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August 31, 2016

The student loan crisis: It’s a phrase we’re all aware of. 

From personal stories to the political stump, the plight of young college students saddled with debt has captured the country's attention.

But how big of a problem really is all this debt?

Sandy Baum, senior fellow at the Urban Institute, argues it's not as bad as many of us believe.

She recently sat down with On Campus’ Kirk Carapezza to talk about her latest book on the subject: Student Debt: Rhetoric and Realities of Higher Education Financing.

Interview Highlights

On whether the student loan debt crisis exists:

The reality is that if you ask people how much money they think people borrow for college, you’ll get very exaggerated responses. If you ask how many people are struggling to pay back their loans, as opposed to really reaping the benefits of their education, you’ll get exaggerated answers.We have some very real problems with student debt, but they’re not necessarily the problems that most people think exist.

On the outrage over student loan debt:

People can easily say ‘Nobody should have to pay [for college]’ but in the end, somebody has to pay. It’s either taxpayers in general or it’s students and parents. Ideally, it’s a division between those parties and we need to have that conversation. It’s really unfortunate that state funding for higher education has declined the way it has. It is problem that college tuition has gone up so rapidly. We’re probably putting too much of the burden on students and families now, but the reality is that for most people college pays off very well. It’s an investment in yourself. You’re gonna end up better off than the average taxpayer, so why shouldn’t you pay part of that bill?

Related: Amid State Funding Cuts, Public Research Universities Find Unlikely Advocate

On the media’s role in perpetuating the student loan debt crisis narrative:

The media’s role is very big. The media are always looking for headlines and it’s not very interesting to write a story about a student who borrowed $25,00o to $30,000 to earn a Bachelor's degree and has a good job and a promising career. That’s not really very interesting. Instead, [the media] find somebody who borrowed $100,000 -- an extraordinarily rare event for an undergraduate student -- and graduated during the recession, and is struggling to find a job, and they don’t follow up to find out that three years later that student is fine. These amounts of debt are very rare.

On how to fix or improve the student loan system:

There’s a lot we need to do. The biggest problem is preventing future students from getting into these bad situations. We have to help people make better decisions about where and when to go to college and what to study. We have to make it impossible for them to take their money to schools that aren’t going to serve them well. Then, beyond that, there are always gonna be people for whom things don’t work out well. We need very strong insurance against those outcomes. We’re doing pretty well with that in terms of having federal student loan repayment plans that are based on people's incomes, so you never have to pay more than you can afford. The programs are not structured well enough; they’re too difficult to get into. We have to improve those programs.

On whether colleges should be held accountable if graduates struggling or unable to pay off debts:

I think it makes sense for colleges to have some skin in the game and it’s not just about their graduates. We have to remember that the real problems are with students who don't graduate, so any program that’s based only on graduates is gonna fall short. It’s really difficult to figure out how to design a program that will make colleges pay for some of the loans that their students don’t repay because you don’t want to encourage colleges not to take students who carry a risk. But you do want to encourage them not accept students who have no chance of success.

Editor's note: Answers have been edited for clarity and length. 

Earlier: How One Affluent Town Helps Its Neediest Students Get Into (And Stay In) College

confronting cost, increasing access and success

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