Dissecting the State of Student Debt: What’s the Path Forward?

On March 3, 2021, Dr. Mark W. Huddleston, President Emeritus of the University of New Hampshire, presented the 2021 Perkins Bass Distinguished Lecture, titled “The Burden of Student Debt: Dimensions, Complexities, and Options.” In a discussion hosted by Professor Charles Wheelan ’88, Huddleston shared his own findings on the trends and implications of student debt in the United States, as well as his perspective on today’s discourse surrounding potential solutions to this complex issue.

Having served several secondary institutions around the country in an administrative capacity, the issue of student debt has been one central to Huddleston’s work for decades. As student debt in the United States is often reported in terms of its magnitude—most recent data suggests a grand total of nearly $1.7 trillion— many policymakers, university officials, and students alike are fully aware of the magnitude of the issue. However, while “America does indeed have a student debt problem,” Huddleston notes, “it may not be exactly the one that the loudest voices have articulated.” Rather, said Huddleston, the picture of student debt in the US is far more intricate than the massive $1.7 trillion number implies, suggesting that a comprehensive solution is also more complex than initially imagined.

One of the many nuances of the student debt issue lies in its origins. To many, it appears that the considerable cost of college in the US, which is unlike almost anywhere else in the world, is entirely to blame; as Huddleston explains, there is indeed a massive discrepancy between today’s average cost of tuition and the cost of tuition having only increased at the rate of inflation. However, Huddleston noted, massive increases in tuition are by no means the sole cause of the student debt problem. According to data from Sandy Baum at the Brookings Institution, there does not seem to be a massive discrepancy in the debt held by borrowers at schools with near zero net tuition versus that held by schools with net tuition of over $5k. Thus, Huddleston remarked, “there’s no one factor that explains exactly why that slope [of student debt] has been rising at the rate that we’ve seen.”

Similarly, in contrast to a decade ago, the question of to whom students owe debt has also fundamentally changed. While most students used to owe debt to private lenders, today approximately 92% of outstanding student debt is owed to the federal government. “In terms of the current debate and discussion about policy options,” Huddleston explained, this trend “suggests that the federal government may be freer—the President, indeed, may be freer-- to provide debt relief than might have been the case had that debt been held mostly by private lenders.”

While the federal government may be at greater liberty to issue debt relief, Huddleston also warned against many mainstream debt relief proposals, most recently suggested by multiple Senators as well as the Biden Administration, which would seek to forgive some to all student loan debt.

“There is no single problem, and no single solution,” Huddleston emphasized, arguing that “it would be a mistake to simply embrace a policy proposal that wipes out all student debt in America.” Not only are there more comprehensive plans, in line with today’s data on student debt, that could be more economical and more effective, but, said Huddleston, contrary to the belief of many policymakers, higher education is not a “pure public good.” Based on the many economic and personal benefits individuals who attend college still reap, he noted, “it is not inappropriate to ask people to make some investment in their own future, possibly by taking out some reasonable amount of loan to finance their own education.”

Huddleston suggested several key policy points which could reshape the conversation surrounding student debt relief in a manner more reflective of the origins and implications of the crisis. In particular, Huddleston noted a clear issue with the presence of for-profit institutions, which have become “the least effective institutions of higher education that we have” while also saddling the greatest share of students (compared to public and private non-profit institutions) with over $40,000 in debt.

Huddleston also highlighted the significant problems associated with graduate study in the US, noting that it too “saddle[s] students with debt that they are not going to be able to discharge given employment prospects.” Citing data from the Brookings Institution, Huddleston noted that while the greatest share of borrowers holds an associate degree or less, the greatest share of debt originates from graduate students. Furthermore, he said, “among graduate students debt burden rests disproportionately on Black and African-American students and to some extent on Hispanic and Latinx students as well.” However, the buildup of this debt is by no means a student’s fault; “in the days since the defunding of public institutions in particular,” said Huddleston, “a lot of high-quality public institutions have looked to masters programs in particular to generate income without necessarily ensuring that those degrees are going to lead students who enroll in them to meaningful careers.” Thus, Huddleston noted, not only is alleviating graduate student debt critical, but reducing the cost of graduate education for future generations while also maintaining high standards for graduate programs are also key in ensuring the long-term economic security of former and current students alike.

Another often overlooked component of the student debt story, said Huddleston, is the staggering number of people who leave college without a degree and are then saddled with “burdensome loans that really have no meaningful way of earning the money to pay them back.” Given extremely low six-year graduation rates in colleges all over the country, Huddleston argued that “higher education institutions really need to have a bigger stake in college completion,” suggesting federal law that could tie federal funding of schools to college completion rates.

Finally, Huddleston noted, an equally important component of the nationwide debt problem comes down to the cost of students selecting unaffordable colleges at which to study. It may not always be the best idea for a student to attend a public school in another state when they could receive a comparable education for a fraction of the price in their own state. However, students may not always be entirely to blame for their decision making. As the former President of a public institution, Huddleston recalled that “with the defunding of public higher education, we in that sector had to scramble to try to find full-tuition-paying, out-of-state students to subsidize in-state students…it’s a travesty and one we ought to try to undo.”

Ultimately, Huddleston notes that dealing with the college debt crisis must be “inseparable from solving the college affordability crisis.” In order for past, present, and future college students alike to equally reap the benefits of higher education, any proposed plan must be comprehensive enough to address what our data reflects: a rather complex and multifaceted issue.

Written by Shawdi Mehrvarzan ’22, Rockefeller Center Student Assistant for Public Programs