Myths And Facts About The College Debt Crisis

As the nation's student loan debt burden continues to grow and voters look to 2016 presidential candidates for solutions, right-wing media continue to perpetuate debunked myths about college costs, financial aid, and student loans. Here are the facts that conservative media outlets ignore.

Fact: There Is No Established Connection Between Federal Aid And Rising Tuition

Fact: Experts Agree That Decreased State Spending Is The Major Driver In Rising Tuition

Fact: All Types Of Higher Education Programs Can Be Expensive And/Or Risky

Fact: Traditional Four-Year Degrees Continue To Offer Outsized Economic Benefits

Fact: College Choices And Outcomes Are Connected To Race, Ethnicity, And Gender

Fact: Most Students Have No Other Option But To Borrow For School

Fact: The Consequences Of Student Debt Are Felt Most Acutely By Small Borrowers, Non-Graduates, And Students Of Color

Fact: More Lenient Loan Standards Would Enable Bad Actors To Take Advantage Of Veterans And Low-Income Students

Fact: For-Profit Schools Are Significant Contributors To The Student Debt Burden

U.S. Student Loan Debt Is Now Approaching $1.2 Trillion

Wall Street Journal: Total Student Debt Has Tripled Since 2005, Now At $1.19 Trillion. The Wall Street Journal recently reported that the total national student loan burden has reached $1.19 trillion, according to the latest quarterly estimates by the Federal Reserve Bank of New York (FRBNY). The quarterly report also found that almost 7 million Americans have defaulted on student loan repayment, meaning they haven't made a payment toward their outstanding debt in one year. The article highlighted the complicated economic role of student debt:

The latest figures highlight how student debt--which has tripled over the past decade to $1.19 trillion, according to the Federal Reserve Bank of New York--has quickly become a crushing burden for more Americans.


Those in default owe relatively little--a median $8,900, according to the Education Department. Other figures show that borrowers who attended for-profit schools--who are disproportionately minorities--account for a disproportionate share of defaults. Many borrowers in default dropped out of school, leaving them with debt not the degree that typically boosts incomes.

Conversely, student debt has helped other households earn bachelor's and advanced degrees, boosting their lifetime incomes and quality of life. [Wall Street Journal, 8/21/15]

Nearly 7 Out Of 10 New Graduates Have Student Loan Debt. The most recent data from The Institute for College Access and Success' Project on Student Debt showed that 69 percent of students graduating from public and private nonprofit colleges in 2013 had student loans. The average debt for these borrowers was $28,400, with graduates from six states having an average of over $30,000 in debt. [The Institute for College Access and Success, November 2014, 11/13/14]

New York Fed: In 2012, Student Loan Debt Surpassed Credit Card Debt. In 2013, research from the FRBNY found that student loan debt had “eclipsed both auto loans and credit cards, making student loan debt the largest form of consumer debt outside of mortgages.” The FRBNY also noted that student debt was “the only form of consumer debt that has grown since the peak of consumer debt in 2008.” [Federal Reserve Bank of New York, 3/29/13]

CNBC: Growing Student Debt Threatens “The Core of America's Very Might.” Almost a year after the nation's student debt burden hit an all-time high of $1.2 trillion, CNBC reported on the widespread impact of growing student debt on family formation, entrepreneurship, and career pathways (emphasis added):

Mounting student loan debt is ricocheting through the United States, now affecting institutions and economic patterns that have been at the core of America's very might.

Men and women laboring under student debt “are postponing marriage, childbearing and home purchases, and... pretty evidently limiting the percentage of young people who start a business or try to do something entrepreneurial,” said Mitch Daniels, president of Purdue University and the former Republican governor of Indiana. “Every citizen and taxpayer should be concerned about it.”

The high levels of student debt are also serving to perpetuate and even worsen economic inequality, undercutting the opportunity and social mobility that higher education has long promised. Americans almost universally believe that a college degree is the key to success and getting ahead--and the data shows that, generally speaking, college graduates still fare far better financially than those with just a high school diploma. [CNBC, 6/15/15]

Wall Street Journal: Skyrocketing Student Debt Is A Recent Phenomenon. In a recent article on the state of student debt for the graduating class of 2015, the Wall Street Journal reported that rates of student loan debt have grown exponentially in recent years (emphasis added):

The average class of 2015 graduate with student-loan debt will have to pay back a little more than $35,000, according to an analysis of government data by Mark Kantrowitz, publisher at Edvisors, a group of websites about planning and paying for college. Even adjusted for inflation, that's still more than twice the amount borrowers had to pay back two decades earlier.

Not only is average debt rising, but more students are taking out loans to finance secondary education. Almost 71% of bachelor's degree recipients will graduate with a student loan, compared with less than half two decades ago and about 64% 10 years ago.


All together, total education debt-including federal and private education loans-will tally nearly $68 billion this year for graduates with a bachelor's degree and their parents, Mr. Kantrowitz estimates, a more than 10-fold increase since 1994. [Wall Street Journal, 5/8/15]

Myth: Increasing Federal Student Aid Is The Major Cause Of Tuition Hikes

Fox's Charles Payne: Tuition Will Rise Because Of “More Free Money That's Coming From Someone Else.” On the August 18 edition of Fox News' Your World With Neil Cavuto, guest host Charles Payne attacked Democratic presidential candidate Hillary Clinton's newly-unveiled college affordability plan, arguing that an increase in federal aid would lead to tuition hikes and claiming “we know that this is not going to work”:

CHARLES PAYNE: Beyond the fact that thinking that you're going to tax one area of the economy and it won't have repercussions, and ripple through, and hurt jobs and opportunities -- which is nuts -- this also is a problem because tuition is only going to go up, because you're talking about more free money that's coming from someone else.

