Death! Destruction! Student Loans!

Education Sector released a super-sized Charts You Can Trust today looking at the past 15 years of financial aid, and the constant growth in student borrowing. Below is Chart 1 from the report, and the trend line is pretty clear. From 1992-93 through the latest NPSAS in 2007-08, the percent of students borrowing has increased nearly every year for every type of institution. In 2007-08, 53 percent--more than half--of full-time students borrowed for their education.

Today's Inside Higher Ed covers the report - and provides some push back to our assertion that this rising tide of debt is a BIG problem. Are we just joining the bandwagon of hype around the issue of student debt?

If we are on that bandwagon (we, after all, did use the word catastrophic...), I think the wagon is headed in the right direction. Let's just say that the fact that more than half of full-time students borrow for college actually isn't such a big problem and that it focuses on the wrong end--nearly half of students, after all, don't borrow. So great, we're just fine today.

But that doesn't address the very clear trend line - which continually ticks upward and, given growing tuition and the current economic situation, isn't likely to stop anytime soon. So at what point is there too much borrowing? And isn't it good to sound the alarm before we get to that point, rather than wait until we have a generation of college graduates so far in debt that they can't contribute to the economy through spending, buying houses, and starting families?

Borrowing is also higher among the most vulnerable students - the ones that are supposed to be helped the most by financial aid. We didn't include this in the report, but low-income students borrow at slightly higher than average rates - 56 percent, compared with 42 percent for higher income students. So, is 56 percent of low-income students borrowing too high?

These are, after all, the students who can least afford to take on substantial debt to finance college. And that means that 56 percent of those students will pay more for college in the end. Just like that pair of shoes costs more when you add in interest from your credit card, college costs more when you include interest payments over 10 years--even subsidized interest.

Borrowing is really just one symptom of the larger problem - that higher education is becoming increasingly unaffordable. The 44 percent of low-income students who are not borrowing may be using other methods of paying for college that have their own costs, like holding a full-time job, which reduces a student's chance of graduating.

So maybe it's not death and destruction, but growing student debt and the underlying problem of college affordability could actually be catastrophic - and not just for student borrowers, but for the health of our entire economy.