What’s Causing Student Debt? Lasell College President Michael Alexander Breaks It Down
Today we’re talking about something that affects 44 million people across the U.S. today: student debt.
But is student debt really the problem? According to Michael Alexander, President of Lasell College, it may be merely a symptom of a greater problem.
To find out what’s behind national student debt, we had Jill Norton of Abt Associates interview Michael Alexander about what he, as a college president, thinks is the root of the problem.
Full interview with Michael Alexander, President of Lasell College:
JILL NORTON: Hello, I’m Jill Norton, director of education policy of Abt Associates, and today I will be interviewing Michael Alexander, President of Lasell College, for EdTech Times.
JILL: Hi, Michael. Nice to speak with you today.
MICHAEL: Hi Jill, it’s a pleasure to be here today.
JILL: So Michael, could you introduce yourself and Lasell College in a sentence or two? Tell us a little bit about the college.
MICHAEL: I’m in my tenth year as president of Lasell College. Lasell is located in Newton, Massachusetts, just eight miles from downtown Boston. It’s one of the oldest institutions in the Boston area, having been found in 1851. And for most of its history, it was a two-year college for women. But in the 80s, became a four-year institution, in the 90s became a co-educational institution.
So now, what it looks like today, you see, is kind of a traditional, residential-based independent, nonsectarian, private college located on a beautiful suburban campus with a set of academic programs that range from arts and science majors to pre-professional majors across a broad spectrum—particularly well-known for our fashion department, which is our largest and strongest department and one of the strongest programs in the country.
JILL: So, wherever you look today it seems you can find graduates, parents, the media, talking about the student debt crisis. Can you talk a little bit about how you’re thinking about the debt crisis. Is it a crisis? And what is Lasell, how are you thinking about that here, or addressing it?
MICHAEL: So I don’t really look at it as a crisis. Just the fact that there’s one point two trillion dollars* in student debt out there seems like an extraordinarily large amount. But it is broken up into very many, many, many small pieces for one thing, and the average debt that a student is leaving with across the country is still $30,000* or less.
I actually think 25 to 30 thousand dollars is a reasonable amount debt to have at least for someone who actually completes and gets a degree. If you don’t complete a degree, that’s another problem.
But assuming you go all the way through and complete your degree, you’re going to get the benefits of that throughout your life. And all the research shows that’s still a benefit in many different ways, but monetarily, at least a million dollars.
So why shouldn’t the student him or herself pay for some of that benefit, as opposed to the parents, or the institution, or the government paying for it?
So I think a reasonable amount of debt makes sense.
I also think that the debt isn’t the problem itself. So that’s why I don’t call the student debt crisis. It’s a symptom of the problem.
The problem is caused by a number of factors. Family income in the United States has not been rising. In fact, compared to…inflation, it’s been falling since 1998. People talk about it as falling since 2008, but it’s actually been falling since 1998. So for a long time.
The income inequality discrepancy in the United States, with most of what income is happening going to the upper 5 percent or so, means the middle class where most of the students come from it’s even worse than that.
So first of all, even if prices didn’t go up at all, it would be harder for students and their families to pay.
Second of all, and the biggest issue, is that the states have disinvested in public higher education. Their contributions to operating budgets at the state level have decreased from what used to be 60 to 80 percent of the budgets down to five to 20 percent of the budgets, depending on what state you’re in.
That’s a huge difference. In other words, they used to be the biggest contributor to the financing of higher education, the states did, where now families are—they just flipped that responsibility to the families.
So how do families make up that difference? Through debt. And so that’s…it’s really a symptom of that.
Now…most of those things are things that institutions don’t control. Institutions don’t decide how much is allocated by the states to public institutions. The legislatures do that.
Institutions can’t really control family income in the United States. That’s a big economic…it’s into the tax system and income distribution all those kinds of big economic factors.
Nevertheless, we have to respond to it.
So how do we respond to it? Over the years, we’re going to have to respond by figuring out a way to lower the costs. Finding a way to deliver a high quality education at a lower cost—and not just incrementally, but significantly lower.
JILL: So when students and their families consider their options for colleges, where do you feel private institutions fit in terms of affordability?
MICHAEL: Well, I like to answer that in terms of trends a little bit. It used to be that there was a big gap between the cost of private colleges and public institutions, and that gap has actually narrowed.
And this is something that’s not covered much in the media.