JESSICA EHRLICH: I mean, I don't see how there's a correlation between sort of the free money and the tuition going up -- I mean there -- [cross-talk]

PAYNE: You're telling me that -- [cross-talk]

EHRLICH: There's an issue of supply and demand -- [cross-talk]

PAYNE: If it's free -- If it's free, there'll be a lot of demand! If it's free, there'll be a lot of demand. If it's free, if I'm some kid and somebody I've never met, you're going to force them to pay for me to go to college?

EHRLICH: It's not free. But it's not free.

PAYNE: It's going to be free to me, the student! The kid --

EHRLICH: It's not free to the student. No. Hillary's plan does not give away free college. [Media Matters for America, 8/8/15]

NRO Editorial Board: Conservatives Know “Iron Law” That Aid Leads To Higher Prices. The editors of the National Review Online responded to the release of Hillary Clinton's college plan in August by doubling down on the argument that an increase in federal aid would lead directly to an increase in the overall price of college attendance, citing one study from the New York Fed (emphasis added):

A study released in July by the Federal Reserve Bank of New York was only the latest piece of evidence of what conservatives have long knew [sic]: Increasing public support for college tuition, especially in the form of federal tuition subsidies, has inflated its total cost. The obscene total cost of college education is far from the only reason why Americans do not graduate from college, but it is one of them.

Yet Hillary's plan is almost entirely silent on controlling total costs, and, by increasing the supply of low-cost loans, the level of funding from state governments, and increasing other subsidies, proposes to lower out-of-pocket costs in the way that we've already seen will backfire.

There are half-hearted proposals in here to help mitigate the iron law of what subsidies do to prices, and most of them are bad... Schools need to be held accountable for their performance, but spending more federal dollars on higher education and trying to micromanage the results from Washington risks bringing us the same pricey, mediocre results we have from our K-12 system. [National Review Online, 8/11/15]

Fact: There Is No Established Connection Between Federal Aid And Rising Tuition

National Association Of Independent Colleges And Universities' David Warren: “Not A Shred Of Empirical Evidence” That Student Aid Has Led To Higher College Costs. David Warren, president of the National Association of Independent Colleges and Universities, wrote in the Washington Post's Answer Sheet blog that there was no merit to the idea that student aid has made higher education less affordable -- a theory known as the “Bennett Hypothesis” -- citing three recent government studies that found no connection between the two:

The re-emergence of the so-called Bennett hypothesis in policy discussions, media coverage, and federal appropriations threatens to make a bad situation worse. According to the hypothesis, named after former Education Secretary William Bennett, who promoted the notion in the 1980s, student aid has allegedly given colleges and universities “license” to increase tuition, meaning that federal student aid has not made higher education more accessible or more affordable.

There is not a shred of empirical evidence of a causal relationship between federal student aid and tuition increases at public and private nonprofit institutions, including institutions with high published prices and large endowments. [Washington Post, 6/1/12]

American Council On Education: Relationship Between Federal Aid And Increased Tuition Is “Ambiguous At Best.” The American Council on Education, the country's largest higher education association, conducted an extensive literature review of studies testing the so-called Bennett Hypothesis and found a limited and inconclusive body of research. The report noted that several prominent studies used the same data and similar methodologies, yet came to different conclusions about the validity of Bennett's theory. The review also highlighted studies that, instead, found a strong connection between decreased state aid levels and tuition increases at public universities. The report concluded:

[T]he best way to characterize the studies that have attempted to measure the veracity of the Bennett Hypothesis is that the findings are ambiguous. Some studies find a relationship between Pell grants and tuition increases; others do not. Some find a relationship in some college sectors but not others, and other studies find exactly the opposite result.

In all of these studies, there are major limitations that restrict our ability to draw hard-and-fast conclusions regarding the Bennett Hypothesis. [American Council on Education, April 2013]

Vox: “No One Has Found A Direct Relationship Between Increases In Grant Spending And Increased Tuition.” Following the release of new research from the FBRNY that seemed to support the Bennett hypothesis, Vox's Libby Nelson outlined the conflicting body of research on relationships between federal aid and college costs. Nelson concluded (emphasis added):

The relationships that researchers have found between federal financial aid and tuition are either complex or downright contradictory. No one has found a direct relationship between increases in grant spending and increased tuition at all types of colleges. And researchers, including those behind this new study, have generally found only evidence of correlation, not causation. [, 8/12/15]

Slate: Eliminating Federal Loans Is “Not Such A Hot Idea.” Reporting on July's FBRNY study, Slate's senior business reporter Jordan Weissmann noted that the Bennett Hypothesis literature remains inconsistent. He also argued that if the hypothesis were true, eliminating the federal student loan program would not help make college more affordable or accessible (emphasis added):

What about nixing the federal student loan program entirely, or at least limiting it a bit? That also might not be such a hot idea. First, it's important to realize that even if federal aid leads to somewhat higher prices at Lavish Private U With Lax Academic Standards--or State U for that matter--in the end it still probably increases access to education. Without Washington's help, some students wouldn't be able to borrow whatsoever, or would be forced to pay far higher interest for private loans, which could keep them from attending college at all.

