IN CONCLUSION
Scratching the surface of the U.S. student loan debate reveals that we allow student debt a sort of grace unparalleled
in U.S. policy, continually moving the goalposts as we seek to console ourselves that a financial aid system
predicated largely on borrowing can, somehow, work. Instead of carefully considering the kind of policy we want, in
order to facilitate our children’s access to the higher education that most Americans believe is essential for economic
mobility (Newport & Busteed, 2013), we look for approaches that would modify the student loan system enough to
allow it to survive, even while holding very low expectations for this very significant investment.
Perhaps like the
apocryphal frog in boiling water, we have gradually come to expect that, for many if not most U.S. college students,
the only path to college and the prosperity that lies beyond is high debt. As it has become clear that this debt is
difficult for many students to afford post-college, we have sought to adjust their repayment schedules extending over
longer periods of time. As it became apparent that even these modified obligations were exerting some negative
influences on students’ decisions prior to college and on adjustment to adulthood after, we consoled ourselves that
these effects are temporary, a new rite of passage as Americans come of age.
As evidence reveals that this
borrowing has lifelong effects, compromising graduates’ ability to engage in the very wealth-building behaviors
their educations were supposed to make possible, we have reflexively defended student loans as a vehicle for college
access, perhaps overlooking that merely accessing college is not the American Dream. When we acknowledge that student loans are underperforming even as an access tool, we helplessly claim that we cannot imagine an alternative
(Woluchem & George, 2014). We are far enough down the policy path of student indebtedness to make it difficult to
see our way out and, so, have adjusted to burdensome student debt as a ‘natural’ part of the American life cycle,
normalizing a rather extraordinary phenomenon that sees many U.S. college graduates worse off, in measures of
financial well-being, health, and even overall life satisfaction (Dugan & Kafka, 2014),
as an apparent side effect of
their use of a financial aid product that is supposed to facilitate ultimate improvements in all of these indicators.
The seeds for this bitter harvest were sown long ago, with the ill effects only brought into sharp relief by the Great
Recession, with its colliding forces of further increases in college costs, reduced job prospects for graduates, and
tightened family finances that preclude, for many, the luxury of just trusting that higher education will be a good
investment. We have now turned our attention to different measures of the extent to which student loans are failing
us, and the evidence is not just disappointing. It is alarming.
There is reason to believe that, if we expected student
loans to actually help us address our greatest collective challenges, particularly those that threaten the viability of the
American Dream—rising inequality and constrained economic growth—they are not only falling short, but they may
be constructing a higher hill for other policy structures to climb.
The depression of asset accumulation that may result in the immediate post-college period as a result of real
financial strains of debt repayment may really matter when it comes to understanding the financial well-being of
young adults and growing wealth inequality (Elliott & Lewis, 2014).
Even students with outstanding debt who do
well in college may struggle to understand why they are not reaping the gains of that academic achievement to the
same extent as their counterparts who have no student debt. And, of course, there are real opportunity costs to the
student loan system, which has largely crowded out our collective capacity to imagine anything else. The policy
energy consumed by tinkering with a fundamentally flawed student loan system, in an effort to blunt its most
negative effects, could be otherwise deployed to construct new asset-empowered financial aid models that could
improve student outcomes (see, Elliott & Lewis, 2014).
Instead, the corrosive effects of placing our collective
financial aid ‘eggs’ all in a problematic basket may be compromising the educational prospects of a generation of
students whose futures—economically and otherwise—depend on the attainment of a higher education. U.S. policy
should prioritize outcomes over instruments, and we must not allow ourselves to cling to an intervention for
sentimental value or because we are afraid of what would follow in the breach. Overheated debate about the ‘next
financial crisis’ notwithstanding, evidence reveals real dangers in continuing on our current path with student
loans—for individuals, for the macro-economy,
and, perhaps most importantly, for our vision of ourselves and the
Dream that animates us. Just as importantly, there is evidence to suggest significant advantages from shifting course
and resetting the default to saving for post-secondary education, rather than leveraging one’s future for it. Taking
this alternate path requires the vision to imagine better outcomes, which, even with research to recommend it, can
demand a leap of faith, but our children deserve that.
