Behind the Bumper Sticker: Student Debt Crisis
With headlines like “Student Loan Debt has Nearly Tripled,” “The Student Debt Crisis Threatens the American Way of Life,” and “Ballooning Student Loans Are Also Killing Homeownership” dominating national news, it’s clear we’ve reached a fever pitch when it comes to the “student debt crisis.” So on Thursday, April 19th, Third Way hosted the third event in its "Behind the Bumper Sticker" series to debate what the debt crisis actually looks like if you dig beneath the headlines. Which students are most affected? And what can Congress actually do to fix it?
The event featured a robust discussion moderated by Dr. Sandy Baum, Nonresident Fellow at the Urban Institute. The panel consisted of some of higher education’s preeminent student debt experts, including Dr. Fenaba Addo, Assistant Professor of Consumer Science at The University of Wisconsin-Madison, Dr. Jason Furman, Former Chairman of the Council of Economic Advisers and Professor of the Practice of Economic Policy at Harvard Kennedy School, and Mark Huelsman, Senior Policy Analyst at Demos.
Dr. Baum started the discussion by stating a lot of the conversation around this issue is on the $1.4 trillion of outstanding debt as the benchmark. However, she then questioned whether the public’s understanding of student debt is accurate, asking panelists, what are the real problems and can we do to address them?
Mr. Huelsman explained that the debt crisis is more acute for communities of color and working class communities. He also said that those struggling with student debt are the ones really struggling and the crisis is when half of all black student borrowers default on their loans within 12 years of starting college. Dr. Addo added that black students with college degrees are more likely to be underemployed or unemployed. She added that we have to think about what is going on in the labor market if people are not getting returns for their degree.
Dr. Furman said that the way to decrease debt from student loans is to enroll students in an income driven repayment plan. He believes, “if everyone was in an income driven repayment plan, nobody would default.” Later on, when the topic of “free college” was discussed as a way to deal with the debt crisis, Dr. Furman made the point that free college doesn’t account for the investment of time students make and that even with “free college” too many students don’t graduate, which we know is the biggest contributor to student defaults.
Want to learn more? Watch the full event on video here.