It's also not exactly clear what getting Washington out of the education loan business would accomplish, since the move wouldn't kill off student lending so much as abandon it to the private sector. Some would argue that's a good thing, because unlike the federal government, which will lend to anybody, banks have underwriting standards, which theoretically keep them from extending credit to students who are unlikely to be able to pay it back. But those standards have sometimes proved to be pretty loose in the past, and frankly, risky, lower-income students aren't the sort of undergrads whose infinite willingness to shell out for the school of their dreams is helping drive up tuition. [, 9/8/15]

Myth: Administrative Bloat Is Responsible For A Rise In Public Education Costs

Fox's Stephen Moore: “Fundamental Problem” Is Lack Of College Spending Accountability. In a recent opinion piece for, Stephen Moore argued that both the Bennett Hypothesis and unchecked university spending were to blame for tuition increases, claiming that schools were wasting money and did not have accountability:

The fundamental problem is that most universities are charging about double what they should. No one wants to look under the hood of the Ivory Towers and find out where money is being wasted. It's called accountability and that is what is lacking at most universities. If state schools are getting a bigger wad of cash from the federal government through the states, their costs and extravagancies will rise, not fall. [, 8/11/15]

Fox's Charles Payne: College Debt Plans Must “Put Pressure On Colleges With These Sprawling Campuses.” On the August 10 edition of Fox News' The Real Story with Gretchen Carlson, Fox Business host Charles Payne argued that Democratic college affordability plans fail to “address colleges” with “amazing facilities” (emphasis added):

PAYNE: It's a hell of a voting bloc! I mean that's essentially what this is, right? Buying votes. But, you think about what's happened with student loans, and student tuition, particularly since President Obama has come into office. He kicked out the middle men, so bankers that might take a responsible approach to lending money for something that won't have a return-- like majoring in basket weaving -- instead it's, 'Go to school. It's sort of a right. Wink wink, we'll get rid of the debt somewhere.'

There are already a couple of programs in place. One has already taken 39 billion dollars from student loans and put it on the back of taxpayers. Which by the way, 850 of the 1.2 trillion dollars we're responsible for already. And the notion that somehow a wealthy person should pay someone else's kid's college tuition? It's scary stuff. It smacks of that kind of socialistic thinking that's backward. But -- and the cost curve doesn't go down, it goes up.

Your coll- We don't address colleges. Never put pressure on colleges with these sprawling campuses, and this great dining, and all of these amazing facilities and tenure and all of these things that cost so much money. There's never pressure on them because they're one of the favored political classes, so they keep hiking tuition no matter what, for studies, by the way, that people can never really make the money back on. [Fox News, The Real Story with Gretchen Carlson, 8/10/15]

Fact: Experts Agree That Decreased State Spending Is The Major Driver In Rising Tuition

CNBC: Spending On Amenities And Sports Is “The Exception, Not The Rule.” In a recent in-depth exploration of college costs and student debt, CNBC wrote that big-ticket college budget items like sports facilities or administrative salaries garner outsized attention for their relatively small contributions to tuition inflation:

Among the most selective schools, amenities have become an important part of the race for the best and brightest, and well-off, applicants, according to Robert Kelchen, a professor at Seton Hall University's Department of Education


Over the decade from 2001-2011, the share of expenses devoted to “student services” rose from 17 percent of the average school's budget to 20 percent, according to a comprehensive review of college-spending patterns by the Delta Cost Project at American Institutes for Research. The research covered decades of data from thousands of American public and private colleges and universities.


“At many colleges, it's a significant cost,” said Kelchen. “The biggest subsidies are at these small Division I programs that are trying to make their way up the ladder and get into the big time.”

Still, though pricey amenities and big-budget sports programs get a lot of attention, they're the exception, not the rule among universities, say higher education experts.


“Overall, the aggregate level that institutions are spending on teaching and student-related services has been pretty much stable for the past 15 to 20 years, adjusted for inflation” said Franke, of the University of Massachusetts in Boston.

So if the cost of providing an education has remained fairly stable, why does the price students pay keep rising?

The reason, say researchers, is that deep budget cuts in state funding for public higher education and shrinking subsidies at private schools have pushed a greater share of the cost onto students and their families. [CNBC, 6/16/15]

Demos: “The Real Culprit: Cuts In State Support.” After exploring other theories for rising tuition (including the Bennett Hypothesis, which the report labeled as “false,” and school misspending), recent research from Demos identified cuts in state funding as the “real culprit” for tuition hikes at four-year public universities. The report found that (emphasis added):

[D]eclining state support is responsible for 79 percent of increased tuition at research institutions and 78 percent at master's and bachelor's universities. Increases in instruction costs (largely due to increases in health insurance premiums) are responsible for 9 percent and 11 percent, respectively, of tuition increases at the two types of institutions, and increased spending on administrative and support functions, some of which is also due to rising health care premiums, accounts for the remaining 6 and 5 percent. Finally, rising spending on campus construction accounts for 6 percent of increased tuition at each institutional category. [Demos, 5/5/15]

