Earlier this month, another report on the high rate of student loan defaults once again triggered a great deal of discussion.

Bloomberg followed this up with an article that parses the problem: defaults by borrowers who failed to complete their studies versus those who did, where the rate of default for the dropouts is many times that for recent graduates.

The article also describes the heightened emphasis that the Education Department is placing on borrowers who are struggling to repay their debts and the remedial efforts the ED expects its subcontracted loan administrators to pursue aggressively in this regard.

A few days later, Thirdway.org, a think tank that describes itself as a “centrist counterweight to the forces of polarization and ideological rigidity,” published a white paper in which it uses data gleaned from the ED’s College Scorecard to call out the abysmal outcome (graduation) rate for public higher educational institutions: less than half of first-time, full-time students graduate within six years. Thirdway goes on to assert that if these schools were part of the K-12 system, they would be designated as dropout factories under the recently reauthorized Elementary and Secondary Education Act (ESEA).

The white paper culminates in a call to “broaden the policy debate in higher education from one that focuses solely on refinancing student loans or providing debt-free college to one that improves data transparency for students and holds colleges accountable for outcomes.”

Although it’s hard to argue with the unmistakable link between the academic and the economic — where students who do not complete their studies are more likely to end up earning less than their graduating counterparts and are therefore less likely to be able to meet their financial obligations — I’m troubled by the seeming unrelenting focus on effect versus root cause.

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Mitchell D. Weiss

Mitchell D. Weiss is an experienced financial services industry executive and entrepreneur. He is an Executive-in-Residence at the University of Hartford, co-founder of the university’s Center for Personal Financial Responsibility and adjunct faculty at Rutgers University as well. His books include Life Happens: A Practical Course on Personal Finance from College to Career, Business Happens: A Practical Guide to Entrepreneurial Finance for Small Businesses and Professional Practices and Practical Finance: A Straightforward Guide to Personal and Entrepreneurial Finance, all of which are undergraduate courses that he teaches at the aforementioned schools and elsewhere.
Mitchell D. Weiss
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