Debt-free college must be debt free

As the 2016 presidential campaign kicks off in earnest, it’s already becoming clear that one issue is bubbling to the top of the national conversation and candidate platforms: debt-free college.

Simply put, debt-free college means that every student in America, regardless of their financial means, should be able to attend a public college or university and graduate without student debt. It is a promise that, until only 20 years ago, was available to generations of American college students. But rising college costs, as well as stagnating wages and state budget cuts, have meant that student loans are now the primary way that students and families finance higher education. Concerns about student debt have an impact on major life decisions — from starting careers and small businesses to saving for retirement or buying a home. It even acts as a barrier to attending college in the first place.

{mosads}Given these major life choices, it’s no surprise that the goal of debt-free higher education is so popular with voters — 71 percent to 19 percent in a recent Progressive Change Institute poll, including majorities of Republicans, Independents, and Democrats. Since April, 20 senators and over 40 members of Congress co-sponsored Senate and House resolutions calling for a national goal of debt-free college.

Presidential candidates have also begun embracing this big idea. Former Maryland Gov. Martin O’Malley (D) endorsed debt-free college in a Washington Post op-ed and in an email to supporters. Sen. Bernie Sanders (I-Vt.)  introduced legislation to provide free tuition at public colleges and universities, a positive step in reducing the need to borrow for college. And former Secretary of State Hillary Clinton (D) embraced this national goal by saying, “We have to deal with the indebtedness — to try to move toward making college as debt-free as possible.”

If debt-free college becomes a centerpiece item in the 2016 election, it will represent a seismic shift toward bold ideas and away from small solutions to the very big issue of college affordability.

Some argue that instead of offering a full debt-free guarantee, we should focus on making debt more “manageable.” But this is mostly motivated by a lack of willingness to make the full investment necessary to achieve the goals of debt-free college, and would diminish such a policy’s impact and public support.

First, for many students, there is no such thing as “manageable debt.” In fact, the students most likely to default on student loans have smaller balances. According to recent data from the New York Federal Reserve, over half of students who borrowed less than $5,000 either defaulted or fell behind on repaying that loan within 5 years — compared with less than one-third of borrowers who took on $100,000 or more.

Second, the notion of “manageable” student debt embraces something similar to what President George W. Bush once called the “soft bigotry of low expectations.” It basically defines success as merely not going bankrupt. The Philadelphia Federal Reserve has noted that the existence of student debt hurts small-business formation. And research by Demos shows that young student debtors are far less likely to have savings — hurting their ability to start a business, buy a first home, or save for retirement.  

Third, the existence of student debt is one of the leading causes of students “boomeranging” back to their parents’ homes after college — stunting their ability to start a life. While these college graduates may be “managing,” their ability to be part of our economy and start their lives is significantly hurt by what some may consider “reasonable debt.”

Put these factors together and the next inventor of Google may never have the ability to start the next engine of economic growth — or move out of their parents’ home.

In response to the above, some may call for guaranteed access to debt-free college solely for low-income people, arguing that wealthy families can afford “manageable debt.” But under our current system, wealthy families already have access to debt-free education because they can afford the full cost of public colleges and universities.

Those who would really be hit by “manageable debt” are middle-class families. A family of two teachers with two children and a household income of $100,000 per year will not have tens of thousands in disposable income to pay for college. Similarly, a farmer or small-business owner may have property or assets that are worth a lot, but lack disposable income. The children of these families are the ones who would get hit by “manageable debt” — and be forced to forego savings, the start of small businesses, buying homes, leaving their parents’ home, and life opportunities that make them full participants in our economy and society.

In the end, the debate about debt-free college should be resolved by core principles.

First, access to education that is a prerequisite for entering or remaining in the middle class should be universal. Higher education beyond K-12 meets that standard today.

Second, we should expand opportunity to achieve the American Dream to all Americans. If taking on debt is a prerequisite to entering college, that is a barrier to entry for many families.

Third, education is not a cost — it is an investment. The move to universal K-12 education, free to all regardless of economic means, resulted in long-term economic prosperity and helped build the modern middle class. Our investment in sending people to college through the GI Bill achieved a 7-to-1 return on investment for our economy. And workers with college degrees earn more money, pay more taxes, and rely less on government services.

Fourth, we should not cut corners, skimp on investments, or settle for “manageable” when we can achieve far greater things.

It’s our turn to invest fully in America’s future and tell all students: By working and studying hard, you will be able to contribute to the future of our economy and build a life without debt getting in the way.

Huelsman is senior policy analyst for Demos.