Center For American Progress: State Cuts Led To Public College Tuition Hikes And “Unduly Burdened” Families. A 2014 report and issue brief from the Center for American Progress detailed the significant cuts in state higher education spending in the wake of the economic recession, and connected these cuts to corresponding hikes in tuition costs at public colleges. The report also found that low-income and middle-income families were most affected by the rising tuition costs:

The report found that in response to the fiscal crisis, the majority of state governments charted a budgetary course that reduced direct support to public colleges and universities, which, not surprisingly, coincided with the increasing unaffordability of these institutions. To make up for the funding cuts, public colleges increased their reliance on tuition revenue, which unduly burdened low- and moderate-income families. Those students and families living in states with the greatest disinvestment in public colleges and universities paid the highest net price for a postsecondary education relative to students in the same income groups in states where funding cuts were not as deep. [Center for American Progress, 12/3/14, October 2014]

Center On Budget And Policy Priorities: 47 States Are Still Spending Less Per Student Than Before The Recession. A recent study from the nonpartisan Center on Budget and Policy Priorities found that state spending on higher education nationwide is still 20 percent lower than pre-recession levels, and that 47 states continue to fund public higher education at a per-student rate lower than in the 2007-2008 academic year. The report also noted that 37 states increased their higher education funding in 2014-2015 an average of 4 percent, though 13 states saw further decreases. [Center on Budget and Policy Priorities, 5/13/15]

Public Universities Are Investing In Education Spending Even With State Cuts. An independent report for the Association of Public & Land-grant Universities (APLU) concluded that four-year public universities spent more per student on education expenses, in spite of state cuts, in the years following the recession than they had before. The analysis found that schools raised tuition rates to partially offset cuts to state and local funding, but did not fully rely on tuition hikes to make up the difference. Inside Higher Ed reported that the study's results represented a larger trend in which state disinvestment squeezes schools to raise tuition rates and cut non-educational spending:

Public institutions are now more reliant on tuition dollars than on state funding, a trend that's been noted by several recent studies. Advocates of public higher education, including APLU, have been encouraging states to increase their public funding, with increasing urgency.

In 2007, state and local funding accounted for 27 percent of revenue at the surveyed institutions. In 2013 it accounted for 23 percent. And tuition dollars that year made up 30 percent of colleges' revenue, up from 21 percent in 2007.

Peter McPherson, APLU's president, said it's “unsustainable” for students to bear the brunt of state divestment.

“Despite steep state budget cuts, universities have devoted more educational resources per student and are choosing to make cuts elsewhere,” he said in a statement. “States need to restore funding for public universities instead of viewing students and their families as alternative funding streams that can make their budgets look whole.” [Association of Public & Land-grant Universities, August 2015, Inside Higher Ed, 8/27/15]

Myth: Students Could Just Choose Less Expensive Programs And Avoid Borrowing For “Scam” College Degrees

Fox Guest: Families Need To Sit Down And Decide Which Schools They Can Afford. In a segment discussing President Obama's recent college policy measures on the September 14 edition of Fox's Your World with Neil Cavuto, guest and conservative blogger Crystal Wright argued that students and their parents had to decide which schools were affordable to attend, adding that not everyone can “go to Harvard or Yale” and advocating for students to consider vocational programs rather than four-year colleges. [Fox News, Your World With Neil Cavuto, 9/14/15]

The Federalist's Joy Pullmann: “Decent And Responsible People” Will “Opt Out Of The College Rat Race.” Conservative researcher and The Federalist managing editor Joy Pullmann argued in a July opinion piece that families ought to avoid “sex-soaked leftist indoctrination” at “scam” colleges, writing that there are only “about a dozen” colleges or universities worth the tuition price (original emphasis):

Of course, many decent and responsible people are deciding to opt out of the college rat race before they enter it, rather than after they've received an anti-education. They know what's really going on here.


Further, arguments from politicians and business types wanting taxpayers to shoulder their costs for on-the-job-training about how the future needs a more highly skilled workforce are bunk. Say we do need a more highly skilled workforce. The evidence, as noted above, is rather overwhelming that America's higher-education system is producing less-competent graduates than before. To get more highly skilled workers, if that's what we need, the data indicates fewer people should attend traditional college.


Young people need an escape valve. We need more paths into adulthood than a one-way sentence to a four-year college worthy of the name that offers academic work only a fifth, at most, of the population finds stimulating. We need more opportunities for young people to simply work their way up a career ladder, like Thomas Edison or Andrew Carnegie had. This means eliminating age minimums for holding paid jobs, and abolishing (or, for heaven's sake, at least reducing) the minimum wage. It means requiring government to stop picking career-entry winners and losers by getting it out of the accreditation business, and letting independent entities accredit alternatives to four-year college, such as apprenticeship and certification programs. It means cutting taxes and regulations on businesses of all sizes, so they can afford to hire someone whose work isn't worth much until they're trained three months later. It means colleges and employers communicating to young people that they value work experience at starter jobs just as much as they do the often namby-pamby volunteer work kids pile into resumes. [The Federalist, 7/13/15]

