Graduates and their staggering student loan debt loads

1.2 trillion dollars in debt. Got your attention? Try this. Seven in 10 college graduates graduated  from private and public institutions in 2013 with a staggering student loan debt of over $28,000. That figure is up more than 2 percent from the year before. And the trend continues.

Do you wonder how our Utah graduates are doing? A bit better by comparison. For the same year, the average debt load for a Utah graduating senior was $22,418. The percentage of Utah graduating seniors with debt was 52 percent. Both metrics place Utah in the 44th rank when compared to other states. A small silver lining, but not enough for us to breathe a sigh of relief.

How did the debt load get to such a staggering level? According to John E. Sununu, a former Republican Senator from New Hampshire, we have several directions in which to point the finger of blame. He attributes the inflation in tuition rates to bloated faculty salaries, extravagant capital spending, and mushrooming administrative overhead. All designed, he argues, to bolster the institutions branding and marketing success and thereby attract more students.

This could all be a ho-hum story but for three pesky factors. The first is this: this year, over seven million student borrowers have failed to make a payment on their debt in the last 12 months. That figure is up nearly 6 percent over last year. Secondly, this staggering student loan debt load does not land evenly on all student shoulders.

“Student debt is not the same to every borrower,” said Mark Huelsman, a senior analyst at public policy nonprofit Demos. “It can look a lot different to a first generation student from a very modest economic background than to someone going to graduate school getting a law degree.”

And finally, there appears to be little relief in sight. All indications are that the amount of student debt is going to continue to rise because colleges and universities are going to continue to suck up money in the form of tuition rates to keep themselves in business. Students are going to continue to take out loans to keep up with the money-sucking, and lower-income students will continue to fall further behind their contemporaries as the weight of the debt burden slows their progress to securing a decent household income.

But why does it matter to us? The money we are talking about is mostly federally sourced, coming in the form of Pell grants, which do not need to be repaid. The other sources are federal student loan programs, for which there is an expectation of repayment. And where does federal money come from? Yes, indeed. Our tax dollars.

President Obama has attempted to address the problem of the staggering burden to students by strengthening the existing student loan forgiveness programs. More than $200 billion of the $1.2 trillion federal loan portfolio is in a plan that allows student borrowers to make modified payments, according to data from the government and Moody’s Investors Service. Unfortunately, as more people use the programs, which offer forgiveness after at least 20 years, the cost to taxpayers is expected to grow. In December, under a more generous policy planned by the Obama administration, a bigger group of borrowers will be eligible to pay 10 percent of their incomes. In that program, former graduate-school students can have their remaining balances forgiven after 25 years and former undergraduates after 20 years.

I suppose the theory behind the program is that collecting some of the debt is better than collecting none of it, but there still remains the uncollected portion, which is coming out of the federal budget.

The staggering student loan debt load for college graduates has cropped up lately on the presidential campaign trail, as well it should.

For example, Bernie Sanders has proposed the College for All Act, under which student loan interest rates would revert to the low average of 2006, and student borrowers would be encouraged to refinance their existing loans. Sanders’ plan pays for itself through the imposition of a series of “Robin Hood” taxes on Wall Street investment houses, hedge fund operators, and stock speculators.

Ben Carson recently dismissed the Obama administration’s plan to offer two free years of community college to students within certain income guidelines as unnecessary. Carson reasoned that the Pell grants already are available to those students with the most financial need. He suggested that those who don’t qualify for the Pells should just “work for a few years” to earn enough money to attend college.

Hillary Clinton proposes providing free community college for all as well as lowering interest rates, capping tuition rates, and reforming loan repayments for existing borrowers. She would require states to increase investments in higher education through grants subsidized by the federal government. Students would be offered the option of assistance in exchange for national service, such as AmeriCorps. Clinton proposes paying for all of this by limiting itemized tax deductions for the wealthy.

And what does Donald Trump think? When asked, he said he would “… cut the Department of Education way, way down.” Hmm. I’m sure there might be a way that would help, but I can’t see it at the moment.

There is no doubt about these facts, however. More than half of the students graduating from college in this country today come to the workplace already in significant debt. It is clear that those students who are economically disadvantaged are tripped up once again by a system that doesn’t take the entirety of their circumstances into account. And as the cost of obtaining a college education escalates, there will be more and more defaults.

Finally, the fix—and this is a system the United States definitely needs to fix—isn’t going to be cheap. It concerns all of us.

We need an educated work force to direct the decisions we make in the future. Of course, college isn’t the only post-secondary option offering to provide the skills necessary for tomorrow’s leaders, which is a good thing. At this rate, fewer and fewer among us are going to be able to afford it.