightly point out that debt incurred by Black and Latino students is greater than debt held by whites, and their graduation rates are lower for myriad reasons (although a terrific organization called Complete College America is working to fix this).
And making mass forgiveness of student debt contingent on finishing one’s degree, or performing public service, or becoming gainfully employed — well, that’s too much to ask of likely voters.
But going forward, graduation rates need to be part of the conversation as policymakers grapple with the cost of higher education, which is the core problem and which the Biden plan does nothing to resolve. There has been a growing casualness about the need for college students to finish what they start, ironically aided by businessman Peter Thiel’s program that offers young tech superstars $100,000 over two years to drop out of college, which Larry Summers rightly called “meretricious in its impact and the signals that it sends to a broader society.”
Recipients of the Thiel Fellowship will never bear the stigma commonly associated with the word “dropout,” although many thousands of other college students who graduate without degrees will.
The only thing worse than having tens of thousands of dollars in college debt is having tens of thousands in college debt without a degree. Both micro and macro incentives must be baked into higher education, our policies and our families to prevent this from happening to our children. Colleges need incentives to graduate students in the shortest amount of time possible. Students need incentives, as well, like the tuition rebates that some schools, including Howard University, have offered.
Most important of all, however, is the embrace of the hoary, dull value that one should finish what one starts, whether this involves the completion of a degree or the repayment of a debt. Biden’s plan does nothing to encourage either. So once again, and as it should be, it’s on us.