Fact: All Types Of Higher Education Programs Can Be Expensive And/Or Risky

The College Board: Tuition Prices Have Steadily Risen For All Types Of Schools For The Last Several Decades. The most recent college pricing data from the College Board showed that the published, or “sticker,” price across all types of institutions has risen steadily and significantly for several decades. At the same time, net prices -- what students actually pay -- vary much more widely by type and location of institution, and individual student. According to this research:

Over the 30 years from 1984-85 to 2014-15, average published tuition and fees at private four-year institutions rose by 146%, from $12,716 (in 2014 dollars) to $31,231. The average published price at public two-year colleges rose by 150%, from $1,337 to $3,347, and the increase for in-state students at public four-year institutions was 225%, from $2,810 to $9,139. [College Board, 2014]

Wash. Post: Actual Costs To Attend Non-Traditional And For-Profit Programs Are Often Higher. In response to a recent Brookings Institution study on student loan default rates, Washington Post Wonkblog reporters Jim Tankersley and Danielle Douglas-Gabriel explained that due to the complicated system of federal aid and lending at for-profit schools and the backgrounds of for-profit students, these programs are often more expensive and riskier for the average student (emphasis added):

While the rising cost of college has led to increased borrowing across the board, the financial dynamics at for-profit schools places added pressure on their students. Few for-profit colleges offer scholarships and grants to cover tuition and fees, which according to the College Board costs an average $15,230 a year for full-time students.

As the authors note, students who attend for-profit colleges are typically from low-income households without the financial means to pay for school. About 73 percent of full-time students at for-profit colleges use Pell Grants, a federal program that provides money to the country's neediest college students, according to the Education Department. That compares to 37 percent of students at private universities and 45 percent of students at public universities.

At most, federal grants cover a third of the cost of college, forcing students who can't pay out of pocket to borrow money to cover the balance. Because the federal government will only allow undergraduates to borrow up to $31,000 in total ($57,500 for older independent borrowers) students at for-profit schools often turn to banks and other financial firms for loans. Some for-profit schools even peddle in-house private loans that have run afoul of the government for the predatory terms. [Washington Post, 9/10/15]

White House College Scorecard Data: Many Types Of Degrees Fail To Offer Financial Security For Students. On September 12, the White House released a consumer tool known as the “College Scorecard” -- a searchable database with information on the earnings and loan default rates of undergraduate students who received federal financial aid to attend a wide range of schools. Analyses of the data revealed that large numbers of graduates at select institutions -- from private 4-year schools to certification programs -- reported lower or insignificantly different incomes than their peers who only had a high-school diploma. Kevin Carey at the New York Times Upshot reported:

Although earnings of college graduates continue to outpace those of non-collegians by a significant margin, at some institutions, the earnings of students 10 years after enrollment are bleak.

The Department of Education calculated the percentage of students at each college who earned more than $25,000 per year, which is about what high school graduates earn. At hundreds of colleges, less than half of students met this threshold 10 years after enrolling. The list includes a raft of barber academies, cosmetology schools and for-profit colleges that often leave students with few job prospects and mountains of debt.

But some more well-known institutions weren't far behind. [New York Times, 9/13/15]

Fact: Traditional Four-Year Degrees Continue To Offer Outsized Economic Benefits

New York Times: “A Four-Year Degree Has Probably Never Been More Valuable.” The New York Times' David Leonhardt reported the results of a 2014 analysis from the Economic Policy Institute on the worth of a four-year college degree:

Yes, college is worth it, and it's not even close. For all the struggles that many young college graduates face, a four-year degree has probably never been more valuable.

The pay gap between college graduates and everyone else reached a record high last year, according to the new data, which is based on an analysis of Labor Department statistics by the Economic Policy Institute in Washington. Americans with four-year college degrees made 98 percent more an hour on average in 2013 than people without a degree. That's up from 89 percent five years earlier, 85 percent a decade earlier and 64 percent in the early 1980s. [New York Times, 5/27/14]

Georgetown Center On Education And The Workforce: A Bachelor's Degree Is Worth $2.8 Million Over A Lifetime. Researchers at the Georgetown University Center on Education and the Workforce (CEW) found that bachelor's degree attainment remained a significant boon in labor market participation. Their data showed that, on average, individuals with a bachelor's degree earned 84 percent more than those with only a high school diploma over the course of their lifetime - the equivalent of about $2.8 million. Bachelor's degree holders also earned, on average, 31 percent more than associate's degree holders. The report concluded:

No matter how you cut it, more education pays. The data presented here show that there is a sizeable economic return to going to college and earning at least a two- or four-year degree. The 33 percent of Bachelor's degree holders that continue on to graduate and professional schools have even more prosperous futures ahead. Moreover, the difference in earnings between those who go to college and those who don't is growing -- meaning that postsecondary education is more important than ever. [Georgetown Center on Education and the Workforce, 2011]

New York Fed: College Degrees Still “Easily Surpass” The Mark For “A Sound Investment.” A 2014 analysis from researchers at the Federal Reserve Bank of New York found that “the economic returns” of both bachelor's and associate's degrees continue to “outweigh the cost.” They also traced the steadily higher average earnings of bachelor's degree holders over associate's degree holders and those with a high school diploma:

