An Age of Demoralizing Debt

The number itself is daunting: $1 trillion in student debt. That means there is more student debt than credit-card debt in the U.S. And that the amount of student debt in this country is in the realm of the GDP of such nations as South Korea, Mexico, and Australia.
This issue has the potential to fray our social fabric. The Occupy Wall Street protests inspired the Occupy Student Debt campaign, which has been asking 1 million students nationwide to pledge not to repay their student loans. This is a lose-lose proposition — one with potentially harrowing long-term financial implications for anyone who might follow this course — and it’s for the better that the Occupy Student Debt pledge has not caught on.
Yet the basic impulse is entirely understandable. There was a time in the not-too-distant past when student debt didn’t exist. When I went to college in the 1960s, students could pay for a college education without borrowing. College costs were low enough that a family contribution and a summer or part-time job got you through. You graduated with a degree — not with a payment plan.
As an educator, I have spent my entire career at public universities. When I was a young chemistry professor at Towson University in Maryland in the 1970s, a shared-responsibility social contract prevailed in the world of public higher education. Government funded about 70% of the cost of education, and students and families came up with the remaining 30%. Students graduated with little or no debt.
This shared-responsibility model acknowledged that earning a college degree benefited the student but also paid great social and economic dividends for communities, states, and the nation.
Today, that funding model has changed considerably. Nationally, the split is now closer to 50-50; the public subsidy and tuition dollars are roughly equal. The reason for this ominous change is clear: decreased funding by states has shifted more of the burden to the student.
In Massachusetts, the shift is even more acute. A decade ago the Commonwealth provided 63% of the funding for general education expenses at UMass. This year the state is providing 45%; students and their parents are on the hook for 55%.
So we have gone from the days when students took on no debt, moved through a period of ‘manageable debt,’ and now stand poised at the edge of an era of destabilizing, demoralizing debt. UMass students now graduate, on average, with $24,000 in debt, up from $14,000 only four years ago. At private universities, where education costs are two and a half times what they are at public universities, the debt story is even more daunting. How do we fix this major national problem?
There is no easy fix. But there are steps that, taken together, could put us back on a sustainable course.
For one, the 50 states need to make their public universities and colleges a higher priority. Next year is the 150th anniversary of the Morrill Act, which led to the creation of UMass and the vast expansion of public higher education nationwide. States should mark the occasion by rededicating themselves to the public institutions that have educated millions of citizens over the years and that drive the national economy.
The federal government should do its part by providing more grant aid to students — a step that would benefit public and private institutions alike.
We in higher education need to step up by reducing administrative and academic costs. We also need to make sure that students graduate in four years — eliminating the need for more loans and more debt.
While ‘crisis’ is a greatly overused word, its use is completely warranted in this instance. While organized default is not a good option, we do need to take a number of imaginative and purposeful steps to make sure that the student-debt storm does not batter our economy and our society. We need to keep our bridge to the future — our educational bridge — open wide for all citizens. v

Robert Caret is president of the University of Massachusetts.

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