Lessons in debt: Work on all fronts can defuse the college loan crisis
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A tsunami of student-loan debt threatens the belief that education is key to achieving the American dream. How to make college accessible without burying graduates in debt is a complex problem. No single solution will fix it.
The New York Times recently highlighted the student-debt dilemma at Ohio Northern University, a small, Methodist-affiliated private university where students graduate with an average debt of $48,886. But the problem is national. Student-loan debt passed $1 trillion this year -- more than U.S. consumers' credit-card debt.
Twenty years ago, most students did not borrow to get a bachelor's degree. Today, more than two-thirds of graduates get a loan-repayment book with their diploma. On average, new graduates owe $23,000. But 10 percent have more than $54,000 in loans, and 3 percent owe more than $100,000.
And less is being paid off. Five years ago, 45 percent of college loans were in repayment. Today it's 38 percent. The rest is in deferment, forbearance or default.
Too often, college marketers underplay debt and overplay career opportunities to fill classrooms. This is especially true of for-profit colleges, which enroll 11 percent of U.S. undergraduates but get about 25 percent of federal loans and grants.
Pennsylvania ranked 39th among states in 2010 in spending per student on higher education. That amount, $5,159, had fallen by 14 percent in the previous five years.
Too often, parents don't save enough for college; even when they do, costs in recent years have risen faster than incomes or inflation. Too often, students fail to monitor their debt responsibly; enticed by the advantages of a college degree, they seek federal loans at low interest rates without asking how much they will owe.
Other contributing factors include bloated university administrations and overspending on amenities such as luxurious dormitories, food services and recreation facilities. Parents, students and states can help, but it is up to colleges and universities to raise revenue, cut costs or both.
The college-as-big-business model isn't working. Public universities can do their bit to alleviate future student debt by focusing on their original mission: to educate the state's young people, prepare them for careers in the modern world and equip them to be effective citizens.
First Published July 2, 2012 12:00 am