Student Debt Is a Problem Only Government Can Solve--Particularly Since Government Created It

A Wall Street Journal Article shines a lens on a Columbia MFA where half of the students go into ill-paid jobs mired in debt--but it isn't the whole story

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This morning’s buzz on academic Twitter is Melissa Korn and Andrea Fuller’s Wall Street Journal article about MA programs that exploit students’ borrowing power. The article features young people, who probably also borrowed for college, who believe they need an MA to pursue their chosen field. Glitzy programs promise to give them an entree to a career and then don’t deliver.

Many MA graduates undergo a brief period of training to do something they genuinely love—writing, journalism, film, philosophy—only to find out that they have signed on for a lifetime of serfdom to a bank.

Sure it’s easy to hate on Columbia University: it’s anti-union, it colonized Morningside Heights for profit, and it supports its Ph.D. programs with come one, come all MA programs in the same fields. But why do Korn and Fuller demand that universities solve a financial problem that the federal and state governments, which regulate education and the financial industry, have not only refused to address but openly facilitated? They barely mention these powerful actors at all.

It’s not that universities are innocent of establishing numerous graduate and professional programs whose primary function is to raise cash. They are. Korn and Fuller explore the Columbia University MFA in film as a primary example of such abuses. “Recent film program graduates of Columbia University who took out federal student loans had a median debt of $181,000,” they write. “Yet two years after earning their master’s degrees, half of the borrowers were making less than $30,000 a year.”

We can all agree that $30,000 is not a sum that will support a life anywhere that film or television is made, much less student loan payments.

Using Department of Education data and interviews with disappointed graduates, Korn and Fuller show that “The Columbia program offers the most extreme example of how elite universities in recent years have awarded thousands of master’s degrees that don’t provide graduates enough early career earnings to begin paying down their federal student loans[.]” Graduates of a program lodged at a school with an $11.3 million endowment have the highest debt load of any university graduate program in the nation.

I share Korn and Fuller’s outrage about student loan burdens. But under what conditions should any degree at any university guarantee all of its students “enough early career earnings to begin paying down their federal student loans?” Focusing on “the most extreme” example—wealthy university mires students in a lifetime of debt with degrees that lead to poverty wages—obscures a more complex picture.

One obvious part of that picture is that if half of Columbia film graduates have debt, they will never pay off; half do not. That’s a significant fact. However, this other half of each cohort is probably a mix of students whose parents are willing to pay for grad school outright and those whose parents can support them well enough that they can take on a modest, repayable debt. It may even mean that Columbia offers a good degree: some graduates may be getting good jobs right out of the program, with salaries that allow them to pay off a debt in the career they desire.

So it is poor and middle-income students who the university—or, I would argue, the government—is not adequately supporting. Why highlight this vital fact? Because the vast majority of universities—and most of us work at places that are far less affluent than Columbia—are admitting over half of their undergraduates, and most of their MA students, with the expectation that they will take on often significant debt.

And the sum students will have to borrow tends to increase annually, often well beyond what they initially imagined. Students who assume they can work 20-30 hours a week to support themselves, as they did in undergrad, quickly find that this is incompatible with graduate study. The competition between work and school is particularly true in fields like film, art, design, and writing, which require a heavy investment of time (and extra money for materials and production) to succeed. So students take out loans and more loans as the reality of their situations becomes apparent.

Furthermore, the more debt students have already taken on, the more likely they will take on additional debt, particularly in families that value education. Not taking on the debt required to finish a degree means that loans, and cash payments, already accrued are money down the drain.

There’s another phenomenon: debt and higher education are so closely twinned that students take that connection for granted. More than one student has said to me after signing off on another loan agreement: “I’m never going to be able to pay it back anyway—so it doesn’t matter how much I borrow.” Many of them expect the Biden administration to make good on promises made by his party’s progressive wing to void current federal loans.

Note to Joe Biden and the Democrats: the more you promise, and the longer you dawdle on this, the more students will believe that they are taking out loans that no one will ever make them pay back.

