Pay for college and enrich your future

  • Article by: BRIAN ROSENBERG
  • Updated: November 16, 2011 - 7:24 PM

The debt issue is complex, but higher education remains a good investment.


Macalester College

Photo: Mike Carroll, Star Tribune

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On Sunday, the Star Tribune published a column by Eric Wieffering about student debt that was for the most part measured and thoughtful ("Paying for college, mortgaging your future").

Wieffering correctly identified burgeoning student debt as a national problem, while acknowledging that by virtually any measure college remains a good economic investment.

Like many who have written about this topic, however, Wieffering painted a picture that was incomplete. My fear is that this will discourage students and their families from learning all they should about the options for higher education in Minnesota.

To cite one example: The column was accompanied by a list, "Average debt of graduates," with data derived from the Project on Student Debt. In fact, these totals represent not the average debt of all graduates, but the average debt among those graduates who borrowed.

The "average debt" of Minnesota State University Moorhead graduates was listed as $29,410 -- but only 58 percent of the school's graduates borrowed through the student loan program in 2010 (the year in which the information was compiled).

Put another way, more than 40 percent of Moorhead's graduates were not included in the average.

The truth is that while the horror stories of graduates with enormous debt burdens are real and deeply troubling, the actual picture among students in the state is more varied and nuanced.

At Macalester College, about two-thirds of the members of the class of 2010 qualified for financial aid that included a loan component. The average total indebtedness of these graduates, after four years of college, was $19,649, or about the price of a low-end compact car.

For every dollar of loan, these same students received on average well more than $5 of grant, meaning that the average grant package was in excess of $100,000.

Neither the motives for nor the outcomes of these practices have much in common with the ongoing mortgage crisis, as Wieffering and others have tried to suggest.

To discuss the growth in student debt without also discussing the growing income disparity in the state and the country is to tell only a partial story.

Over the past half century, the inflation-adjusted income of the bottom 20 percent of our national income distribution has shown no growth -- none -- and the income of the bottom 60 percent has shown very limited growth.

Colleges and universities have had to provide increasingly large subsidies to these families in order to keep higher education accessible. The largest portion of these subsidies has come in the form of grants; some has come in the form of loans.

Tuition has also risen sharply, and we need to slow that rate of increase.

But the economists Robert Archibald and David Feldman have calculated that about 30 percent of the increase in tuition at private colleges is directly attributable to these increased subsidies -- which are in turn related, again, to growing income disparity.

The most important message to deliver to students in that lower half of the income distribution is not that going to college is "mortgaging your future."

Rather, it is that there are many access points to higher education at many different prices and that going to college is important.

How important?

Even in the midst of an abysmal economy, and by Wieffering's own reckoning, unemployment among men ages 25 to 34 with a bachelor's degree is about one-third as high as unemployment among high school graduates in the same demographic, and incomes are nearly twice as high.

Students and their families should research their college options carefully. They should view an appropriate level of borrowing for college as a better use of resources than borrowing of virtually any other kind.

They should measure the level of debt against the level of grant support and against their own likely capacity to repay that debt.

And they should steer clear of practices that seem predatory, because there are indeed those in some sectors of higher education who are seeking to take advantage of the aspirations of others.

At responsible levels, borrowing for college should be viewed as an investment in, not the mortgaging of, one's future.

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Brian Rosenberg is president of Macalester College.

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