< Rethinking the Student Debt Crisis

Transcript

Friday, June 27, 2014

BOB GARFIELD:  And now for some more conventional wisdom - debunked. Everyone knows that student debt is at historic highs and an unscalable obstacle for a whole generation of young people trying to enter the economy.

MALE CORRESPONDENT:  Saving for college is very, very important. We’ve got a student loan crisis in America. It’s larger than credit card debt now.

HARRIS FAULKNER/FOX NEWS:  Well, if you are buried in student loan debt, you’re not alone. Forty million Americans have outstanding loans, and that's more than the entire population of most countries.

FEMALE CORRESPONDENT:  The amount of debt that is crushing students going to college is just unbelievable.

 [BOTH SPEAK/OVERLAP]

FEMALE CORRESPONDENT:  So many, yeah.

BOB GARFIELD:  But then on Tuesday, David Leonhardt of the New York Times reported on a just released Brookings Institution study on education debt. It was headlined, “The Reality of Student Debt is Different from the Clichés,” an assertion so out of sync with conventional wisdom that other writers instantly produced impassioned attacks on Leonhardt, and Brookings, for jumping to conclusions based on shoddy research.

The New York Times itself seemed a little conflicted on the issue. The weekend before Leonhardt’s article its Sunday Magazine cover story titled, “It's Official:  The Boomerang Kids Won’t Leave,” detailed the hardship faced by many post-graduate Millennials. Reporter Adam Davidson wrote that, quote, “One in five people in their ‘20s and early ‘30s is currently living with his or her parents.” That’s a stat that certainly tracks with the sense that student debt is an all-time high. But that Brookings study says it ain’t so. What if what we all know for sure and what the media tell us is wrong? What if criticism of that study hinges on questions easily answered by statistical norms? In a follow-up piece in Wednesday’s Times, Leonhardt addressed those very questions. Dave, welcome back to On the Media.

DAVID LEONHARDT:  Thanks for having me.

BOB GARFIELD:  So can we begin with the most basic question? Did you screw up here, a lot, a little bit, not at all?

DAVID LEONHARDT:  Not at all.

BOB GARFIELD:  Tell me.

DAVID LEONHARDT:  We have had a rise in student debt over the last couple of decades, but we have also had a rise in income over the last couple of decades. And so, the amount that a typical person with student debt needs to pay has remained relatively similar over that time. And yet, because the economy has been so disappointing, student debt has become an easy thing to blame. And that’s why you often see in the media anecdotes of someone who has 50 or 75 of $100,000 of debt. And when you go look at the numbers, those people are quite rare. And none of the numbers disagree about that. And I think the problem here is that those of us in the media are more likely to know people who go to elite colleges, and so you’re more likely to know a couple of people who maybe majored in something that has left it hard for them to get a job, and maybe they did take on tons of debt, and so we exaggerate how common the problem is.

BOB GARFIELD:  Are you talking about the stereotypical privileged kid with the arts history degree and nothing much to show for it?

DAVID LEONHARDT:  As a colleague of mine joked, there are some of those people, and probably every one of them has been profiled in the media over the last few years. The much bigger problem, it’s not the poet with $90,000 in debt; it’s the kid with $15,000 in debt who leaves college without a degree. That is a much more common situation. One of the things that I am arguing is that we should pay more attention to the larger problem.

BOB GARFIELD:  Okay, fair enough, but you were writing about this study and the study was based on households with people between the ages of 20 and 40. But the authors did not include households where a recent graduate is back in his or her old bedroom because he or she has a degree, and debt, and is unemployed or underemployed.

DAVID LEONHARDT:  It’s because there has not been a huge increase in the number of people doing that. I mean, it is true that the number of kids who are living at home with their parents seems to have risen, but it also fell before that. We don’t remember that the economy was also quite weak in the early ‘90s and a lot of people did it back then. So it’s just not that much higher than it was.

BOB GARFIELD:  When it previously spiked, but against historical averages isn’t it something close to a historic high?

DAVID LEONHARDT:  Well, if it was 7% in 1992 and 8% right now, and I’d be wary of saying that it’s a historic high. Kevin Carey of the New America Foundation did this great thing. He went and he tracked down all the unemployed and underemployed college graduates that the media had written about during the early ‘80s and the early ‘90s and the early 2000s recessions, and he found where they were now. And they were overwhelmingly doing quite well. And so, you could imagine back in the early ‘80s or the early ‘90s that you and I would be having this conversation and one of us would be saying, boy, I know so many young college graduates right now who are just having such a hard time, I can’t imagine that they won’t have a really, really hard time ever recovering from that in any meaningful way. But that’s why we really do want to dig into the data and not put too much weight on anecdotes.

BOB GARFIELD:  You pointed out from the Brookings study that the percentage of students graduating with more than $50,000 in debt was not vastly larger than it had been historically, adjusted for inflation. If a lot of young people have $48,000 in debt or 43,000, they don’t make the 50,000 threshold but that’s still a pretty crippling burden for people who are working at Starbucks. Did that get misrepresented?

DAVID LEONHARDT:  No, I think the thing that gets misrepresented is someone who just listened to the kind of numbers you walked through or read, a typical story in much of the media about this, would imagine, wow, $45,000 in debt is a really common amount of debt. And it’s just not. And if you look at households between ages 20 and 40 that have at least $30,000 in debt, we’re talking about 6% of all households, not nobody, but the discussions that you see in the media projects those things as the norm, and they’re not the norm.

BOB GARFIELD:  I want to get back to the way you wrote your original piece, make an assertion, which is quite contrarian and argues that we’re kind of missing the real story. But then, in a clarification in the form of a Q&A piece in Wednesday's Times, you double back with a kind of asterisk, which was to note that in 2010 36% of households with people between the ages of 20 and 40 had education debt versus only 14% in 1989. And you doubled back to acknowledge that the overall debt load is going up. If you had to do it all over again, Dave, would you rewrite this story so that you didn't have to go two steps forward and one step back?

DAVID LEONHARDT:  No. I think good reporting is including nuance rather than deciding that you’re gonna make an argument and ignore any evidence that points the other way. The idea that we’ve exaggerated elite student debt and under-covered the kind of student debt that affects most kids isn’t contrary at all among economists; it’s sort of conventional wisdom.

Now, having said that, in the course of arguing that I think we've missed a substantial part of the story, we, being the media as a whole, I don't want to go so far as to pretend there aren't issues with student debt. I think that's being less honest with readers. Part of it really is I’ve spent so long listening to people whose job it is to study these issues, talk to me about how badly they think the media is, covering this story.

BOB GARFIELD:  Dave, thank you so much.

DAVID LEONHARDT:  Thanks for having me.

BOB GARFIELD:  David Leonhardt is the editor of The Upshot at the New York Times

Guests:

David Leonhardt

Hosted by:

Bob Garfield