Taking a reality check on college debt

Even if you interpret the rise in student debt as a glass half full (more young people going to college!) it's hard to ignore the downside. More than 44 million Americans owing $1.6 trillion in repayments for student loans sounds like a serious problem, especially when more than a third of debtors are in default.

Saddest of all are those students departing campus with debt but no degree. Two-thirds of college debtors are college dropouts. Many were ill-prepared for college work; others struggled with financial or other hardships.

Graduation aside, the impact of student debt ripples through the economy and society long after college days are over. Credit scores suffer. Marriage, family formation and homeownership are often deferred, as are other large purchases including cars, furniture, vacations and retirement savings. Entrepreneurship and career paths are stifled.

Cynicism is another byproduct. Despite evidence to the contrary, many college debtors question the value of their education against the burden of debt they continue to carry. College was supposed to be the ticket to the good life, but when do they get to live it?

As Democratic presidential candidates seek possible solutions, it's important to reflect on the problem's origins and finer points. The root of the problem? Wages have stagnated since the 1970s while tuition and fees have tripled.

Why the soaring costs? Big spending on administrative staff — as well as on amenities such as fancy dorms — is partly to blame as both public and private schools scramble to compete for top students and faculty.

Another factor on the public side is the shifting of college costs from states to individuals. Higher education, once seen by politicians as a societal benefit, is increasingly viewed as a personal perk. Yet another explanation is that college degrees continue to hold value. On average, a college grad can expect to earn $1 million more over a lifetime than a high school grad.

Those with advanced degrees generally owe more. But higher earnings improve the ability to repay. The debt crunch is actually easing somewhat at the University Minnesota's Twin Cities campuses. The share of bachelor's degree graduates carrying debt has fallen over the past decade from 65% to 56%, while the median amount owed has declined slightly to $23,000.

Still, as a category, college debt is disturbingly high, now exceeding auto loans and credit cards, trailing only mortgages in the household debt rankings. Working your way through college, once seen as an alternative to debt, no longer works. Minimal wages don't come close to meeting college costs, let alone living expenses.