Student Debt

Student Debt Headlines and the Humanities Degree

~ devo3000

The New York Times and the Chronicle have mounted a one-two this week to publicize the problem of student debt (something I’ve posted on previously here and here and here).  In an extensive front-page story from Sunday, the Times lays out the problem from the perspective of undergraduates, and the Chronicle followed up today with an analysis of graduate recipients, particularly Ph.D.s working as adjunct faculty, that need welfare and other public-service benefits to make ends meet.  Both provide extensive analysis; the Times piece in particular leverages an extraordinary amount of statistical support.

The implications of the problem are broad, now that more than half of graduating seniors are going to college.  If college is fast becoming a prerequisite of stable middle-class employment, it seems clear we need policies that provide education without burying the students under a lifetime of debt.  I was fortunate enough to attend a state school on scholarship; many of my colleagues won’t finish paying off their educational loans for a decade or two.

One place where the Times piece suffers is in its analysis of the sources of the problem.   Continue reading →

OWS and Forgiving Student Debt

~ devo3000

Wednesday evening I went to an OWS-Occupy Philly rally. I was hoping to get a sense of what OWS-Philly was planning to do, now that the city has evicted them from Dilworth Plaza. I didn’t get a clear sense of what the next phase is, though I suspect that warmer weather and a hot campaign season will revive OWS nationally. But I did note a laser-like focus on the banking industry, in addition to the Philadelphia Youth curfew law, expanded in October, which is widely seen to be racism by proxy.

Many of the OWS speakers advocated pulling money out of local banks. Now that Meg and I are saving for our retirement, and finally have our finances roughly in order, it was hard for me to wrap my head around what I’d have to do to try and completely extricate myself from the banking system. Even cashing checks from Penn would be a problem, seeing that without an account, I’d have to pay some kind of fee.

But the challenge does raise the question for the most effective means of changing the role that student debt plays in higher education. As I have argued previously, a large part of the rise in student debt can be seen as an inefficient federal subsidy that passes the provision of support for higher education through various financial institutions, rather than providing grants directly to students and schools. Among circulating proposals is this petition, which will formally ask Congress to forgive federal student debt (I signed, and I note that they are close to reaching their goal 675K signature goal).

Another proposal is from the Occupy Student Debt Campaign. In seperate pledges for students, faculty, and non-debtors, they propose that students should refuse to make payments on their loans as soon as they reach the goal of one million signatures. I’m not sure that I support this tactic. For one, I assume from the association with Occupy Wall Street that the campaign is construed as part of a broad attempt to crack down on Wall Street abuses. But this doesn’t align with the fact that 90% of student debt is held by federal and state institutions, not private banks. As a practical matter, while I’m sure that mass defaults would achieve some short term goals in terms of freeing students from crushing debt, I have to think that the political effect would be overwhelmingly negative. It’s hard to imagine a response in which federal and state legislatures opt to put even more money into higher education.

And yet some sort of broad adjustment is demanded; 8.6% unemployment can not sustain the level of student debt that we are seeing. This is a professional and particularly academic problem. I was fortunate enough to finish my Ph.D. without carrying any student debt; it was a boon to earn my degrees at state schools with full scholarships. Tuition at UT-Austin was $2,500 a semester in the late 90’s when I started as an undergrad. In the humanities, we worry about the over-production of Ph.D.s. But if the accrued debt required to make it all the way through the bachelor’s, master’s and doctorate become prohibitively expensive, it’s hard to see how this will lead to the kind of adjustment we want.

Compounding Educational Debt

~ devo3000

To add a quick note to yesterday’s post about the MLA’s statement regarding academic debt, Alex Gourevitch argues that debt has become a central plank not just of the American economy, but of how we organize that economy from the federal level on down. This only emphasizes that reigning in the costs of higher education and student debt demands federal as much as local action. Academia needs to work to make these national, as well as institutional and state-level issues.

(And on an unrelated note, Matt Yglesias suggests that Humanities majors, who it turns out are some of the hardest-working and best prepared students at universities, should probably receive more credit in the society at large. Yawp!)

The Value of a Humanities Degree

~ devo3000

Inline with my ongoing discussion of the costs of higher education, I’ve noticed a lot of recent discussion that tries to evaluate the value of different college degrees. On the one hand, I think that humanists lose the argument when we try to fix the value of a degree in monetary terms. But as a practical matter, the economic environment and the skyrocketing costs of higher education demand we engage the question.

In an article just published for Bloomberg, Peter Orzag, the Obama administration’s recent director of the OMB, notes that we can expect current economic conditions to depress wages for college graduates as much as ten percent after ten years. Orzag makes a pragmatic case that decreased wages imply we should make a college degree less expensive, particularly at public universities already squeezed by tightened state budgets and higher medical costs. But this also implies that students will be shopping more carefully for degrees regardless of the public vs. private university path they choose. Yesterday, Kevin Drum posted a WSJ chart that purports to break down unemployment rates by profession and degree. Drum highlights the top-paying careers, which are heavy with engineers. But unemployment tells a different story. Engineers seem to be about average, with around 5.1% unemployment. Holders of science degrees fare a little worse, with 5.2% unemployed. It turns out the sector you really want to be in is education — only 4% unemployment. (An engineer might argue that this marginal difference in unemployment is compensated by economic value — their median salary is $78,000 versus $43,500 for teachers.)

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