For the majority of American college students, the soaring price of a degree requires sinking into debt. To increase transparency, all colleges should be required to release detailed and publicly accessible data about student debt.
According to a report released in November 2014 by the Institute for College Access and Success, 69 percent of students who graduated from private or public nonprofit colleges in 2013 did so with debt from student loans. The average borrower owed $28,400, a two percent increase from the year before. Regrettably for students in the granite state, New Hampshire topped the report’s list of “high-debt states,” with average student loan debt at a whopping $32,975 — right around the average price of a brand new car.
The situation was not always this bleak for incoming students. Consider the 1981 to 1982 school year, when many of the parents of current students went to college. According to the National Center for Education Statistics, a federal organization that collects and analyzes data on American education, the average yearly cost of tuition, room and board and various fees at a four-year institution was $9,554 in 2011 to 2012 dollars. A full-time summer job paying minimum wage — $3.35 per hour at the time, or about $8.61 in today’s dollars – could cover nearly half of a college student’s expenses for the year. If that student worked part-time for the rest of the year, she could pay the full price herself — without the need for loans, financial aid or family assistance.
In the 33 years since, the possibility of paying your way through college has become a pipe dream. The average cost of tuition and room and board has more than doubled while the minimum wage in inflation-corrected dollars has stagnated. Without a generous financial aid program or a family with the available funds and willingness to foot the bill, accumulating thousands of dollars of debt is the only option remaining for students seeking a four-year diploma.
According to an article by Cornell economist Ronald Ehrenberg, there are several independent pressures pushing college costs upward, including federal policies that reduce financial aid and shared governance between administrators and trustees that makes overspending easy. Ehrenberg also mentions the rankings rat race, in which many colleges fund just about anything to get ahead of their peers — even to the point of parody. At Texas Tech University, for instance, $8.4 million was blown on a water recreation complex.
This kind of arms race harms everyone. Students are lured into four years of school that many will spend decades of their life paying off. Colleges, by increasing expenditures rather than efficiency, lose sight of their primary purpose — to educate, not to serve as a glorified four-year resort for 20-year-olds.
A government mandate that requires colleges to publish hard numbers on student debt is one way of increasing awareness of loan debt among prospective students, and it may incentivize colleges to cut costs and improve aid. As the Institute for College Access and Success report notes, average debt varies widely across schools and states. If every university were to publish the average debt of students in each income bracket, affordable schools would become more visible and attractive, while the schools that saddle its students with a disproportionate amount of debt would likely be viewed as sharks rather than respectable institutions.
The pieces are already in place to carry this out. In 2013, President Barack Obama rolled out a college scorecard website that displays information on student borrowing rates. The data, however, is too crude to be useful. Look up Dartmouth’s scorecard, for instance, and all you will find about student debt is the median borrowing amount and the loan default rate. Of far greater use to prospective students would be a detailed breakdown of the relationship between loan debt and parental income.
Higher education is a high-stakes marketplace — the student buyers make a decision that will affect the rest of their lives. If they will be required to swap a sizeable slice of their future income to attend a school with a water park, they should know that going in, not 10 years down the road when debt collectors come knocking on their door.
