Effective Treatment for the Student Debt Crisis Requires an Accurate Diagnosis

Abstract

ADDRESSING THE STUDENT DEBT CRISISAs outstanding student debt has expanded rapidly-to more than $1.5 trillion in 2019-many observers have concluded that the student loan system is in crisis. Student loans are now the second largest category of household debt in the U.S., exceeded only by home loans. Since the federal government guarantees most of these loans, all American taxpayers have an interest in whether this expanding debt could ultimately place a direct burden on them. Furthermore, high student debt and defaults create a burden for student borrowers, lowering credit scores and making it more difficult to buy a house or achieve financial independence.If the expansion in student debt reflects a crisis in the student loan system, how should that crisis be addressed through policy? In this issue's Point/Counterpoint exchange, Sara Goldrick-Rab of Temple University and Marshall Steinbaum of the University of Utah argue that student debt is a symptom of the economic and administrative obstacles many students face in pursuing education beyond high school, and those obstacles have been amplified by recent reductions in state funding for higher education. The authors propose to reverse this trend in funding and make public higher education tuition-free, drastically reducing the need to rely on student debt to pursue higher education. In addition, they suggest that some outstanding student debt be written off by the government. In contrast, Adam Looney of The Brookings Institution and Constantine Yannelis of the University of Chicago prefer that policymakers focus on repairing the student loan system. They cite evidence that the current student debt crisis was caused by the rapid expansion in schools that offer little economic benefit to their graduates and the explosion in debt associated with these schools. This leads them to conclude that institutional accountability is critical to a stable student loan system. Hence, the government should restrict loan eligibility and loan amounts associated with attending any given school based on the outcomes of their students. ACKNOWLEDGMENTSI thank Kevin Kelly of Mathematica for his outstanding help in organizing the Point/ Counterpoint section.

Further resource multiplication at more advanced ages? Interactions between education, parental socioeconomic status, and age in their impacts upon health

“…However, the more direct effects of this interaction between respondent‐ and parental‐level education upon life circumstances, and thus perceptions of health issues and concerns, might be less strong, especially since the parental generation was marked by less strong connections between education and occupational prestige (see Goldrick‐Rab & Steinbaum, 2020; James, 2012). This might explain why in the prediction of excellent/good health, this positive interaction fell short of statistical significance.…”

“…This study does not address variability in the ages at which respondents' parents obtained their educations, came of age, and entered the workforce. Nonetheless, especially given the average respondent age of 50 years, the parents of this study's sample generally came of age in earlier times during which high levels of education were rarer (Hendricks & Schoellman, 2014) and less required for occupational prestige (Goldrick‐Rab & Steinbaum, 2020; James, 2012). Future scholarship should further consider the ages of respondents' parents.…”

“…These trends involved growing differences in academic ability between college graduates and non-college graduates, and greater economic returns to education (Hendricks & Schoellman, 2014). They further involved increasing labor market credentialization; stable workforce positions are now unlikely to be achieved without higher education training (Goldrick-Rab & Steinbaum, 2020). As the knowledge economy expanded, educational credentials were increasingly employed to measure workers' knowledge and skills, effectively transferrable from educational settings to the workforce (James, 2012).…”