The Education Bubble, Part 3: 'Shared Responsibility' To Shrink Student Debt

As college tuition costs keep rising, student loan debt has increased significantly. Two-thirds of students take on loans, with the average debt load now more than $23,000. And as there’s a renewed push for youths to attend some college, there’s also worry that debt levels and default rates will continue to rise as well. Part 3 of a WBUR Series: The Education Bubble.

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BOSTON — In a recent interview, a Boston-based college and career consultant stressed the need for cooperation to ease the escalating student debt we've covered in this series.

"There's got to be a push for some shared responsibility in informing students up front as to whether or not the decisions that they're making make any economic sense," said Craig Powell, CEO of ConnectEDU, a website that aids students in their collegiate and professional transitions.

On the students' behalf, Powell says applicants and their families need to ask themselves a series of questions to make sure the math "makes sense at the outset." He advises students to consider their target institution, the general career path they're interested in, the starting salary of a person in that career, how well the institution places graduates in that career and whether a target degree correlates to target career opportunities.

He also pointed out two specific data points he says are rarely discussed when weighing financial needs: The cost of transferring credits for the 47 percent of students who switch colleges in their first two years; and that, on average, students take 5.4 years to graduate from four-year programs.

"Many parents and families are still operating under the notion that you graduate from college in four years when in fact, statistically, that is not the case," Powell said.

Powell also took issue with the sometimes hands-off approach he sees colleges employing regarding their students' debt loads. He says institutions shouldn't wash their hands of responsibility "because we live in a free country" and noted that some industries levy penalties for not informing consumers of potential future pitfalls.

“Many parents and families are still operating under the notion that you graduate from college in four years when in fact, statistically, that is not the case.”-- Craig Powell, ConnectEDU

Part of the problem, in his view, is that it's a worst-case scenario for an institution when a student cannot graduate, but it's a different story upon graduation.

"That institution has no ownership once that student has left the institution as to whether or not that debt burden actually gets paid back or not," Powell said. "That's the sole responsibility of that student loan underwriter."

While Powell has seen the upside of the student loan system — he says he never would have attended an Ivy League school without supplemental, private loans — he concedes that the high default rates are starting to resemble the busted housing market.

"I think the notion, in concept of 'bubble,' as defined by inflation off of debt, is absolutely alive and well in the education space," he said. "I think you're seeing particularly mid- and lower-tiered, higher-priced institutions sort of careening toward a course of not being able to make the hours add up."