Cancel all student debt? No.

[spork]

I'm not sure student debts are such a big barrier.

[. . .]

A few years ago I read something about research on how undergraduates spent money that they had borrowed while in college. Maybe it was in Academically Adrift. Can't remember. But the conclusion was that on average money from college loans was spent mostly on "lifestyle expenses" rather than bare necessities.

[Caracal]

I'm not sure student debts are such a big barrier.

[. . .]

A few years ago I read something about research on how undergraduates spent money that they had borrowed while in college. Maybe it was in Academically Adrift. Can't remember. But the conclusion was that on average money from college loans was spent mostly on "lifestyle expenses" rather than bare necessities.

I would be curious about how those things are defined, as well as how it would be separated from other money students are making. If you add up tuition, books, rent, transportation, food, computers and all kinds of other potential costs, it would be pretty hard for most students to be actually spending more money on discretionary purchases. It also seems unreasonable to think that college students are all supposed to be eating Ramen for dinner every night, wearing, and not subscribe to Netflix.

[larryc]

My daughter and her fiancee, mid 30s, have such a shitload of college debt. They make good money, but can't but a house or start a family. All their friends are in the same boat. Student debt is undermining our nation's future.

[pigou]

Note that I was replying specifically in the context of medical school. A cardiologist making an average of $500k starting salary is just not going to be overly held back by $200k in student loans. And I doubt it's a great use of taxpayer funds to cancel that person's debt.

Even more broadly, though, only about 50% of students with a Bachelor's degree have any student loans and, conditional on having outstanding debt, the median amount is only $25,000 (source). At 6% interest and a 10 year payoff period, that's $280 per month. If your degree doesn't add that much to your income, something went horribly wrong along the way. As with most things, the problem here isn't at the median -- it's the outliers who somehow end up $100,000 in debt for a degree that's not marketable.

[mahagonny]

Note that I was replying specifically in the context of medical school. A cardiologist making an average of $500k starting salary is just not going to be overly held back by $200k in student loans. And I doubt it's a great use of taxpayer funds to cancel that person's debt.

Even more broadly, though, only about 50% of students with a Bachelor's degree have any student loans and, conditional on having outstanding debt, the median amount is only $25,000 (source). At 6% interest and a 10 year payoff period, that's $280 per month. If your degree doesn't add that much to your income, something went horribly wrong along the way. As with most things, the problem here isn't at the median -- it's the outliers who somehow end up $100,000 in debt for a degree that's not marketable.

I just got back from a party with a bankruptcy lawyer. He thinks the problem could be solved by interest-free loans.

[apl68]

I'm not sure student debts are such a big barrier.

[. . .]

A few years ago I read something about research on how undergraduates spent money that they had borrowed while in college. Maybe it was in Academically Adrift. Can't remember. But the conclusion was that on average money from college loans was spent mostly on "lifestyle expenses" rather than bare necessities.

I would be curious about how those things are defined, as well as how it would be separated from other money students are making. If you add up tuition, books, rent, transportation, food, computers and all kinds of other potential costs, it would be pretty hard for most students to be actually spending more money on discretionary purchases. It also seems unreasonable to think that college students are all supposed to be eating Ramen for dinner every night, wearing, and not subscribe to Netflix.

With some colleges building fancy new dorms and requiring students to live in them, the line between "essential" and "discretionary" can get kind of blurred.  Students who want to go to College A may have no choice but to live in a gold-plated dorm, pay inflated cafeteria costs, and pay steep student activity fees to subsidize the athletic teams and climbing walls.

I wouldn't think that most students borrow more than they really need for tuition and basic expenses, given how much that adds up to.  But it seems plausible that a minority--maybe a fairly substantial minority--can't resist the credit opportunities they see.  A couple of years ago I heard the president of our regional state college--a very inexpensive four-year school by today's standards--cheerfully admit that he sees students using student loan money for purchases like new pickup trucks.  The school's advisors warn them not to, but the warnings aren't always heeded. 

[Hegemony]

I wonder if that thing about the pick-ups is really true, or whether that's an urban legend of the type of "That beggar really lives in a mansion." 

The old cinderblock dorms with the tiny rooms really ought to be adequate for today's students too, and in a perfect world, they would be. The problem now is that universities are fighting for students. And when East Directional State University has shiny new dorms, each room with its own bathroom and kitchen, it looks a lot more appealing than the University of West Directional cinderblock dorms, each with a bathroom down the hall shared with forty people and no one allowed to plug in a mini-fridge because it will overload the electrical system.  The rich students look at the fancy new gym with the climbing wall and sauna at East Directional, and the deluxe food court, and then they look at the tiny tired gym at West Directional, and the run-down student union with a Subway outlet and nothing else, and they go for the shiny.  And it's very important to attract the rich students, because they're the only ones paying full freight, especially the foreign rich students, who are probably contributing the lion's share of tuition dollars, state subsidies being as tiny as they are these days. So it becomes an arms race of resort-type offerings.

