In their recent book Not Quite Adults: Why 20-Somethings Are Choosing a Slower Path to Adulthood, and Why It's Good for Everyone, authors Richard Settersten and Barbara E. Ray make what sounds like an crazy argument: Young people are too afraid to borrow for college.

It sure does sound crazy. And when you dig a little deeper into it, you realize that it actually is crazy.

Three basic facts about higher education in 21st-century America:
  1. People are more likely to go to college than ever before.
  2. People who go to college are more likely to pay for it with loans than ever before.
  3. People who pay for college with loans borrow more than ever.
Taking those three irrefutable truths and conjuring up the argument that excessive fear of student loan debt is the problem in higher education for this generation is actually sort of amazing.

But they manage to pull that off. I'm serious. "One of the key reasons they skate so precariously close to financial ruin seems almost heresy in this age of contraction," they write. "They are afraid to take on debt. That is, they are unwilling, and in some cases unable, to take on the kind of debt that helps to secure a more stable future: debt from a college degree."

There are two fundamental fallacies they use to keep this argument from collapsing:

Don't mention the default rate. One in five federal student loans end up in default within 15 years. But the authors don't mention that. Nor do they mention that student loan debt can't be discharged in bankruptcy. But that doesn't stop Settersten and Ray. They write that "relatively few graduates experience financial straits because of their student loan debt" -- and then provide no evidence that that's true.

That's because it isn't. A new study from the Institute for Higher Education Policy finds that nearly 40% of student borrowers are delinquent on their payments within the first five years of repayment. Lynn O'Shaughnessy has more details on that scary report.

Mislead with numbers
. The authors note that "The average student has paid back all but $7,000 of his or her debt just three years out of college." Which would be interesting, if it were true.

It isn't. Mark Kantrowitz of calls the alleged statistic "bogus." When I asked one of the book's co-authors for a response, she seemed to back off that statistic.

"We find that the average young adult household has about $7,000 in education debt outstanding" wrote Ray. "Although this is much lower than others have noted, most of the other figures are for recent college graduates, while our figures are for those at least three years out, and sometimes longer." In other words, the data apparently includes all young adult households -- not just those who borrowed for college -- and includes people who've been out longer than three years as well. Ray did not respond to repeated requests for further comment and clarification. But the bottom line -- when you look at actual data instead of this book -- is this: Most students have paid off only a tiny portion of their debt three years after graduation.

But the best part of my email exchange with Ray was where she explained that "Our larger point -- which debates that zero in on one data point obscure -- is that college pays off in the long run."

Exactly. Having used statistics as a drunk uses a lamppost -- for support rather than illumination, to quote Andrew Lang -- the authors fall back on the last refuge of the scoundrel: claiming the actual data doesn't matter. Just trust us.

Zac Bissonnette's Debt-Free U: How I Paid For An Outstanding College Education Without Loans, Scholarships, Or Mooching Off My Parents was called the "best and most troubling book ever about the college admissions process" by The Washington Post.

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What I really want to know is how a 22 year old kid who happened to make it through college without loans (by the way quite a lot of students do that, not really a big deal) gets to be considered a so called financial expert. I mean really 22 years old, with no degree in finance or accounting or anything related to money. Also know job history working with money. So he’s an expert because he achieved a mediocre feat? By that logic every student who graduated college without a loan is an expert. You sir are a tool.

September 29 2011 at 9:16 PM Report abuse rate up rate down Reply

If you borrow money from the Mafia, you had better pay it back or else........................................................................................................................................................................... If you make a student loan, you had better pay it back or else even more people will come after you and you can't hide from them, ever, ever.

March 29 2011 at 5:56 PM Report abuse rate up rate down Reply

College can put a person in a position to get a better paying job. BUT, not all jobs that require degree are well paying. There are degrees that are actually useless and could saddle a person with massive debt. Find out if you degree will be useless, if so save your money an just get a library card and educate yourself. You will be dollars ahead. Colleges are no loner for the student; they are for the college. For example, if you are a science major, you can not graduate without couses in history. Does that make you a worse scientist? Does that fill the classrooms and coffers of the history department?

Colleges try to make every student believe they will become CEOs or at least senior level managers. Get real, how many of those jobs actually exist? Count the number of students in college coming into the market place every year. What per cent of them even have a shot at one of those jobs?

An expense of college that is ignored is the fore gone income of four or five years of earnings at a young age. If a person earned money for four or five years and lived like a student and saved all that money compound interest would make them wealth at retirement without the many years of repayment of student loans that will delay saving for retirement.

Unfortunately, companies are requiring degrees and sometimes specific degrees for jobs that don't actually need a degree to perform. That is in part because there are so many people with degrees to chose from. In the case of specific degrees, I personally know an outstanding PhD in physics that taught a a major university that was turned down for a teaching position at a high school because his degree was not in education. He had volenteered to teach there because the high school needed a physics teacher and could not find one.

Colleges hold the tickets. So you have to play their game to get the ticket to ride. My suggestion is to use programs like CLEP and other like it knock out a few courses to save money and time as a paying inmate on the college campus. Community colleges are a way to reduce cost of the first two years. If you have a job try night classes to see if college is for you. Creativity and making sure that the intended college of graduation's requirements are meet is a way to save money.

Colleges are arrogant. I know a young lady whose great grand father was considered the "father" of a particular field of science. She was going into major in a different field but chose to take the entrance exam for her great grand fathers field just to see how she could do on the exam with no intent to persue it. She did well on the exam. She was called in and asked in a very arrogant tone, "What makes you think you are suuted for this field of study?" She explained that she had only taken the exam on a lark and walked out. She was called back and they begged her to change majors. The school wanted the prestige of her presence. She still turned them down. Colleges try to make students feel insignificant. How long do you think a college would last without students? When planning something unconventional with a college, GET IT IN WRITING. Otherwise, years later, you will hear, "I cannot imagine who would has said that."

I would never discourage anyone from getting a college education. I do issue the caution: It is expensive. You should have a defined objective. You should remain focused on that objective. Learn to use the "system" to your advantage. Never forget you are the consumer.

March 29 2011 at 5:36 PM Report abuse rate up rate down Reply

Young student are not afraid, they're just too smart to avoid getting RIP-OFF, ROBBED & MILKED by these son's of bitches RIP-OFF student loan lenders!!!

March 29 2011 at 5:16 PM Report abuse rate up rate down Reply

What young people (including my daughters) are afraid of, is not gettng thier money's worth for their student loan investment. A 4 year college degree saddles a kid, or parents, with $100K or more in debt obligation before they ever get a job. Encouraging student loans and debt totally contradicts the messages parents and society send to our kids about avoiding debt at all costs, unless buying a home. Given a kid starting at Amazon for $11.00 per hour out of high school will be earning more per hour (and have more to spend) in 4 years, without student loan debt, than the 4 year college grad in the booth next to them, where's the incentive? We need to get real and either make 4 year college a basic right in this country, or keep our tuition moneuy at home and accept the realities that 4 year degrees are becoming obsolete, and most of us will do just fine with an AA from our local community college.

March 29 2011 at 9:22 AM Report abuse rate up rate down Reply

they should be this inflated and service economy, you cannot start your career in debt. our government rewards debt and punishes savings...and that's just WRONG!

March 29 2011 at 8:34 AM Report abuse rate up rate down Reply

If your child takes out a loan in michigan for education he or she should go to a diffrent state to get the education since governor snyger is cutting into it to raise money for his clowns in business

March 28 2011 at 9:02 PM Report abuse +1 rate up rate down Reply