The Fear of Taking on Debt is Hurting Students, Colleges

By Joelle Fredman, NASFAA Staff Reporter

Students and their families are afraid to take on debt to continue their education, leading students who may be able to afford college to not even apply and learn about their aid options, according to editors at Inside Higher Ed.

In a webinar hosted yesterday titled “Key Issues in Student Debt,” two of the site’s founders and editors Scott Jaschik and Doug Lederman shared their thoughts on the biggest issues students are facing when it comes to financing their higher education and what efforts have been taken to address college accountability and affordability.

Jaschik said that what he has found to be “of grave concern” is that many colleges and universities believe they are losing applicants because students and families do not want to take on debt to pay for school, and there is a disconnect between what colleges and students believe to be a reasonable amount of debt to take on.

Further, Jaschik argued that because students do not even find out how much aid they will be eligible for until after they apply for admission, this phenomenon is causing schools to lose students that could succeed at their university by taking on “a modest amount of debt.” Jaschik did acknowledge, however, that the price of tuition has risen significantly in recent years, while just a generation ago, “tuition rates were so low that borrowing wasn’t necessary, or a very modest amount of borrowing [would] do the trick.”

“We have moved away from that. I don’t see a dramatic change happening anytime soon,” he said. “... For most students, debt is going to be part of how they pay for college.”

In addition to these issues, Jaschik also said this fear of taking on debt is partly fueled by the fact that families are questioning the return on investment of higher education, no longer believing that students will be earning a high-paying salary after graduation — a concept that has been spurred much of the debate around accountability and affordability in higher education.   

The editors said that it is this focus on value that has led to bipartisan support for some kind of risk-sharing proposal, where institutions would be held accountable for how their students fare after graduation from their programs. Despite support from both sides of the aisle, however, there has been disagreement around how such a proposal should take form and what measurements should be used by which to judge success, as well as cautionary tales of unintended consequences from higher education stakeholders.

NASFAA, for example, has warned lawmakers that penalizing institutions for poor performance based on a set of metrics may disincentivize schools for enrolling at-risk students. A poorly designed system, NASFAA argued, could create a “perverse incentive of increasing the number of institutions (most likely community colleges) that choose not to participate in the federal loan programs, choking college access to thousands of students who would not be able to attend without those dollars.”

Other efforts the editors highlighted aimed at reducing student debt and restoring faith in higher education included free tuition policies, which have recently garnered both support and critique from higher education stakeholders and policymakers. Lederman argued that while these efforts are promising in that they attempt to reduce debt, he does not believe that students shouldn’t have skin in the game. We have “lost the idea that people should have to contribute to their education,” he asserted. Instead, Lederman said higher education stakeholders and policymakers need to determine what is truly affordable.


Publication Date: 7/11/2018

James C | 7/11/2018 4:21:06 PM

I think the concept of "cost of attendance" needs to be re-visited. Families are scared by the cost of attendance figure and do not understand what it is and why it is higher than the bill. Perhaps cost of attendance should be scaled back through re-authorization?

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