It's that time of year again in higher education. Prospective students are deciding, current students are pre-registering and graduating, administrations are making budget decisions, and boards are bracing for how the numbers shape up. Looming especially large this year is the political drum beat of “free college” and “student loan crisis.” Boards are concerned about tuition and revenue, the real burden of loan debt for students and graduates, and the public perception of college costs as out of control.
Remember that federal student loans often give students a very real opportunity to choose among thousands of colleges and universities. Until recently, student loans were also a bargain with low interest rates and extended pay back periods. Loans provided students with the capacity to make an investment in their educations and have some skin in the game.
The rise in student debt, however, has been caused by a complex set of forces, including high interest rates, inadequate counseling for students, longer time spent obtaining a degree, poor preparation for college work, and life circumstances that cause students to drop out with loans but no degree.
The best approach that a board can take is to ask the hard questions about debt—the institutional default rate, the average debt at graduation, the average time to degree, the number and percentage of students dropping out or transferring with debt, how student financial-aid packages are put together, how students are counseled about debt (which should be a part of the academic experience), and how the institution can help students manage their loans after graduation.
Boards can help students to keep debt manageable, but they must also stand firm on the value of higher education and the importance of ensuring the quality of the academic experience.
Student loan debt is a reality and has become a part of the higher education experience in the U.S. Major reform of the federal financial-aid system should take place with the guidance and engagement of higher education boards. In the meantime, boards must act responsibly and thoughtfully at the institutional level by controlling costs and monitoring student debt. The better informed boards are about student loans, the better decisions they will be able to make for their institutions and their students.