The riptides in higher ed overpower ripple effect of student loan

In this series, students and industry experts share stories and perspectives from inside the student debt crisis. Share yours here using #StudentDebt.

It is very easy for policy makers, pundits, the media and a new President to blame both private and public colleges and universities for rising student debt. The sticker price of most institutions just keeps rising. That seems like a sure sign that educational institutions are not doing all they can and should do to contain costs.

To be sure, there are unfortunate and too common examples of outlandish purchases

(presidential home renovations; tickets to concerts; high administrative salaries; inaugural costs) and outsized construction costs (most especially for athletic facilities and amenities) by educational institutions. And there are gargantuan endowments, which seem embarrassing at a time when tuition keeps rising. But, and this is key, we refer to these examples as if “all” institutions are equally at blame. They are not. And, as a leader, any new President needs to be cautious about using limited examples to extrapolate out to national norms.

Yes, there are some institutions and institutional leaders that are “overspending.” But, my personal in the trenches experiences as the president of a small college in a small state suggests that the bad apples do not overwhelm the good apples; it isn’t even a close race. I am especially worried about people who comment on educational costs whose only experience is being a student and perhaps engaging in and receiving a degree from a graduate program. Seriously, advice needs to be grounded in and informed by what is actually happening in the trenches from those who are there or have been there recently. 

Stated differently, rising tuition costs are not – for the most part – the result of the above described “unnecessary” spending in an effort to line the pockets of administrators or needlessly augment student amenities. There are lots of very good reasons which, when unraveled, explain tuition increases, including rises at a higher rate than that of inflation.

Consider these examples.

The healthcare costs for current and delayed retiring faculty and staff continue to rise, particularly plans that allow for low deductibles and quality coverage. We are enrolling more students that are low income and first generation; this means the need for added valuable support services increases (tutoring; mental health services; mentoring; advising; bridge programs; dual enrollment).

Added technology to enable students to be truly ready to engage in the workplace of today and tomorrow is expensive, both the equipment and the instruction. Admissions recruitment is an expensive proposition, even for campuses that have no issues with selectivity and a quality applicant pool and yield. And, for the record, compliance with Title IX, state and federal regulatory requirements and accreditation (regional or national and programmatic) are expensive in both time and money, disproportionately so for smaller and less well-heeled institutions.

In other words, I think we have focused on a few “bad apples” and based educational policy and commentary on outliers and in so doing, we have missed much of what drives the costs of higher education and what can be done to curb costs. We have also assumed, erroneously, that all sizable debt is bad. Really? There is actually good debt and bad debt, even as we debate which is which. 

Gambling debt is bad. Just ask Phil Mickelson. Some debt arises from judgments for civil wrongs where a company or individual needs to repay others for wrongs of which they were unaware, but legally responsible. Payday loans and rent-to-own are, with extremely limited exception, bad debt.

But there is good debt. Sizable, but market determined debt for a quality home mortgage is not bad debt; home ownership has always (pre-bursting bubbles and studies reflect subsequent thereto) been recognized as an important enabler for moving families from poverty into the middle class.

A goodly portion of existing student debt, with quality repayment options, is also good debt and worth the investment. But, there are two key assumptions built into this statement. First, students and their families need to select and we need to develop better repayment options that are simpler, safer and reflective of the career and life trajectory of the borrowers. We need ONE repayment option offered through the Department of Education and it needs to be the default option. Automatic payment as done in England would eliminate the fiasco with bad government contracted debt collections. All of this is a relatively easy and doable fix – that should be non-partisan. A presidential win-win.

The second premise is that borrowing for education is not wise if students drop out or stop out or are engaged in a program of poor quality that does not enable career opportunities or graduate education. We have too many students that are trapped with debt but have no way to show value for the monies they borrowed and now owe. This is for a myriad of reasons including institutions that are not working effectively to retain students, mismatches between students and institutions, perverse profit incentives and the failure of accreditors to measure educational quality and innovation, financial stability and governance compliance in meaningful and thoughtful ways. So, some blame here falls on the federal government and accreditors (who are, sadly, approved by weak standards by the federal government). The latter two issues can be fixed too. Possible presidential win-wins.