[scamp]

I wonder if that thing about the pick-ups is really true, or whether that's an urban legend of the type of "That beggar really lives in a mansion." 

The old cinderblock dorms with the tiny rooms really ought to be adequate for today's students too, and in a perfect world, they would be. The problem now is that universities are fighting for students. And when East Directional State University has shiny new dorms, each room with its own bathroom and kitchen, it looks a lot more appealing than the University of West Directional cinderblock dorms, each with a bathroom down the hall shared with forty people and no one allowed to plug in a mini-fridge because it will overload the electrical system.  The rich students look at the fancy new gym with the climbing wall and sauna at East Directional, and the deluxe food court, and then they look at the tiny tired gym at West Directional, and the run-down student union with a Subway outlet and nothing else, and they go for the shiny.  And it's very important to attract the rich students, because they're the only ones paying full freight, especially the foreign rich students, who are probably contributing the lion's share of tuition dollars, state subsidies being as tiny as they are these days. So it becomes an arms race of resort-type offerings.

Yes - the S(elective)LAC I work with has pretty crappy dorms, but they have no problem filling their class. To be fair, they do invest in nice shared facilities like the athletic center, but freshman are sometimes 3 to a cinder block room. I was actually surprised - I figured everything would be pretty posh!

[Caracal]

I wonder if that thing about the pick-ups is really true, or whether that's an urban legend of the type of "That beggar really lives in a mansion." 

I'm sure it is true in the sense that some people have student loans and make poor financial decisions. However, as an explanation of the problems of student debt, it doesn't make much sense. It reminds me of the way that we often blame poverty on poor people's bad decisions, as if people not in poverty don't make bad choices all the time. They just don't suffer the same sort of consequences. Same thing here. We shouldn't be shocked that some young adults don't do well in terms of managing large amounts of debt. That doesn't mean that the root of the problem is individual poor decision making.

The old cinderblock dorms with the tiny rooms really ought to be adequate for today's students too, and in a perfect world, they would be. The problem now is that universities are fighting for students. And when East Directional State University has shiny new dorms, each room with its own bathroom and kitchen, it looks a lot more appealing than the University of West Directional cinderblock dorms, each with a bathroom down the hall shared with forty people and no one allowed to plug in a mini-fridge because it will overload the electrical system.  The rich students look at the fancy new gym with the climbing wall and sauna at East Directional, and the deluxe food court, and then they look at the tiny tired gym at West Directional, and the run-down student union with a Subway outlet and nothing else, and they go for the shiny.  And it's very important to attract the rich students, because they're the only ones paying full freight, especially the foreign rich students, who are probably contributing the lion's share of tuition dollars, state subsidies being as tiny as they are these days. So it becomes an arms race of resort-type offerings.

I have mixed feelings on all of this. On one hand, I agree that driving up tuition with fancy new facilities is a bad idea. However, I teach at a place with some pretty crummy facilities and, even as a faculty member, I find it kind of depressing. The common areas in all the buildings are inadequate to the number of students. If you show up 20 minutes before class, there's never anywhere to sit. Very few of the classrooms have windows. If you forget to bring your lunch you can either have a terrible sandwich or wait for 20 minutes in a huge line at the fast food place.

My reaction to some of this comes from my own privileged education. I went to a fancy private school where there were lots of pleasant places to sit. However, I do think it gives students a feeling that they don't really have a place at the institution. That said, part of the problem might be an investment in the wrong sorts of facilities, particularly ones that might appeal to prospective students rather than the ones who are actually at the institution and might like to have a chair to sit in while they do their reading before class.

[Hegemony]

I went to tour a SLAC with my teenage son a few months back. The tour guide showed us the dorms, the dining area, the athletic fields, the after-hours coffee shop, and a fancy classroom building.  We walked through all of these.  Then she said, "And that's the library over there," giving it a nod. "They have a writing center there too."  We didn't get to go inside the library.  I have to say it left a bad impression on me. I personally was a lot more interested in how large the library collection was than seeing a lot of similar-looking classrooms.  My son wondered if they had something to hide, but my guess is that she just didn't think the library would be of interest to prospectives.  Which lowered my opinion of the student body.

[ciao_yall]

I wonder if that thing about the pick-ups is really true, or whether that's an urban legend of the type of "That beggar really lives in a mansion." 

I'm sure it is true in the sense that some people have student loans and make poor financial decisions. However, as an explanation of the problems of student debt, it doesn't make much sense. It reminds me of the way that we often blame poverty on poor people's bad decisions, as if people not in poverty don't make bad choices all the time. They just don't suffer the same sort of consequences. Same thing here. We shouldn't be shocked that some young adults don't do well in terms of managing large amounts of debt. That doesn't mean that the root of the problem is individual poor decision making.

