Posted by: Gregory Linton | 06/11/2018

Government report on apprenticeship expansion promotes fake news about student loan debt

In the last two posts, I showed how the Task Force on Apprenticeship Expansion included misinformation about higher education in its Final Report to the President of the United States. In this post, I will discuss the misinformation about student loan debt included in the report.

Here is the statement included in the report:

Higher education, namely 4-year baccalaureate degree programs, have become increasingly unaffordable for the average American, culminating in the current student loan crisis. On average, a student graduating college in 2016 possessed $37,000 in debt, and the total student loan debt climbed to more than $1.3 trillion, triple the level from a decade ago.

The questionable statement here is that graduating students average $37,000 in debt. Surprisingly, the report does not cite any government data to back up this figure. Instead, it cites an article published in YaleGlobal Online on May 18, 2017, but that article does not cite the source of the figure. An Internet search turned up an article in Wall Street Journal that identified the source of this figure as Mark Kantrowitz, the publisher of Cappex. However, that figure refers to the average loan debt of borrowers, not all graduating students. And the article goes on to note that his figure of $37,000 is disputed by other experts such as the Institute for College Access & Success, which puts it at $28,950.

Articles about student loan debt often make three errors in reporting on this issue. First, they fail to mention that the student loan debt averages relate only to those who actually borrowed. Second, they fail to mention that about 30 percent of students graduate with no debt at all.

Media reports about the “student loan crisis” fail to balance their reporting with facts that indicate the return on that investment. In April 2017, the National Center for Education Statistics published a Stats in Brief titled “The Debt Burden of Bachelor’s Degree Recipients.” Although the report was intended to highlight the difficulties that student loan borrowers have with paying back their loans, it balances that reporting by noting that “the average increase in lifetime earnings from a bachelor’s degree relative to a high school diploma still exceeds average student loan debt.” It also notes that the lifetime earnings premium over a high school diploma is 70 percent. You won’t find this kind of balanced reporting in most articles in the media.

Most reports on student loan debt fail to note the return on the investment. For the cost of a decent new car, one can receive a return of more than $1 million in a lifetime. One can also live without fear of unemployment compared to the high school graduate. And of course, there are many other benefits provided by a college degree, including physical health, emotional health, and social benefits.

Student loans provide access to higher education for many people who would not otherwise have it. They made it possible for me to receive my Ph.D. from Duke University. Through the help of my parents and my own willingness to sacrifice and work several jobs, I was able to finish college and seminary without any loan debt. Because I received little financial help from Duke University at the beginning of my tenure there, I was able to take out loans to get me by for the first three years. The degree that I earned as a result of those loans has opened up opportunities for me that I would not have had otherwise.

The hysteria about student loan debt stirred up by the media can discourage lower-income students from taking out loans and instead cause them to drop out of school. Those of us who work in the area of student retention have noted this trend. Certainly, students should be educated about keeping their loans as low as possible and using them wisely and responsibly, but they also need to know that this upfront investment can produce healthy dividends later in life.

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