So much has been said about the rising cost of college. So much has been written about student loan debt reaching crisis proportions.
Now a report by the Brookings Institution comes with some unexpected news: Student loan debt isn’t as bad as it’s been portrayed, and fears of a looming student debt crisis are overblown.
The report’s authors suggest that those borrowers burdened with $100,000 debt loads, who frequently appear in media coverage, “may not be part of a new or growing phenomenon.”
Sure, some students and families will get in over their heads as they borrow more to afford the level of education the industry tells them is essential for success.
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But typical borrowers “are no worse off now than they were a generation ago,” the report says. “The percentage of borrowers with high payment-to-income ratios has not increased over the last 20 years.”
Because evidence of widespread financial hardship wasn’t found, the report concludes that broad-based policies aimed at all student borrowers are likely “unnecessary and wasteful.”
In the nation’s troublesome trillion-dollar student loan debt total, Brookings pointed out that “roughly one-quarter of the debt increase since 1989 can be directly attributed to Americans obtaining more education, especially graduate degrees.”
But isn’t that exactly what President Barack Obama and the nation’s governors have said they want — more Americans getting a college education?
It gets murky, said Rob Weagley, chairman of the personal financial planning department at the University of Missouri.
“There are two sides to this issue, and both sides want to use the same story to make their point,” he said.
One side blames colleges for spending too much to build fancy facilities and overpay faculty, driving up the cost of higher education.
“They think we need to rein in the costs,” Weagley said.
Another side blames state lawmakers for not seeing that investing more in higher education will pay dividends for those individuals and for the country down the road.
There’s yet another group, said William Elliott, associate professor of social welfare at the University of Kansas.
“We have some who really see the value of student loans as increasing access to higher education” for families who couldn’t afford it any other way, he said.
Those people, said Elliott, who’s an expert in assets and education, “don’t want to say anything negative about the student loan program for fear the program will be lost altogether.”