Myths & Facts: Student Debt Crisis – Media Matters
Fox News often promotes myths about student loan debt in the United States, misinforming about everything from the lack of protections borrowers receive, to the unsubtantiated claim that student loans drive up college costs, to the myth that struggling borrowers are taking a government handout. As the two-year anniversary of student debt surpassing $1 trillion takes place this week, here is a sample of the network’s past student loan misinformation.
Student Loan Debt Reached $1 Trillion In 2012
AP: “Surging Above $1 Trillion, U.S. Student Loan Debt Has Surpassed Credit Card And Auto-Loan Debt.” The Associated Press reported in 2012 that student debt “surpassed credit card and auto loan debt,” resulting in a “debt explosion.” The AP continued:
Surging above $1 trillion, U.S. student loan debt has surpassed credit card and auto-loan debt. This debt explosion jeopardizes the fragile recovery, increases the burden on taxpayers and possibly sets the stage for a new economic crisis.
Lifting student debt higher and higher is the escalating cost of attending schools, with tuition increasing far faster than the rate of inflation. And enrolment has been rising for years, a trend that accelerated through the recent recession, fueling even more borrowing.
Mark Zandi, chief economist at Moody’s Analytics, argues that government loans and subsidies are not particularly cost-effective for taxpayers because “universities and colleges just raise their tuition. It doesn’t improve affordability and it doesn’t make it easier to go to college.”
“Of course, it’s very hard on the kids who have gone through this, because they’re on the hook,” Zandi added. “And they’re not going to be able to get off the hook.”
It’s not just young adults who are saddled.
“Parents and the federal government shoulder a substantial part of the postsecondary education bill,” said a new report by the Federal Reserve Bank of New York. And some of the borrowers are baby boomers, near or at retirement age. The Fed research found that Americans 60 and older still owe about $36 billion in student loans. [Associated Press, 4/3/12]
Forbes: Student Loan Debts In 2013 Accounted “For Second Highest Form Of Consumer Debt Behind Mortgages.” Forbes reported in August 2013 that “student loan debt has reached a new milestone, crossing the $1.2 trillion mark — $1 trillion of that in federal student loan debt.” It also noted that these “dizzying new heights” meant that student loan debts “now account for the second highest form of consumer debt behind mortgages.” [Forbes, 8/7/13]
American Student Assistance: “There Are Approximately 37 Million Student Loan Borrowers With Outstanding Student Loans Today.” Private nonprofit American Student Assistance reported data from the Federal Reserve Board of New York showing that “[t]here are approximately 37 million student loan borrowers with outstanding student loans.” [American Student Assistance, accessed 4/24/14]
Urban Institute: “Student Loan Debt Follows One Of Every Five Americans Age 20 Or Older.” A report from The Urban Institute titled “Forever In Your Debt” stated that “[s]tudent loan debt follows one of every five Americans age 20 or older and roughly two of every three college seniors who graduated in 2011.” [The Urban Institute, June 2013]
Demos: Rising College Costs Sapping Wealth From Future Workforce. According to an August 2013 study from Demos, the more than $1 trillion in “outstanding student loan debt” could create a “lifetime wealth loss of $4 trillion” as current borrowers struggle for decades to make interest and principle payments. [Demos, August 2013]
Since 2012, Fox News Has Pushed Numerous Myths About Student Loan Debt
Fox’s Liz Claman: Parents Should Focus On “Finding A Less Expensive College.” On the May 31, 2013, edition of Fox News’ America’s Newsroom, co-host Bill Hemmer and Fox Business anchor Liz Claman discussed the specter of mounting college debt in the United States. While acknowledging that college costs are “skyrocketing” across the country, Claman argued that parents and students should focus on “finding a less expensive college.” [Fox News, America’s Newsroom, 5/31/13 via Media Matters]
FACT: College Costs Have Escalated And Even “Less Expensive” Colleges Are More Expensive
National Center for Education Statistics: Cost Of Attendance Is Up For Virtually All Institutions Of Higher Education. According to data compiled by the National Center for Education Statistics, after adjusting for inflation the average total cost of attendance at “all institutions” (including public, private, 4-year, and 2-year) increased from $8,438 in 1982 to $19,339 in 2012. This represents the average cost after factoring in tuition, fees, and room and board. [National Center for Education Statistics, accessed 4/23/14]
Demos: “Funding Cuts Have Led To Large Tuition Increases.” According to a report from Demos, there have been “unprecedented declines in state funding for higher education and steep tuition increases” as a result of the economic downturn, with average tuition costs continuing to rise at four- and two- year universities:
ESCALATING TUITION: Funding cuts have led to large tuition increases. Nationally, average tuition at 4-year public universities increased by 20 percent in the four years since 2008 after rising 14 percent in the four years prior. In seven states, average tuition increased by more than a third, and two states–Arizona and California–have raised it by more than two-thirds, or 66 percent. At public 2-year colleges, average tuition has risen by more than a third in six states.
FAMILIES PRICED OUT: Average tuition at 4-year public schools now consumes more than 15 percent of the median household income in 26 states. Average total cost–including room and board–consumes more than one third of the median household income in 22 states.
The decreasing affordability of higher education is eroding the last relatively secure path into the middle class, as more students take on larger amounts of debt to finance their higher educations, or forego it altogether. With $1.2 trillion in outstanding student loan debt and climbing, student loan debt is now substantial enough to affect our overall economy as indebted graduates find it harder to buy a home or a car. [Demos, 3/6/14]
Fox’s Andrea Tantaros: Expanding Student Loan Availability Drives Up College Costs. On the November 30, 2012, edition of Fox News’ The Five, co-host Andrea Tantaros argued that making “cheap credit readily available” allowed colleges and universities to “hike up [their] tuitions every year.” Tantaros went on to ask, “should every kid really be going to college?” Co-hosts Eric Bolling, Brian Kilmeade, and Dana Perino all agreed that expanding loan availability for students and families was a fiscally irresponsible decision. [Fox News, The Five, 11/30/12 via Media Matters]
FACT: Increased College Costs Are Not A Result Of Student Aid
National Association Of Student Financial Aid Administrators’ Justin Draeger: Theory That Increased Student Aid Drives Up College Costs “Is Not Founded In Reality.” In a post for University Business, Justin Draeger of the National Association of Student Financial Aid Administrators stated that the myth that “increases in student aid drive up college costs” is one that lawmakers use “when justifying proposals to cut federal student aid spending.” Draeger continued:
Essentially, the budget resolution would reduce federal funding for student aid by eliminating student loan subsidies and limiting student eligibility for Pell Grants and other federal aid.
But this theory is not founded in reality. In testimony before the House Education and the Workforce Committee, Education Secretary Arne Duncan noted that college costs increase even when the government reduces student aid spending or keeps it level. There is conflicting evidence on the correlation between the federal student aid spending and increases in college costs and absolutely no research that indicates a causal relationship.
There are several factors that drive up college costs. Two economic professors at The College of William & Mary conclude that the primary forces driving up college costs are the technological changes that have reshaped the entire global economy over the past century. David Feldman and Robert Archibald are co-authors of Why Does College Cost So Much? (Oxford University Press, 2010). Their book explains that the most important engine of cost growth in higher education is the very thing that is driving costs down in other industries: technological advancement. Technology advances have caused productivity growth in some industries, like manufacturing, to overshadow productivity growth in other industries, including higher education. [University Business, May 2012, empahsis added]
Written By Craig Harrington & Hilary Tone
Posted on 25 April 2014