Busting the Myth of College Debt

By S. Georgia Nugent

College costs are “skyrocketing.” Graduates incur a “crushing” amount of debt. These are frequently heard claims about American higher education, particularly private colleges and universities. As someone who has taught at three Ivy League universities and served as president of three liberal arts colleges, I welcome the opportunity to address these claims with facts that are not so widely known. I’ll concentrate on private, not public colleges, as the sector I know best.

First, the net tuition (what students and families actually pay) is lower in 2021-22 than it was in 2006-07, according to annual economic analysis by The College Board. Unfortunately, high “sticker prices” belie this fact. Today, most colleges provide financial aid to 90-100% of their students. And, nationwide, they provide in financial aid more than 50% of their published tuition. 

This is a problem that higher education needs to fix. The discrepancy between “sticker price” and actual cost to the student contributes to public confusion and mistrust. As well, it’s obviously unsustainable for colleges to distribute more funds than they take in. The origins of this system are historical, complex, and difficult to address, in part because the Department of Justice bans colleges from discussing it. (That’s a long and fascinating story in itself.)

With regard to “crushing” amounts of debt, it’s important to know that 30% of graduates have no debt at all. Extraordinary indebtedness of $100,000 affects only about 5% of college-goers; the vast majority of that debt is to for-profit operations, not traditional colleges. At private colleges, the average amount of debt (for all four years) is about $20,000. And college graduates earn, on average, 67% more than non-grads, typically $1 million more in lifetime earnings. 

The term “college debt,” in my view, is a misnomer; most will assume it refers to an undergraduate degree. But in fact, students earning advanced degrees in graduate and professional school (who may be expected to draw higher compensation for those advanced degrees) account for 47% of federal loans, although they’re only 14% of post- secondary school students.

Despite the headlines, undergraduate reliance on federal loans has been steadily declining, reaching a low in 2020-21. And the default rate on federal loans by private college undergraduates is only about 5%.

College cost is reason for concern, particularly as students are deterred from attaining a degree by misinformation about the actual costs—and benefits—of earning a degree. Research is clear: a college degree remains the number one ticket to social mobility. My fellow educators and I need to do more, both to get the facts out, and to diminish the disconnect between published prices and what students actually pay.