I’ve written in the past about the hysteria surrounding student loans, and the focus in the media about how student loans are the next “bubble.” I recently published an op-ed in the Answer Sheet blog on education of The Washington Post in which I attempted to counter some of the rhetoric with facts about student loans. The piece received a number of comments, most of them critical, so I wrote a response which I expect to be published there sometime later this week.More recently, Yahoo published a story about one family in Massachusetts who had racked up more than half a million dollars in student loan debt, most of it in Parent PLUS loans, to send the first three of their four children to private colleges. I saw the article when a friend of mine posted it on Facebook, and after reading the story I posted a comment that said, “There is so much wrong with this article, I don’t even know where to start.” He followed up, and asked if I would be willing to explain my response in more detail. I did, and that response received many comments as well. So in the interest of sharing my response more broadly, I am including an edited version of my comments here. These comments will make the most sense if you have read the Yahoo article, so I hope you’ll take the opportunity to do that.

1) Like many of the articles about student loans, the writer and publication – while not explicitly stating it in this case – want the reader to think of the subjects as typical of student loan borrowers. But $500,000 in student loan debt (presumably this is the total of the parents’ PLUS loans and the three students’ own borrowing) is an average of about $170,000 per student. This puts these students way, way out in the far right-hand tail of the distribution of student borrowers. 

During the period I’m guessing these three were in school (let’s say in the last five years) the average amount borrowed by students completing a bachelor’s degree in private, 4-year universities was around $30,000. And the average amount of parent PLUS loans was about $40,000 (these data come from the 2011-12 National Postsecondary Student Aid Study). A total of about $170K per student is well above the averages. So this family is by no means “typical” of student loan borrowers.

2) The family chose to send their first three kids to private colleges, and had to borrow huge sums to do so. This was clearly a choice on their part; Massachusetts has 14 public universities, all of which are more reasonably priced (sticker price) than most private colleges. The most expensive of which, University of Massachusetts-Amherst, during the period their kids likely went to college had a cost of attendance of about $25K per year, meaning they could have attended four years for $100K each (maybe some of the kids took longer than four years, and this added to their costs – we don’t know). Even if they couldn’t get into UMass-Amherst, there are many other public colleges in the state that admit the majority of students who apply, so they likely had other options. And these other public universities have lower prices than UMass-Amherst.

Some parents say, “It’s always been my child’s dream to attend private college X, and how could I deny her that?” Well, if you can’t afford something, and there are cheaper alternatives, then it makes little sense to buy the more expensive alternative. According to what appear to be the LinkedIn profiles of the parents, Valerie and Peter Shippen, both of them attended public universities in Massachusetts for their bachelor’s degrees.

3) The article quotes the mother as saying “We have no retirement savings.” This is another reason why it made little sense for this family to borrow $500,000 to send three kids to college when it likely had cheaper alternatives.

4) The article states that both parents have graduate degrees, so they are clearly highly educated. They had the skills necessary to weigh the pros and cons, and in the end they made a conscious choice to borrow this huge sum of money to send their first three kids to private colleges. Are we supposed to be sympathetic toward them? Some may be, but I’ll reserve my sympathy for the poor and lower middle-class families who can’t afford to send their kids to any 4-year institution, even if they are willing to borrow (here is an article from Inside Higher Ed about how some parents are unable to access Parent PLUS Loans).

At the end of the Yahoo story, it says, “Are you a student struggling to pay your way through college? We’d love to hear your story.” Nowhere does it say, “Are you a student for whom a reasonable amount of student loan borrowing enabled you to earn a degree and reap the lifetime benefits of that investment? We’d love to hear your story.” The point is that the media are intensely focused on the student loan horror stories, and with tens of millions of borrowers out there, you can certainly find some. The media don’t pay enough attention to how responsible borrowing can help students achieve their dream of attaining a college education.

The debate about student loans is an ongoing one, so I am sure I will have more to say about it down the road. Stay tuned.