Ask yourself what these three situations have in common: (1) a doctor tells a patient with a badly damaged wrist that surgery is both necessary and painful, but post-surgery the wrist injury will be stabilized and, in all probability, the wrist will be better and stronger than it was before; (2) a lender offers a home loan to a new homebuyer with reasonable variable interest and a down payment of 30 percent, knowing that if there’s a default down the road, the collateral (the home) can be sold at a fair price; and (3) a teacher tells her students that their selected course of study is intense, difficult and long but, if they succeed, there are quality, well-paying job prospects upon graduation.
The answer is that the “front-end” events—pain, costs, hard work—are linked to “back-end” rewards: improved health, little financial risk and considerable upside financial gain and valuable employment. This is a risk-reward analysis.
Sadly, the vast majority of media coverage of the costs of higher education focuses on the front-end costs of the higher education experience and ignores the back-end repayment options and opportunities. Yes, higher education is expensive, and value is not always commensurate with cost. To be sure, we address increased earning capacities of graduates with a four-year degree and the need for this degree in the twenty-first century workplace. Yes, we laud the improved health and civic engagement of college graduates.
But, we have a serious disconnect when it comes to conversations about incurring and repaying debt. This occurs in part because the front-end conversations happen in Admissions or Enrollment Management offices, whereas the back-end conversations are housed in Financial Aid offices. Students often learn about only one end of financial aid, and many individuals dealing with student admissions (not to mention talking heads, some higher-education experts, and college governing boards) are woefully under-informed about the back-end options.
Surely we can investigate new and creative models for financing higher education, especially for our most vulnerable students. We can reflect on cost-cutting, including through partnerships. But here is something we can do immediately: We can explain front-end and back-end options together, illuminating choices and easing the pain of borrowing and repayment. With the federal government playing such a central role in student lending and loan repayment, many of the sizable debt payments that undergraduates experience can be ameliorated. And at the same time, we can work to explore further repayment options, like expanding the bankruptcy discharge.
There are vast and beneficial repayment options, including income-based repayment (where a graduate pays based on earned income), public loan forgiveness for select professions, forbearance, deferral and rehabilitation (which can restore credit worthiness), among others. If you become a teacher or a police office or a nurse or a social worker, these options can help immeasurably by lowering payments and then eliminating the final portion after a period of on-time payments. The possibilities are complex, and simplification would be beneficial. Surely we would not be happy—and have not been happy—with a teacher, surgeon or lender who did not think through the back-end consequences of front-end actions. Think malpractice lawsuits and the home mortgage crisis.
The real question is why have we allowed the rhetoric surrounding the cost of U.S. higher education to capture the conversation without a concomitant discussion of repayment options? Why don’t we explain that, yes, some students will graduate with debt of $27,000, but here are ways to repay that amount without imperiling their future.
I was pained to see this disconnect most recently at a meeting of educators addressing whether there is room for tuition increases in today’s market. The comments included:
- “Our students cannot pay more. Period.”
- “The only thing that matters is net tuition revenue; who needs a tuition increase if we can’t fill the seats at the current price?”
- “Flat-lining tuition is a promise of stability for families and will encourage enrollment.”
- “If we raise tuition, we will lose a sizable portion of our applicant pool.”
- “You cannot get blood out of a stone.”
Not once were repayment options offered as a counter-balance. Not once were creative approaches to financing suggested. Instead, the educators bought into the current rhetoric hook, line and sinker: higher education is overpriced for our low-income students, and there’s no solution in sight. Yipes.
There are some hard and largely intractable issues in higher education as well as growing inequalities that cannot be solved easily. But we can address one aspect of this problem by breaking the silos between Admissions on the one hand, and Financial Aid repayment on the other. We can speak loudly about the beneficial repayment options that exist but often go unused.
It is not too late to tell students entering college in 2014-15 that the front-end size of their debt can be ameliorated at the back-end. This will reinforce the idea that pursing higher education is both a worthy and worthwhile investment. The price of tuition is not what matters per se. Capacity to service the debt post-graduation is what counts. Let’s raise our voices to showcase the many back-end options that are available—they are staring us in the face.