On College Debt and the Drop-Out Crisis

On Monday the New York Times' published a story about the immense and growing debt burden on college graduates. In 2003, two-thirds of bachelor's degree receipients had college debt, and their average individual debt load was a whopping $24,000. 

As the piece, by Tamar Lewin, notes, most economists still consider student debt "good debt" because a college degree raises a worker's lifetime earnings. But what about those young Americans who take out loans to pursue higher education, yet drop out before receiving any kind of degree? Afterall, just 53 percent of students who enter four-year colleges graduate within six years. At two-year community colleges, half of all students drop-out in the first year, and only 25 percent finish their programs within three-years. 

Half of all college drop-outs have borrowed some money for tuition. And consider this depressing statistic: One in five students who drop out of college leave only after accumulating $20,000 or more in debt.

These are the folks most unable to pay back their loans; the rhetoric of "college for all" simply does not match the reality of their lives. That's why we need to be providing young teenagers–in middle schools and high schools–with much savvier college and career counseling. Given the state of the economy, we have a responsibility to help young adults protect themselves from the spurious claims of for-profit and low-quality colleges with high drop-out and loan default rates, and we need to explicitly direct people toward cost-effective higher education and job training programs that have clear records of preparing students for remunerative employment.

2 thoughts on “On College Debt and the Drop-Out Crisis

  1. Kirill Reznikovski

    You make a good point in your post about
    the dangers of unprepared students, who enter academia and dropout because they can’t keep up
    with their studies.

    But, the main question I think we should be
    asking is how did they get in there,
    without having the study skills they had to
    use while in a degree program.

    What about all the enterance exams, like the
    SATs, aren’t they supposed to weed out
    kids who are not ready for a four – year
    college. And in the community colleges
    they have the remedial classes, so why aren’t
    they helping.

    I think it’s easy to say:”the system is broken,
    so lets fixed it”.
    However, with all of the new reforms,
    NY’s and the federal ones, which are
    not a new fashion, you still don’t see
    a real improvement.

    Maybe, what students need is some shock &
    awe demostration, like tours with people
    who are high-school dropout, or even
    college dropouts to see how their lives look.

    Because, I believe that putting faces to all
    of those scary failure stories is probably
    more effective than many of the above reforms.

    What do you think?

    Best regards,
    Kirill

    Reply
  2. Kevin

    I think it would be very helpful not to treat college debt as a single entity.

    There’s debt incurred to attend college because legislatures are decreasing their outlays nationwide — this is the real higher-ed crisis, and the bullshit spewed by legislators and echoed by reporters about rising debt rates of students, to the extent that it’s caused by the failings of the state, is a bait-and-switch that responsible journalists (do you know of any?) should be exposing;
    There’s debt incurred because students are often required to take a certain number of hours to qualify for aid even though taking that number of hours with the complicated lives that they live make them less likely to succeed (I see many of these students each semester);
    There’s debt incurred to attend elite private schools and hobnob with famous professors and year-long guests, which is regarded more as an investment decision (you’re seeing many of those students this semester);
    There’s debt incurred to attend for-profit colleges which needs greater oversight that it won’t get as long as politicians are posturing against public universities;
    There’s debt incurred by families by choice for tax purposes;
    There’s even debt incurred by students desirous of maintaining a certain lifestyle at the more exclusive schools, the great American live now pay later ethos.

    You cannot reasonably treat all these forms of debt as one single thing.

    Reply

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