At the movies this summer, you’ll find blockbusters that deal with college, including “Neighbors” and “22 Jump Street.” Both feature classic depictions of the American campus: frat bros chugging beers at raucous parties and during spring break escapades. But these films won’t explain that of the characters played by Zac Efron, Dave Franco, and Christopher Mintz-Plasse, at least two of them will graduate with an average of $33,000 in debt.
A new documentary that I directed, “Ivory Tower,” provides a contrast with Hollywood’s depiction of college. Opening this weekend at the Kendall Square Cinema, the film looks at student debt and the financial model of non-profit universities. It also raises a pressing question: Is college still worth it?
To millions of families, the answer is an emphatic “yes.” In purely economic terms, it’s hard to disagree. Median lifetime earnings for those who have a bachelor’s degree are $1 million greater than for people with only a high school diploma. But for those who struggle with student debt the cries of “no” are growing increasingly urgent now that total student loan debt has surpassed $1 trillion. Over 70 percent of 2014 graduates borrowed an average of $33,000, up dramatically from the $25,250 reported for the class of 2010.
The amount of debt held at graduation is only part of the problem. As Anya Kamenetz, author of the book “Generation Debt,” has detailed, loan balances can quickly balloon after graduation if borrowers can’t keep up with monthly payments. When loans are pushed into deferment or forbearance, interest keeps accruing and can be added to the principal, making a debt of $33,000 grow exponentially in just a few years. Amid a tepid post-recession economy, over half of student loans have been deferred, and defaults are on the rise as more than half of recent college graduates are unemployed or underemployed.
How much debt is too much? Anthony Carnevale, director of Georgetown’s Center on Education and the Workforce, provides a solid ground rule: once you’re borrowing more than $50,000 for college, you must consider what you’re getting yourself into, because such a burden can negatively affect your ability to make future investments, such as starting a family and buying a home. At that point, our economy as a whole feels the effects of high student debt burdens.
Recognizing the significant drag on our economy, President Obama last week signed an executive order to provide relief for student debtors, expanding a program that caps student loan repayments at 10 percent of a borrower’s monthly income. The Department of Education will also renegotiate contracts with student loan servicers, such as Sallie Mae, to give them more incentives to guide borrowers to more affordable repayment plans. And although Senator Elizabeth Warren’s proposed legislation to allow student borrowers to refinance at lower rates failed in the Senate last week, state legislatures, including Massachusetts, are pursuing initiatives to lower interest rates on student loans and make college more affordable.
However commendable, these efforts do not address the deeper problems in higher education’s financial model. The cost of college has risen by 1,120 percent since 1978, while state funding to public universities has declined by 40 percent in the same period. Caught in a competition for prestige to attract the student loan dollar — as a substitute for government support — many universities are fighting an arms race of amenities.
More troubling is the shift in the philosophy around higher education. Americans have come to view college as a path to private benefit rather than a public good which contributes educated citizens to our democracy. Historically, government has expanded the franchise of higher education, through the Morrill Act of 1862 (creating the land grant universities), the GI Bill, and the Higher Education Act of 1965. We need legislation on that grand scale to address the student loan crisis. But today’s political climate is unlikely to yield that result.
American higher education provides a bridge from adolescence to adulthood, a time in which students can learn what they are good at and what they care about (beyond the tailgates and parties), so that upon graduation they can dedicate themselves to a path that is meaningful to them and productive to society. It is critical for us to address the student loan crisis and the unsustainable financial model of higher education, because it is distorting the dream of college as a gateway to opportunity, both on campus and in the wider world that awaits graduates.