In the period between 1970 and 2013 as a whole, those with a bachelor's degree earned about $64,500 per year and those with an associate's degree earned about $50,000 per year, while those with a high school diploma earned only $41,000 per year. Thus, over the past four decades, those with a bachelor's degree have tended to earn 56 percent more than high school graduates while those with an associate's degree have tended to earn 21 percent more than high school graduates. [Federal Reserve Bank of New York, 6/24/14, 2014]

Fact: College Choices And Outcomes Are Connected To Race, Ethnicity, And Gender

Georgetown University Center On Education And The Workforce: Higher Education Remains “Separate And Unequal” Among Racial Groups. A 2013 report from Georgetown's CEW found that the types of institutions students chose for college enrollment were starkly divided by race, perpetuating white privilege through education outcomes. In an analysis of enrollment trends at 4,400 postsecondary institutions, researchers determined that white students disproportionately attended selective colleges and black and Hispanic students disproportionately attended open-access and community colleges, leading to racial discrepancies in graduation rates and access to resources. The report summarized:

Between 1995 and 2009, 82 percent of new white freshman enrollments were at the 468 most selective four-year colleges, compared to 13 percent for Hispanics and 9 percent for African Americans; 68 percent of new African-American freshman enrollments and 72 percent of new Hispanic freshman enrollments were at open-access two- and four-year colleges, compared to no growth for whites.


These racially polarized separate pathways exist, even among highly qualified students: Among “A” students, African Americans and Hispanics are more likely to enroll in community colleges than similarly qualified white students. [Georgetown Center on Education and the Workforce, 7/31/13, 7/31/13]

Center For Economic And Policy Research: For Black Graduates, “A College Degree Is No Guarantee.” A 2014 report from the Center for Economic and Policy Research found that the long-recognized earnings gap between black college graduates and their peers had further widened since the recession, and that many black college graduates who were employed were not using their degrees directly. ThinkProgress reporter Bruce Covert summarized the findings and connected the report's conclusions to the persistent economic disadvantages of black women:

But black college graduates don't just have to deal with higher unemployment rates. Those who manage to get a job aren't necessarily getting to put their degrees to use. A third of all college graduates were working low-paying jobs that don't typically require a four-year degree between 2003 and 2013, compared to 40 percent of black college graduates. Recent grads fared even worse: 44 percent of recent graduates ended up in these jobs, but for black ones, the rate has averaged about 50 percent since 2003, and in 2013, it shot up 10 percentage points to 55.9 percent. That means more than half of black people who graduated from college in recent years were in jobs that didn't use their degrees.


Black women have been particularly dogged in recent years in graduating college: they made up two-thirds of all black students who finished a Bachelor's Degree in 2010 and 71 percent with a Master's. But they still struggle in other ways: when they're working full-time, year-round, they make 64 percent of what white men make and less than both white women and black men. [Think Progress, 5/20/14]

St. Louis Fed: Even With A College Degree, Black And Hispanic Graduates Have Less Economic Security. Recent research from the Federal Reserve Bank of St. Louis called into question the common assumption that college degrees lead to some level of economic stability for all graduates, finding that black and Hispanic college graduates are not guaranteed the same protections as their counterparts simply by having a degree - partly because of outsized household debt burdens. The New York Times wrote of the study's findings (emphasis added):

A college degree has long been recognized as a great equalizer, a path for minorities to help bridge the economic chasm that separates them from whites. But the report, scheduled to be released on Monday, raises troubling questions about the ability of a college education to narrow the racial and ethnic wealth gap.

“Higher education alone cannot level the playing field,” the report concludes.

Economists emphasize that college-educated blacks and Hispanics over all earn significantly more and are in a better position to accumulate wealth than blacks and Hispanics who do not get degrees... But while these college grads had more assets, they suffered disproportionately during periods of financial trouble. [New York Times, 8/16/15, Federal Reserve Board of St. Louis, August 2015]

Fact: Most Students Have No Other Option But To Borrow For School

Pew Research Center: Affluent Families Borrowing Rate Has Rapidly Increased. The Pew Research Center studied a recent analysis of government data and found that it showed "[t]he growth in student debt among dependent college graduates has been particularly pronounced among middle- and high-income families." Though the report noted the trend, it did not attempt to prove any particular theory for the increase (such as a financial squeeze). However, it did offer several theories which include overall decreases in household wealth brought on by the recession and dwindling availability of alternative resources such as home equity to borrow against. [Pew Research Center, 10/7/14]

Demos: Low-Income Students With Federal Aid Still Borrow More Than Their Peers. A 2015 report from Demos exploring associations between student debt and demographics found that Pell Grant recipients -- the lowest income students qualifying for federal aid -- still borrow money for college and are more likely to graduate with debt than their peers who don't qualify for Pell. This disparity was most pronounced at cheaper public institutions. Demos also noted that:

Additionally, despite the fact that the maximum Pell Grant often covers tuition and fees for associate's degree programs at public schools, well over half (55%) of associate's degree recipients who received Pell Grants graduated with debt. Pell recipients took on an average of over $14,500, nearly $2,000 more than those who never received the grant. [Demos, 5/19/15]

