The Magazine

The Anti-Dowry

A complaint about our student loan system.

Dec 16, 2002, Vol. 8, No. 14 • By ALLAN CARLSON
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IF A GOVERNMENT set out slowly to strangle the family life of its people, what would be the best tactic? One diabolical approach would be to saddle young adults in their early 20s with massive debt. Surely, this would delay marriages, as potential spouses shied away from this perverse form of anti-dowry. Even more surely, this tactic would push back childbearing for a decade or more, as potential mothers and fathers put off having children until their debt collectors were satisfied. Such delays would mean more infertility, smaller families, and empty or never-formed homes.

This is precisely the policy being pursued by the U.S. government, in alliance with the nation's colleges, universities, and other post-secondary schools. It's called "Guaranteed Student Loans." In 2002, the average new college graduate carried an estimated debt of $22,000, up from $8,200 in 1991. An average couple that contemplated marriage on graduation would calculate a joint debt of $44,000, a remarkably heavy burden under which to start a new home. According to the State Public Interest Research Group's (PIRG) Higher Education Project, 39 percent of new graduates with loans carry an "unmanageable debt," defined as requiring payments of 8 percent or more of the borrower's monthly income. Even in 1997, when the burden was significantly less, one survey conducted by Nellie Mae (the nation's largest non-profit provider of student loans) reported that 15 percent of graduates had delayed getting married because of their student debt load; 22 percent had delayed childbearing, up from 12 percent in 1991. The figures today are presumably higher.

Indeed, Census 2000 statistics point to a massive retreat by young adults from marriage and children. In that year, 73 percent of women ages 20-24 were in the never-married category, up from 36 percent in the pre-loan days of 1970; for young men, the never-married figure in 2000 was 84 percent. Among 25 to 29-year-olds, the proportion of the never-married has tripled during the era of student loans. Cohabitation, meanwhile, has displaced marriage for many of the young. There were 4.6 million of these unmarried couples in 2000, an increase of 800 percent since 1970. The marital fertility rate in 2000, meanwhile, was a third below the 1965 figure. While obviously not the sole or even perhaps the main cause of these changes, the burden of debt has surely played a part. It creates perverse material incentives for young adults to succumb to cultural trends like cohabitation and the avoidance of parenthood.

And the problem of college costs seems to be getting worse. A new report released last month by the College Board shows public university tuition up 9.6 percent in 2002; at four-year private universities, it's up 5.8 percent (while the overall inflation rate is under 2 percent). The report also underscored the increasing reliance by all institutions on student loans.

How did this happen? When the federal program began, the loans were largely modest supplements to grants, which provided direct support (without the obligation of repayment) to low- and low-middle-income students. Yet the real value of the grants (eventually called Pell Grants) fell over time. Twenty years ago, the average award covered 84 percent of state school tuition, fees, room and board; by 2000, only 39 percent. Loans took up the slack. In addition, federal loans became available to families with higher incomes, drawing nearly 60 percent of families with college students into the debt trap.

Moreover, colleges and universities have found student loans to be a wonderful way to expand budgets. During the last decade, the costs of college or university education rose about 6 percent a year. At private four-year colleges, tuition climbed from an average of $10,348 in 1990 to $19,312 in 2000, an increase of 87 percent; among state universities, the increase was 85 percent. And yet the overall Consumer Price Index increased during these years by only 30 percent. Colleges and universities have padded their budgets and avoided financial discipline by loading their hapless students with ever more federally inspired debt.