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Economics 101: Is the Heavy Burden of Student Debt Worth It?

Student loans saddle graduates with debt deep into their working lives


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Politically, Idaho is a battleground in the national war over education's place in state budgets. While the state has no constitutional mandate to fund higher education, some lawmakers hold that the state has a moral obligation to do so, while others peg funding to an expected return on investment measured in jobs and revenue.

That's how Coeur d'Alene Republican Sen. John Goedde, who chairs the Senate's Education Committee, looks at it.

"As you earn more income, you pay more taxes--as long as we can keep those people with degrees working within the state," he said. "We need to recruit businesses to Idaho so we can provide the workforce for them."

Providing employers with a pool of applicants encourages businesses to move to Idaho, initiating a snowball effect that Goedde said will improve commerce and the state's balance sheet.

Among the most important issues he sees in the coming legislative session is the issue of transparency at Idaho's public universities.

"There's been some effort on a federal level to make for-profit institutions more transparent. I think that would also be good for our public institutions," he said.

His concerns are that not enough scrutiny is given to professors' and administrators' salaries--though he concedes that those salaries need to be competitive in the Northwest--and that Idaho's universities need to publish employment and salary data by topic of study.

"Some of the degrees that are conferred make it very difficult to pay off the debt service," Goedde said.

Goedde's colleague on the Education Committee, Boise Democratic Sen. John Andreason, believes in the primacy of Idaho's commitment to its university system. The problem with Idaho's system, he said, is simple.

"We need to decrease the amount of student tuition and we need to hire more teachers--more professors--and other employees," Andreason said.

The solution: "We need to redo the tax structure to do that."

Between 2009 and 2011, Idaho's higher education budget decreased by $75 million, or 26.4 percent, during tense legislative sessions that pitted advocates against budget hawks. And as finding new revenue streams for education has become a contentious issue, the value of a university education, as measured by the costs and benefits of receiving one, has decreased.

Since 2007, the average tuition in Idaho has increased by 44.3 percent while wages increased by about 5 percent. And though state funding between fiscal years 2012 and 2013 increased by 8.7 percent, it will remain down 6.4 percent from 2007 levels. Meanwhile, Idaho's grant and scholarship programs remain stable. Between fiscal years 2012 and 2013, funds that directly reduce the impact of tuition on students stayed put at $6,663,300.

Despite stabilizing scholarship and grant funds, the portion of students graduating with debt remains high. In 2010, 66 percent of Idaho's graduating class had debt upon graduation, and the average graduate's debt load was $24,178.

And while the rising number of charter schools for Idaho's children has been hailed as a victory for choice in education, the financial viability of sending a student to his or her university of choice is becoming tenuous--particularly if that university is out-of-state.

The question of who should pay in-state and out-of-state tuition challenges everyone from legislators to universities to students as they--and their money--frequently cross state lines in the interests of academic exchange. As Goedde pointed out, University of Idaho is seven miles from his own alma mater, Washington State University in Pullman, Wash.

Beyond the interests of academia, leaving one's home state for college adds a geographical dimension to the separation between the dependency of his or her high school years and a newfound feeling of independence. Joel Wayne left his hometown of Pendleton, Ore., in 2001 for the University of Montana in Missoula to seek new frontiers.

"I wanted to go somewhere else and experience a new location," he said. "There's an appeal about going somewhere new."

At the time, out-of-state tuition at the University of Montana was roughly $12,500 per year. Wayne offset his expenses through a Cal Murphy Gold scholarship worth $4,800 for out-of-state students, but the requirements of that scholarship, including a provision that recipients must live in the university dorms, ultimately cost Wayne more money than he saved.

"It was a good scholarship, but it had a lot of stipulations on it," he said. "In the end, it made a lot more sense for me to become a resident and get a job."

Taking that job meant Wayne could only attend school part-time. In the end, it added a year to the length of his college education.

Leaving college came with hardship. When he graduated with a bachelor's degree in English and a minor in media arts in 2006, Wayne held $13,500 in student loans. After moving to Portland, Ore., with his wife, he was barely able to make the $70 monthly payments on his loans while working what he described as a "non-career job."

"We were just scraping by there. I was just paying the minimum amount because I couldn't pay more," he said.

His fortunes changed after working with AmeriCorps for a year, which reduced his debt load by about one-third and freed him to move to Boise, where he now works as a copywriter at CLM Marketing and Advertising. He said he makes enough there to increase his student loan payments to the point that he will have the remainder of his debt paid in the next two years.

Wayne considers himself fortunate. Though student debt has marked his life, he said he made choices and took actions that minimized his financial exposure; and he began a career ahead of a recession that has affected graduating seniors' job prospects for the last four years.

"I was lucky out of the gate," he said.

Less lucky were those who incurred education expenses after 2008, when legislatures responded to shrinking revenues by cutting budgets for colleges and universities, which passed the buck along to their students.

Don Burnett, dean of the University of Idaho College of Law, has seen this process first-hand.

"Fee increases and tuition partly compensate for decreases of public support of higher education institutions," he said. "There's a shift going on."

The other factor that contributes to the rising cost of educations is the growing volume of material students must learn. From free speech on the Internet to international trade agreements, the body of law for which law school graduates are responsible grows every day.

"The whole content of the law has been increasing greatly. There's more law to be taught and more faculty to be hired," Burnett said.

Affecting law schools in general is the growing perception that they lack transparency regarding the rate at which their graduates find law-related work. Dozens of law schools, including Albany Law School, California Western School of Law and Southwestern Law School have been slapped with class action lawsuits for providing misleading information about the job prospects of their graduates.

Burnett said that at some embattled law schools, transparency is only part of the problem of how they present their post-graduation employment rates. Many graduates find work in traditional legal jobs at firms and prosecutors' offices; but about 30 percent use their degrees to pursue non-traditional legal jobs in areas like the Drug Enforcement Agency, politics and human resources.

"The part that I think is the fault of some law schools is that they have not broken out all the categories of employment," he said.


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