A few days ago, I wrote about the increasing tendency to rank colleges on the basis of alumni earnings, as if higher education is simply another venue for job training.
In the comments, people pointed out the importance of earning power, especially in light of the staggering expense of a college education.
Believe me, I get that.
Nothing I wrote was intended to justify the increasing costs of a university education and the resulting sky-high levels of student debt. Indeed, to the extent that we are pricing education out of the reach of many, we are sabotaging the educational mission I was defending.
Student debt is not only a huge problem for recent graduates; it is dragging down the economy. As Matt Impink and I wrote in an article for the Chronicle of Higher Education,
Student debt constrains individual decision-making in a number of ways, and its growth affects the entire economy. For example, people paying back student loans are less likely to start businesses. Considering that 60 percent of new private-sector jobs are created by small businesses, diminishing the ability to create businesses does considerable harm to the economy.
Debt loads also affect overall consumption. According to research by the Federal Reserve Bank of New York, fewer 30-year-olds in general have bought homes since the recession, but the decline has been steeper for people with a history of student-loan debt and has continued even as the housing market has recovered. In an economy that depends upon the ability and willingness of consumers to purchase homes, furniture, automobiles, and other goods, a debt load that effectively precludes such purchases poses a real problem.
The Consumer Financial Protection Bureau has found that three-quarters of the overall shortfall in household formation can be attributed to younger adults, ages 18 to 34. In 2011, 1.3 million more Americans in this age group lived with their parents than in 2007. Although it is impossible to determine the relative contribution of student-loan debt and the economic downturn to that phenomenon, student debt is clearly implicated. Any program that reduces the need to borrow can only improve the situation.
According to a report from Zillow, the relatively few millennials who are thriving economically are the ones whose parents are able to subsidize college tuition or a down payment on a home. Help with education and buying a home were the two primary ways in which the original GI Bill created upward social mobility. Estimates are that each new household leads to $145,000 of economic impact. If student debt is keeping just a third of those two million young Americans from living on their own — a reasonable, if undocumented, assumption — that adds up to a $100-billion loss or delay in economic activity.
Student debt is an enormous issue for the country. The Democratic presidential candidates have all addressed it; Senator Elizabeth Warren has proposed measures to ameliorate it.
If any of the Republican presidential candidates have paused their attacks on immigrants, reproductive choice and various kinds of “losers” in order to address student debt levels and their impact on either young people or the economy, I’ve missed it.