In the Chicago Tribune’s recent article, Fact & Fiction about Getting a College Education: The discussion about the value of higher education is plagued by misconceptions, tells us that the hysteria about the fading value and astronomical debt of a college education is fictional. It goes on to provide examples of this self-inflicted panic and, until you think about their methodology and sample size, it seems like a pretty decent point. But the Tribune skews some of their answers and does not account for the fact that their samples are composed of non-representative groups.

The article suggests that Americans misunderstand the reality of college loan debt – we over-estimate it:

“Hardworking reporters have gone to great trouble to find people who borrowed more than $100,000 to fund their undergraduate education. […] The average debt accumulation among those who do borrow is about $27,000, almost the same as the average new car loan, according to the Federal Reserve.”

Furthermore – and this is the clincher – there are plenty of students who graduate with no debt at all!

Statistics show that about 30 percent of students who get bachelor’s degrees at private nonprofit colleges and universities and 40 percent of those who graduate from public institutions do so with no education debt.

Reading those statistics, don’t you feel like maybe the Tribune is right? Maybe we are over-reacting to the “education crisis”. Maybe there isn’t an inherent issue with the way schools are budgeted or how efficiently they’re run – maybe, really, it’s just one or two kids who took out more debt than they can reasonably pay back, and now they’re blaming it on the system (typical), rather than their own short-sighted actions. Clearly, the debate raging over the astronomical cost of education is at least slightly melodramatic.

To give more credit and, ostensibly, a little more context to these statistics, the Tribune does a little exercise to show us how FAFSA works. The article does this to try and prove that we’re all overreacting and things aren’t as expensive as we’re told – I mean, c’mon! Just look at the numbers, for Christ’s sake.

“Krupnick [*an unverified, unsubstantiated  person who the Tribune feels is qualified to make these assessments*] used published information from the colleges to figure out what a family of four earning $130,000 a year would be asked to pay, taking into account financial aid grants, for a year at California State University at East Bay ($24,000), University of California at Santa Cruz ($33,000) and Harvard ($17,000).”

Now, the Tribune attempts to further substantiate their claims by incorporating the trump card of ever-affordable two-year degrees.

“Average debt for those who earn two-year degrees — and for those who take on debt but never manage to earn a degree — is considerably lower [than $27,000].”

Well hot dog – why aren’t we all in Technical School yet?

I’m probably one of the biggest advocates for higher education without the 4-year pedestal, but we’re not there yet as a society, in how we view Associates Degree education. We live in a reality where technical school and community college graduates do not have the same opportunities as “4-year college” graduates. In fact, 81.4% of students currently enrolled in 2-year programs have plans to transfer to a 4-year program. Furthermore, depleted federal funding has diminished the quality and accessibility of Community College education.

Although they arguably serve students with greater needs, community colleges spend far less per pupil than four-year institutions […] Between 1999 and 2009, the budget at public research universities increased by nearly $4,000 per pupil in inflation-adjusted dollars. Public community college budgets increased by $1 per pupil over the same period.

Here’s a specific list of all the things the Tribune has “tweaked” or otherwise mis-represented, to make college look like less of a national disaster:

Average Debt: The Tribune’s argument relies on the fact that the audience will hear “average debt” and think – “about accurate for most people”. It also assumes that the reader will understand “most people” to mean “a respresentative variety of people”. The article critically depends on readers either forgetting or not knowing that an “average” is almost never representative of the context and constituents of the situation. That’s why “median” and “mode” get a lot more play than “averages” in college statistics – schools don’t publish the “average” LSAT, GMAT, ACT, SAT scores or GPA’s – they publish the Median numbers, and they usually provide additional information to help give those numbers context – like the infamous 25-75% range. Colleges and Universities do this because all statistically based numbers must necessarily cut out the qualifying information that defines those numbers. Statistics is the art of simplifying complex issues into quantitative terms so that we can assess the situation with fewer considerations – with statistics, the winner is whatever number is more desirable. It’s cut and dry and totally objective because that’s the point of statistics. But by nature, those kinds of numbers are always a little misleading, and the ones in this article are no exception.

The majority of college students come from sound middle-class or upper-class backgrounds. Translation: they can afford to pay at least part of their tuition without loans. The fact that the Tribune used an example of a family of 4 making $130,000 speaks to this fact. (Remember – the national median Household Income is $45,018 for 2012) The majority of modern college students come from similarly situated homes – families who can afford to pay some or all of the cost of college out of pocket. This includes college-specific savings accounts –  a luxury of the upper-middle and upper classes. So this is the demographic that the Tribune’s loan-debt statistics – an average $27,000 annually – refer to.

Well, of course  students who come from families making a reliable $130,000 (or more) annually have an average loan debt of $27,000 – they’re not taking out loans for 100% of their education. A family making $130,000 annually actually falls into the top 10% of wealth distribution in America, so it is completely misleading to suggest that these numbers are representative of the college debt crisis.
(Now granted – perhaps the income-percentile statistics are skewed because the income-percentiles take into account people who aren’t working, can’t work, choose not to work, or are otherwise not active in the economy, which may make the low-end numbers seem lower than reality)

Economic mis-representation in the Statistical Sample: The students who are most seriously struggling with student-debt are not the students who are represented in these statistics, because they do not make up the majority of college students and therefore are not adequately represented in the “average”. These students are not just the very poor students (of which there are too few that aspire to or achieve post-secondary degrees of any kind), but also middle class students whose families have other financial obligations and cannot help with college.