U. Of Wisconsin: Black Students Are Forced To Borrow In Higher Numbers. In research conducted for the University of Wisconsin's HOPE Lab, prominent higher education scholars Sara Goldrick-Rab, Robert Kelchen, and Jason Houle concluded that black students experienced a disproportionate need to borrow in order to pay for college, stemming largely from disparities in family wealth. They also argued that efforts to limit borrowing would therefore limit educational opportunities for black students. The researchers summarized (emphasis added):

There is a substantial racial disparity in families' need to borrow for college, such that black students depend much more heavily on access to loans than white families, and leave college with a great deal more in student loan debt than their white counterparts. Research indicates that family wealth has powerful impacts on college opportunities, exhibiting effects even stronger than those played by family income. Moreover, racial disparities in wealth are large, growing, and unlikely to disappear anytime soon. Black students--whose families disproportionately do not own homes or retirement accounts and who cannot rely on intergenerational transfers for support--are far more likely to borrow not only federal subsidized and unsubsidized loans, but also have fewer alternative sources of credit beyond Parent PLUS loans. Indeed, our analyses indicate that differences in parental net worth and home ownership explain a substantial portion of the black-white gap in student loan debt among young adults. [University of Wisconsin, 9/2/14]

Fact: The Consequences Of Student Debt Are Felt Most Acutely By Small Borrowers, Non-Graduates, And Students Of Color

Demos: The Current Student Borrowing System Is “Deeply Biased Along Class And Racial Lines.” A recent comprehensive report from Demos found that the current debt-financed system of higher education in the United States has reinforced existing racial and class divisions. Their findings include evidence that black and Hispanic students generally have more debt than their peers -- regardless of the type of degree or institution -- and that their outsized debt burden affects rates of college attainment and eventual financial wellness. The researchers wrote:

In an America where Black and Latino households have just a fraction of the wealth of white households, where communities of color have for decades been shut out of traditional ladders of economic opportunity, a system based entirely on acquiring debt to get ahead may have very different impacts on some communities over others...

Our debt-financed system not only results in higher loan balances for low-income, Black and Latino students, but also results in high numbers of low-income students and students of color dropping out without receiving a credential. In addition, our debt-based system may be fundamentally impacting the post-college lives of those who are forced to take on debt to attend and complete college.[Demos, 5/19/15]

Urban Institute: Black And Hispanic Individuals Are Twice As Likely To Have Student Debt. In a 2013 report on the demographics of student loan borrowers, researchers at the Urban Institute found that black and Hispanic individuals were about twice as likely to have student debt as their white peers. According to the study's data set, 16 percent of white participants had student loan debt, while 34 percent of black participants and 28 percent of Hispanic participants reported debt. [The Urban Institute, June 2013]

Center For American Progress: “Small Debt Burdens” “Look Much Worse” When Attainment Plays A Role. In a recent analysis, Ben Miller at the Center for American Progress argued that the true economic concern around student loan debt must factor in the role of degree attainment. Small amounts owed by dropouts who struggle to repay are more economically troubling, he wrote, than a larger debt burden that has led to degree completion:

The link between debt and educational attainment is too frequently missing from national discussions on student loans. While it is easy to bemoan high levels of student debt and big numbers--such as the more than $1 trillion that Americans currently owe--not all loans are inherently bad. The major issue is whether students who borrowed completed their education. Data bear out this assertion. Borrowers who earn a degree are much less likely to default on their loans than those who do not, and dropouts represent an estimated 60 percent of all people who default on their loans.

In other words, it is far better to be a bachelor's degree graduate with $28,400 in loans--the national average in 2013--than a dropout who owes $10,000. Similarly, from a state perspective, high levels of indebtedness may not be as problematic if they are due to a lot of students earning degrees. [Center for American Progress, 6/26/15]

Myth: Lifting Education Consumer Protections Would Lower Costs

Fox & Friends Agree With Marco Rubio That “Competition Could Drive Those Prices Right Down.” On the August 10 edition of Fox News' Fox & Friends, host Elisabeth Hasselbeck agreed with Sen. Marco Rubio (R-FL) as he touted the loosening of accreditation standards to “allow for competition” with online education, claiming that relaxing standards would lead to “competition” and drive down college costs. [Fox News, Fox & Friends, 8/10/15]

Forbes Contributor: “Outlaw Accreditation, Or, Better Yet, Make It Voluntary.” Richard Vedder, a conservative education policy researcher, claimed in a June opinion piece for Forbes that the current accreditation system is “closer to a consumer extortion instrument” than “a consumer protection device.” Vedder argued beyond the bipartisan notion that accreditation ought to be re-examined, instead suggesting that “we need to radically rethink how and even why we accredit schools.” [Forbes, 6/19/15]

Fact: More Lenient Loan Standards Would Enable Bad Actors To Take Advantage Of Veterans And Low-Income Students

Slate's Jordan Weissmann: Simply Relaxing Accreditation Guidelines “Could Make A Troubled Situation Worse.” In response to several Republican proposals for relaxing standards for accreditation, Slate's Jordan Weissmann wrote that some accreditors were already failing to hold schools accountable, and further easing standards rules without making other changes would exacerbate the issue (emphasis original):

Where the accreditors truly drop the ball right now is in quality control. The entire point of requiring schools to be accredited before they can become eligible for federal aid is to make sure students don't take out loans for a worthless education while burning taxpayer money in the bargain. As the rise of unscrupulous for-profit colleges demonstrates, the accreditors have basically abdicated that responsibility. Adding yet more accreditors into the mix, and making more programs eligible to profit off of loan dollars--without making it easier to kick schools out--would only worsen our problems with predatory colleges.


