Hello College Debt, Goodbye Risk

Once again, The New York Times is playing catch-up with Patch.com.

On Sunday, The Times had a front-page story about the growing burdens of college loans, three days after ran on the same subject. The paper did a wee bit more legwork for their gazillion-word story – my research consisted mainly of talking to a friend at the deli counter at the Giant supermarket – so I’ll leave the term “copycat” out of this discussion.

The lead of The Times story was about a young Ohio college graduate who owes $120,000 in loans and is working two jobs to pay the $900-a-month bill. Her mother is taking out life insurance on her because if anything happens to her daughter, she couldn’t pay the loans for which she co-signed. 

A decade ago, 58 percent of families didn’t have to take out loans to send their child to public colleges and universities. By 2008-2009, only 7 percent could say the same.

The Times story shows there is plenty of blame to go around. Too many colleges emphasize the long-term investment aspect of having a college degree and play down the debt students will be left with. Some of the students admitted they failed to ask enough questions about how much debt they were incurring. The situation sounds eerily like the complaints about lenders and borrowers of risky mortgages before the housing bubble burst.

State and local spending per college student, when adjusted for inflation, is at its lowest in 25 years, according to The Times. State legislators, in turn, say universities are inefficient and bloated. The price of tuition has outpaced inflation, increasing even faster than medical spending.  

The result is so many young people getting out of college with the equivalent of a mortgage but no house to show for it. One 24-year-old told The Times she dropped out of Bowling Green State University with $70,000 in debt and wasn’t going back. “It makes me puke to think about borrowing more money,” she said.

Many of those commenting on last week’s column had little sympathy for such students – variations of you-made-your-bed-now-lie-in-it were all the rage. But I think there’s some selective amnesia going on.

How many of those commenting had formative experiences in the first years after graduating from college where they lived on a shoestring budget in order to take a low-paying job they loved, follow a dream, work for a cause or have a life-changing adventure? It might have been a short window of freedom before the responsibilities of kids and mortgages, but it can have a lasting influence on their lives. 

The graduates The Times wrote about can’t even afford to move out of their parents’ homes. 

I fear I’m seeing the Ghost of Christmas Future. When my kids were little, we started a Pennsylvania Tuition Account for each one. We contributed to it each year but not enough so they’ll be able to avoid taking out loans. Right now, both boys have enough money in their accounts to go to college for about 1½ years – just so long as they don’t eat or sleep.