However, using Columbia as an example of the debt problem doesn’t work because it doesn’t remotely represent the educational world as a whole. Of course, Columbia could tap into its endowment to set a reasonable cap on borrowing or fully finance all of its students! And they should.

But guess what? Most universities can’t. Out of 5300 United States colleges and universities, only 64 have endowments above $1 billion. Only nine institutions, including Columbia, have $10 billion or more. Faculty often insist that universities aren’t businesses. But actually, they are, and these numbers matter to the story because, for most of us, MA programs play an essential role in supporting the annual budget of institutions that lack those many billions.

Yet I would also like to add that the MA is not, de facto, a useless credential, like Korn and Fuller imply by profiling young people doing grunt jobs on film and TV sets, for which no one has ever needed an advanced degree. On the contrary, master’s degrees play a positive function for hundreds of thousands of students. They create an opportunity to demonstrate intellect, creativity, and a commitment to excellence. Moreover, for some students, the MA is a viable and necessary step towards under-compensated professional work for which there is a major social need: teaching, therapy, and nursing are a few of these fields.

An MA can also credential a student for more education and public service. Many MA students in my department go on to excellent graduate programs in history, and many get university jobs. Others go on to do history-related work, something our particular faculty supports well. A terminal MA can also lift students into policy circles, political consulting, and professional writing.

The question is not: are MA programs worth it? Instead, it is: what personal cost should students be asked to bear to realize their ambitions? Why have we shoved support for higher education back on young people who can least afford it? And most importantly, what public policies and institutions have facilitated $1.7 trillion in student debt, a number that has accelerated since 2011 but relieved the government and financial institutions from any responsibility for the lucrative monster they created?

If schools like Columbia are laundering the money, federal and state governments have failed to regulate the economics (as opposed to the content)of higher education; and a corrupt and exploitative financial services industry. Instead, the government merely certifies new loan programs and practices that make education possible for students at the cost of their long-term financial health.

In the absence of government regulation, each student is charged with looking out for herself in the face of a bewildering set of powerful institutions: the state, banks, loan collection agencies, and university departments whose employees, after the first year, essentially hold degrees hostage unless students take out the loans to pay for them. Students who know they need the degree to get ahead do not believe these loans are a choice. It is one form of rational thinking: they are betting on themselves.

And instead of spending money on students, the federal government creates loan programs that invest in the financial services industry. Korn and Fuller specifically mention the federally-guaranteed GradPlus, sometimes known as the DirectPlus, loan program, created under the George W. Bush administration, as the culprit that proliferated MA programs. Targeted at graduate and professional education, a student can authorize the school “to use funds to satisfy other educationally-related charges, or change the loan amount specified in a previously submitted PLUS Loan application.” And it has made the explosion of money-making MA programs possible for cash-strapped universities like mine as well as prestigious Ivy League universities.

In a place like New York, these open-ended loans play a role, not just in facilitating tuition payments students can’t afford but in leading them into a precarious life in an expensive city that they can’t afford. As importantly, easy loans also encourage universities to shift institutional costs to students in the form of mandatory insurance policies, lab fees, materials (film, fashion, arts, and design programs require heavy spending on the student outside of tuition and living costs.)

The high focus on alleged money-grubbing at Columbia no doubt reflects how students, and their parents, experience educational debt. That’s important. But it misses the bigger picture: that this country doesn’t support education and fails to meet the aspirations of the young by financially supporting their intellectual and professional development.

Instead, the United States government and state governments have disinvested from their commitment to education and the arts by refusing to play the regulatory role they should. Instead, they have welcomed private, for-profit financial industries into that space and inadvertently identified a class of hard-working, under-resourced young people as prime candidates for a lifetime of debt.

It’s a form of financial serfdom. And state regulators, who certify these MA programs, have failed miserably to sound the alarm bell about what they are for, what they do, and who is paying the price for it.

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Claire Bond Potter is Professor of Historical Studies at The New School for Social Research and co-Executive Editor of Public Seminar. Her most recent book is Political Junkies: From Talk Radio to Twitter, How Alternative Media Hooked Us on Politics and Broke Our Democracy (Basic Books, 2020).

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