Any conversation about fixing our broken accreditation system needs to think about both sides of the equation: making room for new ideas and pushing out bad ones. Right now, the majority of politicians are focused mostly on the first half, which should worry us all. You can talk about smashing the cartel all you want. But I'm not sure anybody would be happy with what might take its place. [Slate, 8/6/14]

Center For American Progress: Accreditor Has Allowed Expansion Of Fraudulent For-Profit Schools. A recent research brief from the Center of American Progress traced the influence of the controversial national accrediting agency, the Accrediting Council for Independent Colleges and Schools (ACICS), an independent nonprofit contracted by the Department of Education to evaluate schools for quality and eligibility for federal funding. ACICS was the agency overseeing the ongoing accreditation of now-defunct Corinthian Colleges, a network of for-profit schools currently facing legal action for allegedly defrauding students. CAP's analysis suggested a larger issue with lax accreditation beyond ACICS, as well. In the brief, CAP's Ben Miller wrote:

Although ACICS has received--and should continue to receive--scrutiny for its oversight of Corinthian, a new Center for American Progress analysis suggests that concerns about the accreditor's role in ensuring college quality extend beyond this one educational provider. According to the analysis, one out of every five borrowers at an ACICS-accredited college defaults on his or her loans within three years of entering repayment--a mark that is 50 percent higher than the national average. Such high default numbers are particularly troubling because students at ACICS-accredited colleges take out student loans at higher rates and in greater amounts than those at colleges accredited by other agencies.

While ACICS' performance is worse than that of its peers that provide similar gatekeeping functions, CAP's analysis suggests that problems with ACICS are emblematic of larger structural flaws that exist in this national accreditation space, which is mostly focused on career education. This is not an arcane policy matter. As the gatekeepers to federal student aid, accreditors' lax approval standards can open the door to mass fraud that undermines confidence in loan programs and the broader postsecondary education system. The role of accreditation and quality assurance is also likely to be a major topic of discussion in the upcoming reauthorization of the Higher Education Act, as well as the 2016 presidential election. [Center for American Progress, 9/8/15]

The Atlantic: Loophole In Federal Regulation Leads To For-Profit Colleges “Targeting” Veterans. The Atlantic's Alia Wong reported on a loophole in a federal rule known was the “90-10 rule” that has led to for-profit institutions targeting veteran families in order to receive additional federal aid. Wong explained:

The rule, which was implemented in 1998, allows these [for-profit] institutions to take in no more than 90 percent of their tuition money in the form of such aid, which includes loans and grants.

However, other forms of federal student funding--namely benefits for military veterans--don't count as part of this 90 percent.

The consequence is a “loophole” that incentivizes for-profit colleges to target and aggressively (sometimes deceptively) recruit veterans and their family members. A two-year U.S. Senate investigation into the industry, led by the former Democratic Senator Tom Harkin, revealed just how egregious those recruitment practices had become.

Among the 2012 report's 150-plus pages were subpoenaed correspondence among for-profit-college insiders discussing how to “leverage” military-spouse benefits and internal documents with strategies for enrolling veterans with access to Department of Defense aid. [The Atlantic, 6/24/15]

Fact: For-Profit Schools Are Significant Contributors To The Student Debt Burden

Brookings: For-Profit Schools Account For “Most” Of The Rising Loan Defaults. In a recent report from Brookings Institution, Treasury Department Deputy Assistant Secretary Adam Looney and researcher Constantine Yannelis concluded that the recent pattern of rising student loan defaults can be largely attributed to for-profit and non-selective institutions:

Most of the increase in default is associated with the rise in the number of borrowers at for-profit schools and, to a lesser extent, 2-year institutions and certain other non-selective institutions, whose students historically composed only a small share of borrowers. These non-traditional borrowers were drawn from lower income families, attended institutions with relatively weak educational outcomes, and experience poor labor market outcomes after leaving school. [Brookings Institution, 9/10/15]

Mother Jones: For-Profit Schools Serve An Underprepared Population, But Many Do Not Succeed In Making Up The Difference. Mother Jones reporter Julia Laurie noted in her coverage of the Brookings study's findings that for-profit schools have expanded significantly in recent years but many leave graduates unprepared for the job market:

As Mother Jones has reported in the past, compared with four-year college graduates, nontraditional borrowers are poorer, older, likely to drop out, and, if they do graduate, unlikely to face bright career prospects. The median for-profit university grad owes about $10,000 in federal loans but makes only about $21,000 per year.


So what happened? During the recession, students poured into colleges to make themselves more marketable in a crummy economy. Community colleges, depleted from plunging state tax revenues, couldn't expand to account for this exodus from the job market, so many students--and their loans--ended up at the quickly expanding for-profit universities, which promise short courses in tangible skills.

But students graduating from these colleges have notoriously dim job opportunities--some of the colleges have shut down in recent years after Department of Education probes found them to target low-income students and misrepresent the likelihood of finding a job post-graduation. So with the subsequent influx of students back into the job market--and, for many of them, into low-wage work or unemployment--thousands are stuck with debt. [Mother Jones, 9/14/15]