Schooling Students in Debt

The real student debt problem is that students aren't forced to make responsible financial choices.

Traditional hat toss. Some motion blur.
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Throughout my undergraduate and law school days at Binghamton and Georgetown universities, I worked to pay my expenses. Even so, my student loan debt took me 15 years to pay off. A generation later, my older sons understood the cost differential between in-state and out-of-state schools, and wisely decided that leaving Virginia didn’t make financial sense. They believed what too many students today don’t bother to consider: Students should be responsible for the cost of their education.

Unfortunately, that view is quaint and even out of place today. President Obama recently announced that he would take action to restrict student loan payments to 10 percent of income for 5 million borrowers, then forgive the remainder of the loans after 20 years – and just 10 years for graduates who work in public service. And politicians are determined to move forward on legislation that would lower interest rates on loans and expand loan forgiveness programs.

We hear over and over again that we need to start cutting and forgiving student debt to spur economic growth. This was the same argument used five years ago to vastly increase student debt. Now that the piper has to be paid, we are hearing a different tune.

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Today, there are about 37 million student loan borrowers with outstanding debt, and the cumulative total exceeds $1 trillion. Seventy-one percent of college graduates shoulder student debt, averaging $29,400 apiece. A loan that size is about equal to a car loan: it’s a serious responsibility, yes, but it is manageable.

The more massive loans are usually taken out by post-graduate students. In fact, 40 percent of the $1 trillion in debt comes from students pursuing post-graduate and professional degrees. One-quarter of the students in grad school take out loans of $100,000, and 10 percent borrow more than $150,000.

It’s time to start asking tougher questions about when and why students borrow to pay for school and what we value in graduate education. In 2012, we graduated more than 46,000 lawyers for only 21,640 legal job openings. And graduates with non-technical degrees in fields like fine arts face even tougher challenges in the job market. So, with our nation facing immense deficits, why do we continue to subsidize degrees that provide students with scant job prospects?

The president and too many lawmakers are content to allow our country’s youth to shrug off responsibility for the debts they incur as students. Proposed legislation wouldn’t just be bad for the economy – it would give students cover to continue making poor choices, like not saving for college; not working paying jobs during college; not considering the cost of a particular college when choosing schools; and not making smart choices about the size of loans they assume.

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We have to rethink how we educate, motivate and incentivize our young adults. We must also reconsider the assumption that college education is always better than technical or vocational training. Just look at Germany, where vocational education and apprenticeships are respectable career paths, equal in status to academic pursuits. The result: a nation with a strong economy and relatively low unemployment rate, whose precision machinery and automobiles are major exports.

We should encourage students heading to college to pursue undergraduate and graduate degrees in high-demand, high-paying science, technology, engineering and math fields, which represent more than 10 percent of jobs in the U.S., and pay nearly double the national average. In fact, seven of the 10 fastest-growing job titles in the U.S. over the last five years are in technology fields.

Quality education also does not have to cost six figures. Thanks to technology, almost anyone can get an excellent education taught by the nation’s top teachers through free courses online offered by great schools like MIT and Harvard.

Our young people need to learn responsibility and the value of hard work. We can’t afford to continue preaching that college is a wise choice for all students no matter the major or the cost. It’s time for our students to realize that their poor decisions hurt not just themselves, but also our nation’s economic future.

I am proud that my sons chose a path of financial responsibility. Both are working now and are responsibly paying off any remaining student debt. Success isn’t just a matter of luck – it requires making smart choices and realizing the full weight and responsibility of our financial choices.