Acton Commentary

Student Debt and the Value of an Education

In the face of rising tuition costs, which have more than doubled since 1982, more and more students are attending colleges, with Millennials being considered "the best-educated generation in history." Despite the mounting cost and swelling debt, America’s demand for education, particularly higher education, has not decreased, defying typical market expectations.

This is what economists call inelastic demand, when people continue to buy a good or service regardless of an increase in prices. Though the post-recession job market is still difficult, growing student debt ought not to lead us to forget the dignity -- and responsibility -- of each individual student.

When prices for goods and services rise, consumers often make sacrifices and adjust their spending. For example, as gas prices rise, families use carpooling or more efficient routes to and from the grocery store. But what are students sacrificing when they join the immovable market for education? Are they considering less costly options with lower tuition, or do they unthinkingly take out student loans, falling into serious debt as they enter their twenties?

On the financial side, it is hard to ignore the escalating amount of student loan debt in this country: the total has swelled to over $1.2 trillion and is rising each year. While many have described this as a crisis, a recent report from the Brown Center on Education Policy at The Brookings Institution focuses on the still intact financial wellbeing of the individual, rather than the daunting debt. Brookings finds that “the average growth in lifetime income among households with student loan debt easily exceeds the average growth in debt.” This suggests that the income increase equips borrowers to compensate for the rise in debt, drawing a timeline for graduates and claiming that in just 2.4 years the average increase in household income compensates for the average increase in student loan debt. However, the article fails to account for the similar inflation of the cost of living.

 In an effort to posit today’s borrowers as financially sound and remove the term “crisis” from the conversation, the Brookings report fails to note that even with a college degree, graduates face a tough job market. Even if the rise in income could supply the means to handle the burden of debt, the question remains: Is the value of a diploma still enough to justify its attainment?

Looking to the differences in employment rates and incomes, the Pew Research Center upholds the substantial worth of a college education, drawing many similar conclusions as the Brookings study. Pew notes the advantage of a college education over a high school diploma, but stresses that while a degree does offer an added level of security, it is not an all-expense paid ticket to a career. Both the unemployment rates of those with a college degree and those with only a high school diploma have increased, having doubled and tripled respectively since 1965, currently averaging at 3.8 percent and at 12.2 percent. While a college graduate may enter the job force better prepared, in 2013 “the average unemployed college-educated Millennial had been looking for work for 27 weeks,” while those with a high school diploma take four weeks longer. Despite the advantage, those holding college degrees are still often ill-equipped to battle the aftermath of the Great Recession.

Americans are right to believe higher education is an important attainment for society, but it is not a necessary purchase for each and every member. With this, parents, educators, community leaders, clergy -- even politicians -- must reiterate that a student loan is an investment, not simply a degree. At the same time, students must acknowledge the economic and moral component of debt. Their moral duty as students, as learners, cannot be overlooked. 

A high school senior should seriously consider whether to head to a college dormitory, to training in a craft or trade, or to a full time job after graduation. Confronted with a greater opportunity and the tempting effortlessness to attend college, students still owe extreme diligence to the decision process. In past generations, the widespread mentality towards college was that it was a privilege, one that came at considerable cost. While various things have made funds for college more readily available in the past fifty years, such as the Higher Education Act of 1965, the ability for those from middle income households to attend college was still a relatively new concept, leaving intact the due respect for higher education. The current ease of receiving an acceptance letter and the subsequent loan offer should not erase that mentality.

Many people still believe in the quality of both life and mind that an education represents, and when offered and received correctly, it meets this expectation. “The term ‘education,’” writes Pope Emeritus Benedict XVI in his 2009 encyclical Caritas in Veritate,  “refers not only to classroom teaching and vocational training … but to the complete formation of the person.” It is this formation that drives Americans to continue to seek higher education, one unfazed by looming debt.

When an education is grounded in a proper view of human nature, a view rooted in human dignity, students are able to invest not only in their studies, but also in themselves. A college education must not merely be the means to a specific degree, but also the means to human flourishing. This does not diminish the responsibility of the university to provide a proper education for students before they embark on their careers. Rather it suggests a university achieves this best within a moral environment that promotes the integrity of each student. In the same way, a student is responsible for acting with integrity, whether it be through a consistent willingness to learn or the quality of his or her work.

If consistently done well, this would leave $1.2 trillion invested not in books or classrooms, but in people, who are thereby better equipped to promote a free and virtuous society. The market must accommodate, continuously providing an education that is worth the investment of both time and money. If pursued, a college degree must be more than a thoughtless decision to fall in line with the societal trend of higher education; it must be a personal choice to commit oneself to intellectual and spiritual growth.