Friday, August 7, 2015

Student Debt: Fiction v. Fact Part II

Student Debt: Fiction v. Fact Part II

In response to Part I, a U of M professor sent a link to the June 24, 2014 New York Times report on The Reality of Student Debt
. The Brookings Institution analysis of student debt nationwide described in the report shows that in 2010 58% of young adult households in the United States with student debt had outstanding student loans of less than $10,000. The Brookings Institution analysis is based on 2010 data. So the analysis does not include the hundreds of millions of dollars in student loan debt incurred over the past five years.

A more recent analysis shows that the financial reality for college graduates in Minnesota is much bleaker. Minnesota ranks 5th in the nation in student loan debt. In 2013 66% of U of M graduates had student debt. The median debt was $25,080, and the average debt was $27,599. See p. 17 of the June 2014 Minnesota Office of Higher Education report on Cumulative Student Loan Debt in Minnesota. See also the November 13, 2014 Star Tribune report on Minnesota Ranks High in Student Debt  and the June 1, 2013 Star Tribune report on Minnesota Grads Carry Heavy Student Debt Burden.

Then there is the unconscionable economic burden placed on students in the professional schools. In 2013 91% of the graduates from the U of M professional schools had student loan debt. The median debt was $157,671. See p. 23 of the June 2014 Minnesota Office of Higher Education report .

The high tuition high financial aid experiment has failed a vast majority of students and their parents. It has vaulted many U of M students into the top tier for student loan debt notwithstanding the ballyhoo by the U of M administration about the Promise Scholarship program. (This was a predictable result of the experiment as college administrators classify student loans as "financial aid." )

Tone deaf remarks about student loan debt ("less than a new car") by the U of M president and the 2014 chair of the Board of Regents demonstrate a failure to acknowledge the overall cost of a college education and a remarkable lack of empathy for the students and parents struggling to pay that cost. The senior administrators and the Regents responsible for a decade of skyrocketing tuition in 2002--2012 never had to deal with that financial burden when they were starting their careers and their families after graduation. How much different would their lives have been if they had been shackled by student debt?

Rather than attempting to minimize the effect of such debt the U of M president could begin an effort to find a better way to operate and to finance higher education. He could establish a task force with members of the administration, legislators from the higher education committees, staff from the Minnesota Office on Higher Education, and informed students and parents. Someone like Jay Kiedrowski of the Humphrey Institute (a former state commissioner of finance) could serve as the chair.

The work of the task force should include an analysis of the rise in the costs of administration over the past 40 years. If there has been a increase in the number of administrators that is disproportionate to any increase in the number of students or the level of research, we should ask why. If there has been a substantial increase (in constant dollars) in the compensation of any administrator, we should ask why.

Each biennium the citizens of our state now invest more than $1 billion in the U of M in general appropriations. With that much at stake the legislature should appoint a qualified person to monitor on a continuing basis the operations of the University and the use of state appropriations. This legislative liaison (or watchdog) should have the responsibility to review the information produced by senior administrators, to collect additional information through his or her independent research, and to meet with all groups at the University so that the perspectives of other well-informed and thoughtful members of the University community are presented to the legislature.

Michael W. McNabb

University of Minnesota B.A. 1971; J.D. 1974

University of Minnesota Alumni Association life member

1 comment:

Anonymous said...

Perhaps more than one of the members of the senior U management was "over-served" and the predictable poor judgment resulted. In addition to the high debt of state school students, the private for-profit schools have binged on the feast of student loans and placed the burdens on the students and their families. Perhaps a remedy is to prohibit third-party guarantees of student loans, so only the student is liable for repayment to the lender, and to force the schools to carry at least 50 percent of the risk and to make the student loans dischargeable in bankruptcy. Much like the recent home-mortgage fiasco, the direct and indirect subsidies of lenders by the government leads to overpricing of the item being financed. The government at multiple levels has failed to provide funding to benefit the students rather than the lenders and the schools (read "top administrators") and has failed to regulate the behavior of the lenders and the schools. At least the revenue-producing sports are adequately funded; after all, isn't that the mission of a great university?