The Tribune doesn’t include interest.  If that $27,000 debt is split evenly between Federal and Private loans, the student could pay up to an additional $3,000 annually in interest alone (depending on which congress they get setting the rates for their federal loans). That means a student paying $300 per month would only be paying $50 per month towards their principle balance, and the other $250 would be going towards interest – i.e., money they didn’t actually use on their education. At an entry level job that pays about $25,000 annually (a very standard starting salary for many college students), $300 per month is 14% of their annual income. So students may walk away from graduation with *just* $27,000 in debt, but by the end of their first year (if they are able to find a job), they will still have $26,400 in debt, having effectively paid only $600 off the total debt. At this rate, it will take them 45 years to get their balance to $0, though we all hope that their salary will increase and they will be able to pay off larger amounts, and maybe be debt-free by the time their children graduate college.

Community College is more complicated than a surface comparison. If attending two-year institutions is the silver-bullet for educational debt, why aren’t we all in tech schools, getting associates degrees. Could it be because of:

  • A) the incredible stigma against technical schools, as 4-year degrees have been put on an unsustainable pedestal,
  • B) the fact that two-year degrees offer a radically lower salary ceiling than 4-year degrees,  or
  • C) that when competing for jobs with 4-year degree candidates, it doesn’t matter how relevant their 2-year degree was or how much money they saved going to community college or tech school, the student with an Associates gets beat out by the idiot with the Bachelor’s (almost) every time.

The article makes a half-baked attempt to address this issue and essentially comes to the conclusion that bachelor’s degrees have a higher pay-off and social respectability, but that doesn’t make them the no-brainer choice.

“Certificates, two-year degrees and four-year degrees have very different requirements and knowing which is the right path is not always easy. That college pays off well on average, and that bachelor’s degrees pay off particularly well, doesn’t make that course right for everyone.”

I agree with the sentiment here – college is not right for everyone. And I stand by my assertion in earlier posts that we cannot agree to live in a world where all people absolutely need post-secondary education to contribute to the economy, have a sustainable job, and have a family. However, framing this argument by comparing the two, clearly favoring the 4-year degree and then encouraging people to still want the admittedly-inferior 2-year degree option, is counter-productive.

For-Profit Schools and Short-sighted students are to blame: The Tribune then claims that those few-and-far-between students who have accumulated more than $50,000 deserve our sympathy and concern… sort of. The article implies that the debt is not a problem in the system, but a problem with the short-sightedness of the student and the greediness of for-profit institutions.

” Look where you’re likely to find [students with more than $50,000 in debt]. In 2009, 30 percent of four-year college graduates who attended for-profit institutions had borrowed this much, but only 3 percent of graduates from public colleges and 8 percent from private nonprofit colleges had this much debt”

Though the article blames schools more than students,  it’s hard to miss the implication that the student could have (and should have) opted for an equally reputable school with a better financial aid set-up. This echoes an earlier point comparing the average student debt to a car loan. The Tribune then argues that, if students would take out comparable loans to buy a car without complaining about going into debt for it, why are we whining about similar numbers with regards to educational debt?

Car loans are not comparable to student loans. First of all, the Tribune fails to acknowledge that an 18 to 22 year old with sub-par or non-existent credit (i.e. – the majority of 18 to 22 year old’s), would never qualify for a $27,000 car loan. Young people don’t qualify for these kinds of loans because banks and car dealerships see the 18 to 22 year old’s as children with no concept of the harsh realities of the financial world. The banks and dealerships see these risk-indicators and reject the loan application because they recognize there is a strong chance the kid does not have the wherewithal to maintain fiscal responsibility for the loan.

Secondly, as The Atlantic so kindly pointed out recently, young people are not buying cars or other big-ticket items at all, largely because student loans have monopolized the modern student’s financial situation. And finally, of course, buying a car does not impact one’s lifelong economic potential the way a post-secondary degree does – so to suggest that each kind of debt should be treated with the same gravitas, is silly.

Somehow this article, and the whole Higher Education System doesn’t question whether it was unethical to take advantage of a bright-eyed kid with too few financial resources in the first place. In reality, the higher education system doles out huge debts to children and very young adults, without explaining the long-term consequences and obligations, without offering counseling and planning guides for how to handle the debt, and without providing comprehensive debt-repayment plans and career services, so that students can make good on their loans.

What about co-signors? Where are the parents? To answer the brewing counter argument – yes, I’m aware that parents often co-sign on both education and car loans. And if the parent comes from sound financial resources – then that parent probably has the wherewithal to explain credit, interest rates, debt, payment-plans, economics, and so forth. They can also probably help their child if s/he fails to make payments, for whatever reason. That is the purpose of a co-signer – to make sure the loan gets repaid even if the primary loan-holder can’t do it. If the parent is not financially sound, then there is a possibility that they are as uninformed as the child, and incapable of providing safety-net assistance if things go south after graduation.

Conclusions: So to recap, the Tribune used questionably verified information to demonstrate what an “average” family of four, making $130,000 annually would have to pay for a college education. We have assessed that income amount to be a skewed perception of the “average” student loan debt, and one which does not actually represent those students who struggle the most with educational debt. The people who are drowning in debt are disproportionately people from lower or middle socio-economic means which, also means that the student-debt crisis disproportionately effects minority students. And minority students do not make up the majority of college students. Do we see the circularity here?

The point is that, college is still the ticket to a high-paid job, and no one disputes that. But to suggest, as this article does, that there isn’t really a problem, that people are over-estimating student debt, and that, in fact, students are doing fine, is to completely marginalize all the people who have been duped by the higher education system and have taken on unsustainable debt, as they entered into a down-economy. Students and families are struggling because the system is broken – there is no reason that 4-year research institutions get more federal help than community colleges, and there’s no reason that tuition goes up as professor salaries and career prospects for graduates decline. Tweaking the facts and mis-representing the statistics does not make the educational debt situation any less of a national disaster.