Then, we have some states that are diminishing their support for education – which means that institutions themselves need to foot more of the costs themselves (which is the net equivalent of a pass-through to students and their families.). Simultaneously, we have an increasing number of cities and states adopting some form of “college promise” to encourage enrollment in public institutions (usually community colleges), most particularly by low-income students – although the sustainability of these programs remains questionable.

We have forgotten or are willing to ignore the power of academic mergers and partnerships, which make infinite sense in education though hard to accomplish in the real world. And, we are reluctant to experiment and make change, lest our enrollment or rankings and rating drop. And we can rightly ask where the private sector including employers is in terms of its commitments to educational improvement – while also earning some profit. Ponder options: new financing vehicles for institutions, families and students such as income share agreements and social impact bonds, and employer funded educational advancement as an incentive for hiring or retention.

But, everything mentioned thus far isn’t unknown or secret. What I would share with a new President (and anyone else willing to listen) is not about the ripple effects of debt; they exist for sure. Debt is stressful and discouraging for students and their families. It impacts career choices and creates burdens for future choices including purchasing power, which in turn affects national economic growth and stability.

But, what really concerns me are the riptides that threaten to drown institutions and their leaders and devastate students and their families. These riptides are vastly more devastating than debt’s ripple effect.

Let me explain – first by explaining riptides and then how they apply to higher education.

Riptides (although the name is something of a misnomer) relate to the critical situation that often occurs when there is an impending storm and the ocean water is disrupted in such a way that a sliver of the ocean strengthens and pulls those in its space out to sea – relentlessly. No matter how hard one tries to swim back to shore, one is sucked under, totally fatigued. Many drown.

The solution, totally counterintuitive in my view, is to swim parallel to the shore (rather than into the shore). This is because riptides run vertically but are narrow and can be escaped if one shifts one’s normal pattern to capitalize on the construction of riptides.

The current complaints about the flaws in higher education and its outsized price tag have created an Armageddon like atmosphere. The consequences are real: some small institutions are closing and others future is threatened. Look at the plight of some of the HBCUs, some of which are experiencing threats on the state level and others of which are struggling financially and in terms of enrollment, retention and graduation rates.  Yet, some of these institutions offer opportunities to students who will not attend elite colleges and the data show that many of today’s minority STEM leaders have graduated from HBCUs and many low income, first generation students are well-served by small institutions where they can find a good niche and a career launching opportunity.

An additional riptide can be felt in leadership and governance. Leadership within today’s education landscape has become increasingly difficult and leaders increasingly leave or are thrown out. Many are aging out too. Minorities and women still are vastly outnumbered despite changes in the student population. Consider this data on community college presidencies (the apple of the Obama Administration’s and employers’ eyes): almost one in four community colleges has experienced a leadership transition in the last year. Ouch.

Board governance is a challenge too – avoiding the temptation to micromanage and yet dealing with an array of difficult issues ranging from past and present sexual assaults, a campus culture that is inhospitable to minorities or at least not welcoming, student and faculty protests over a wide range of issues including race, privilege and safety.

So, one way to avoid riptides when a storm is brewing is not to swim. Another is to realize there is a storm and when caught in a riptide, one needs to be creative and bold and imaginative. One needs to run counter to instincts. One needs, use Edward De Bono’s term, to think laterally. This suggests that how we address problems, how we rise from the riptide will test our fortitude and it will beg for us to try new approaches.

That is my advice to any new President of any organization, institution or nation: encourage the citizenry to be open to new ways of addressing problems and don’t get sucked under by riptides because one gets so fatigued trying what is an impossible swim to shore. Instead, think boldly and act boldly to address the real problems we confront in education and as a nation. Same old same old just won’t work. Riptides, not ripples, are what threaten us.