What’s happened is that the states have disinvested in higher education, meaning they’re not providing as many funds and support of the operating budgets of public institutions. They’ve had to raise their tuition, and they don’t apply very much financial aid to it. So the net cost of public institutions have been rising a lot. And that’s with actually is providing the most pressure on the cost issues and higher education.
At the same time, what’s less well known is that the private institutions net cost has actually come down 4 or 5 percent, because whereas the sticker prices continue to rise, the amount of financial aid has risen more so the actual net cost per student has actually come down a little bit.
Now that’s not true of every single institution. But for those that have gone up, they have gone up very little, and many have gone down or remained flat.
So as public institutions net cost after financial aid has gone up, and privates have stayed flatter, they’ve actually become closer.
The irony is that’s caused students to—and their families to—think about them more in the same vein, looking at both private and public. It used to be, there were a bunch of students who just look at private colleges and those who would just consider public institutions.
But now because they’ve become closer. So whereas at Lasell, when I started 10 years ago, our top five competitors—10 competitors—were all private institutions.
Now half of them are public institutions, which is kind of ironic given that the gap isn’t as big as it used to be.
JILL: So that gets to my next question, which is, as you’re saying as many families start to suffer from the sticker shock of paying for higher education for their children, there’s a growing list of options as you’re referencing there’s bootcamps and micro-credentialing, there’s this idea of slicing education into bits and doing it at particular times to be ready for a particular opening in the workforce. How does a four-year private liberal arts institution like Lasell provide a good return on investment for your students?
MICHAEL: So I do have a biased perspective on this question, because I’m the president of a four-year institution with graduate programs. And I think that for some people bootcamps and smaller credentialing kind of programs make sense.
But for your typical 18 to 22 year old, I don’t think so. I still think they need it for education. I still believe in the liberal arts foundation. I still believe that the world is going to change even more in the future than it has in the past, and that that change has been sped up so you need to be able to respond to that.
And it’s that liberal arts foundation that prepares you for that, and the experience you get living on the campus, and developing relationships with your mentors, who are faculty members and others, and all of the things that you traditionally get for private higher education.
So, I don’t think that’s going away.
Yet even institutions like ours are moving towards offering things in smaller pieces, but that you can stack up and still add up to a degree, because there is a—there’s a lot of research that indicates a bachelor’s degree is worth way more than an associate’s degree. It’s worth way more than partial college degrees over a lifetime. And I don’t see that really changing anytime soon.
In addition, I belong to a group of colleges who are working on trying to find a way to lower costs significantly, and one of the programs we’ve been talking about creating is in the information technology area.
So we’ve been talking to Google and Apple and Facebook, and one of the things they’re telling us is that bootcamps aren’t working. They are not fulfilling the need. They are thousands of employees short.
So that’s why they want to partner with us, a whole bunch of our institutions, to train, bring more people through, and be trained properly with both a broad education background but specific training in the areas of information technology or computer science that they need. So what I’m trying to say is, I don’t think we’re going away any more than television went away when the VCR or DVD came into play.
JILL: Is there anything that you see that could be done that could improve the current financial aid system?
MICHAEL: Well one thing that would improve it would be to give the institutions—the colleges and universities—some control over the amount that a student in their family can borrow.
Right now, students have families they fill out FAFSAs, they go through a system, and they have rights to borrow certain amounts, and they can they can borrow up to those limits. And that’s not always wise.
We counsel them not to have to borrow more than is reasonable. But we don’t have any control over it, and many do go beyond those limits.
So if there’s one thing we can do, it’s to give the institutions some ability to say no, you can’t go above this certain amount. If you need to go above that, maybe you should consider going someplace else.
JILL: Thank you so much for that perspective, and thanks for speaking with us today.
MICHAEL: It’s been a pleasure. Thanks for having me.
Want to learn more?
Listen to the whole series, Challenges & Solutions for Student Financial Aid & Debt.
*Note: The figures in this interview were pulled from a report released in October 2016, the most current data at the time of the interview. In August 2017, a new report was released by Experian, which noted that U.S. student debt has now reached an all-time high of $1.4 trillion, with an average of $34,000 per borrower. This is the data referenced in the first episode of this series, How (And What) Are Students Paying for College?
Hannah Nyren is the General Manager of EdTech Times. A Texan by birth but a Bostonian at heart, Hannah is an educational writer, AmeriCorps alum, and one-time StartupWeekend EDU (SWEDU) winning team member. She started her career at a Pearson-incubated edtech startup, but has since covered travel, food & culture, and even stonemasonry in addition to education.