An article in today’s Inside Higher Ed, “What we don’t know about student debt,” addresses the attempt by the federal government to rationalize student loans and inform “ed consumers” about the risks of their potential indebtedness. As the article indicates, the new federal calculus is missing some crucial information.

But Carl E. Zylstra, recently retired president of Dordt College (my alma mater) and now executive director of the Association of Reformed Institutions of Higher Education (arihe.org), has pointed out that the student loan default rate is probably the best available indicator of whether the average educational outcome from the institution is priced by the employment market at a level approximating its cost.

Default rates are a good indicator, but the statistics on default don’t necessarily correspond to the fiscal and  market realities that a college graduate will face in any given location or job. Default rate information certainly add helpful context, but it is still only a partial glimpse at the whole picture.
To find the default rate for any given college (that issues federal loans), you can type in the name of the college you’re interested in here. Then simply click on the college’s name link to see the default rates for its three most recent years of available data. Enrollments and the number of students repaying their loans are also listed in the reports generated.
The enduring student debt problem nationally remains the culture of easy money, which in academic circles appears in the form of federal loans too easily granted without any relation to collateral or earning potential of the borrower. Think of it as the bastard cousin to the sub-prime loans in the housing crisis. It is economic foolish and a form of federal indentured servanthood for students who graduate with more federal debt than they’ll be able to pay off in a reasonable time.
Christian colleges have been careful, thankfully, about not allowing their students to rack up too much debt. Thus, their overall default rates have been consistently among the lowest (Dordt, for example, is typically below 2 percent), while the national average is 8.8 percent.
College costs-to-value ratios are headed the wrong direction, so the loans are simply buying less. The amount of loans to earning potential have also started going upside down, especially in this risky economy. So the way out boils down to pursuing basic economic faithfulness in a culture of immediate gratification and consumption beyond our means. Colleges need to reduce their costs, and students and families need to save more before they spend.
Until that happens, going to college without sufficient money will continue to be a path to debt slavery.
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