The old cinderblock dorms with the tiny rooms really ought to be adequate for today's students too, and in a perfect world, they would be. The problem now is that universities are fighting for students. And when East Directional State University has shiny new dorms, each room with its own bathroom and kitchen, it looks a lot more appealing than the University of West Directional cinderblock dorms, each with a bathroom down the hall shared with forty people and no one allowed to plug in a mini-fridge because it will overload the electrical system.  The rich students look at the fancy new gym with the climbing wall and sauna at East Directional, and the deluxe food court, and then they look at the tiny tired gym at West Directional, and the run-down student union with a Subway outlet and nothing else, and they go for the shiny.  And it's very important to attract the rich students, because they're the only ones paying full freight, especially the foreign rich students, who are probably contributing the lion's share of tuition dollars, state subsidies being as tiny as they are these days. So it becomes an arms race of resort-type offerings.

I have mixed feelings on all of this. On one hand, I agree that driving up tuition with fancy new facilities is a bad idea. However, I teach at a place with some pretty crummy facilities and, even as a faculty member, I find it kind of depressing. The common areas in all the buildings are inadequate to the number of students. If you show up 20 minutes before class, there's never anywhere to sit. Very few of the classrooms have windows. If you forget to bring your lunch you can either have a terrible sandwich or wait for 20 minutes in a huge line at the fast food place.

My reaction to some of this comes from my own privileged education. I went to a fancy private school where there were lots of pleasant places to sit. However, I do think it gives students a feeling that they don't really have a place at the institution. That said, part of the problem might be an investment in the wrong sorts of facilities, particularly ones that might appeal to prospective students rather than the ones who are actually at the institution and might like to have a chair to sit in while they do their reading before class.

Tuition is not being driven up by clean bathrooms, well-lit seating areas, nice desks, decent mattresses in the dorms and healthy food in the cafeteria.

[pigou]

And it's very important to attract the rich students, because they're the only ones paying full freight, especially the foreign rich students, who are probably contributing the lion's share of tuition dollars, state subsidies being as tiny as they are these days.

This is the key, really. Tuition for most students isn't nearly as high as it looks -- and need-based financial aid is really generous at the good schools. It's schools with very low returns to human capital that charge students a fortune and provide support only through loans, rather than grants.

Ideally, we would discourage students from applying there. Because as a first generation student, how are you supposed to know that attending a good school that is, on paper, much more expensive than the local community college actually ends up being cheaper after financial aid? How are you supposed to measure the social capital loss from transferring in after two years and balance that against potential savings? And given the absurdly low standards for being accredited, that means very little as a signal of quality.

The old cinderblock dorms with the tiny rooms really ought to be adequate for today's students too, and in a perfect world, they would be.

I'm not sure I agree. First, households now are just generally much wealthier than they were 30 years ago. Students may not be themselves, but if parents spending an extra $5k/year massively improves the quality of life for students, then that's a pretty good intergenerational transfer. If they instead inherited that money 60 years later, it wouldn't nearly make as much of a difference. That is, during college is perhaps the time when students are poorest and get the most marginal return to having parents spend money on them. (While the financially struggling students get most attention in the news, I doubt that's the modal experience at flagship state or well-ranked private schools, i.e. the schools that really invest in their infrastructure.)

But for amenities more generally, they also reflect that universities understand the tremendous return that comes from investing in social capital. The students who spend all day in the library studying are missing out on one of the most important returns to college (unless they want to go on and do a PhD). Finding a well-paying job and getting promotions is just much easier with social capital than having a GPA that is 0.2 points higher.

I also wouldn't under-rate the value of large, open spaces with lots of natural light. I find myself almost never in my office, just because the common spaces are more inviting and make me much more productive. For students who don't have offices that's even more important -- especially to the extent that separating where you work and where you live has some value at times.

[Hegemony]

I'm not sure what you mean by social capital, but if you mean hobnobbing with other students, they can surely do that as easily in a cinderblock dorm as in a fancy dorm.  In fact having to share a bathroom and a dining hall would make it easier. 

[Caracal]

I also wouldn't under-rate the value of large, open spaces with lots of natural light. I find myself almost never in my office, just because the common spaces are more inviting and make me much more productive. For students who don't have offices that's even more important -- especially to the extent that separating where you work and where you live has some value at times.

Yes, my campus is almost totally lacking in any indoor spaces with any natural light. Almost all of the buildings are square 60s monstrosities and the vast majority of the classrooms and offices are in the interior with no windows. The common spaces in the middle are these sort of dingy dark crowded places. The campus has some nice outdoor spaces, but the areas around the buildings don't have a lot of seating either. Of course, the school is obsessed with the idea that promoting their football program is going to create a sense of school spirit and community.

[spork]

I'm not sure what you mean by social capital, but if you mean hobnobbing with other students, they can surely do that as easily in a cinderblock dorm as in a fancy dorm.  In fact having to share a bathroom and a dining hall would make it easier.

Social capital is the economic value of relationships between people. Harvard can have shitty dorms in part because anyone who goes there can interact with the next generation of uber-elite, and both parents and potential students know this is economically valuable.