It’s that time of year again: My son starts fourth grade today and while we still have a few years before he heads off to college, he’s already dreaming of future careers (currently in the lead: zoologist). But my work at Ford, where I manage our grant making in financial justice, makes me all too aware that the cost of college will make it difficult for many of my son’s classmates and millions of other students to achieve their career goals.
Student debt has now surpassed $1.2 trillion and shows no sign of slowing. According to The Institute for College Access & Success (TICAS), 71 percent of college seniors who graduated in 2010 had student loan debt, owing an average of $29,400. From 2008 to 2012, average education debt increased 6 percent year over year.
There are lots of big numbers and dire warnings: Is student debt the next housing bubble? Is it putting a drag on the entire economy, slowing recovery? Is it stunting the future of today’s college graduates, forcing them to delay marriage and the start of their own families? These are all critical questions, and ones that Ford and our grantees are working to understand and address. But there’s another set of issues that tend to get less attention, and that are equally important. So in honor of back-to-school season, here are five key points about student debt—from a social justice perspective.
1. Student debt hits broadly but unevenly.
Student debt is not just about young people. A new nationally representative survey by the Federal Reserve found that a quarter of all respondents had education debt, either for themselves or for a spouse, child or grandchild. According to the Urban Institute, 40 percent of people in their 20s have student debt; 30 percent of those in their 30s; 19 percent of those in their 40s; 12 percent of those in their 50s; and 4 percent of people 60 and older. But Urban also found that it affects some groups disproportionately. People of color are much more likely to have education debt: 34 percent of African Americans and 28 percent of Latinos have student debt, compared with 16 percent for whites.
2. It’s not just how much debt you have that matters.
Yes, law school graduates with $100,000 in debt face tough choices, but it’s low-income community college students with $15,000 in debt that I worry about more. They might have less debt, but their debt constitutes a much higher percentage of their income. A recent blog post by the Center for American Progress noted that for borrowers in the lowest quintile of household income, student debt averaged 24 percent of their income in 2010, compared with an average of 6 percent for all households.
3. Those who don’t graduate are really stuck.
The data is pretty clear that over time, an investment in higher education, even with debt, pays off in higher lifetime earnings—for those who graduate. Those who don’t graduate entered higher education with the same goals and aspirations as their peers, but receive no economic value from it. These students are more likely to be low-income and students of color. They are more likely to be behind on payments and default on their debt. Their student debt, and the resulting ding to their credit scores, makes it even harder for them to get a job, rent an apartment or buy a car.
4. It’s far past time to do something about for-profit schools.
I don’t know anyone, except the for-profit schools themselves and their lobbyists, who still believes we should use taxpayer dollars to subsidize proprietary trade schools that target low-income families, students of color and returning veterans, load them up with unaffordable debt and then fail to give them quality education or set them on a career path. According to the National Consumer Law Center, for-profit colleges graduate only 32 percent of students within six years. Eighty-eight percent of those students take on debt, and 23 percent default within the first three years of repayment.
5. We used to recognize that having an educated society was good for us all.
We ought to remember that student debt is not inevitable, and that the current situation represents the results of a significant policy change. In a series of reports on The Great Cost Shift, Demos noted that “until about two decades ago, state funding ensured college tuition remained within reach for most middle-class families, and financial aid provided extra support to ensure lower-income students could afford the costs of college.”
My parents attended college in the 1950s with very little financial burden; public subsidy of higher education helped fuel a growing middle class, into which my parents moved. But the escalating cost of college and the shift from public support to private debt makes that kind of economic opportunity a thing of the past.
Low-income students attend school for the same reasons other do—because they dream of good jobs and a financially secure future. As a society, we owe it to them to make sure that their dreams have a chance to succeed; that they have quality educational choices, affordable options and successful outcomes. Education is at the very heart of the American dream. My immigrant grandparents saw their children succeed because of it. All families should have the same opportunity.