On Student Loans
Sara Goldrick-Rab
A new report from the New America Foundation, “Why Student Loans are Different,” uses findings from six focus groups conducted with 59 people to attribute the difficulty borrowers of student loans face in repaying those loans to “uniformed borrowing” and a “messy system.” As a scholar of higher education policy and Founding Director of the Wisconsin HOPE Lab, where we conduct applied research aimed at finding ways to make college more affordable, I was excited to read this study. I was especially pleased to see that it involved speaking with students, rather than simply analyzing administrative data.
But as I reviewed the document and its accompanying methodological appendix, it became clear that this is simply yet another policy report with a weak empirical foundation that rehashes a narrative framing undergraduate debt as a problem, rather than as the outcome of a broken system that fails to offer affordable higher education opportunities. While the voices of people in this report are helpful in understanding the mindsets of certain borrowers that default or become seriously delinquent, which if further researched might help hone and better target outreach strategies to these special groups, it does nothing to address the larger problem of why we have so much student debt.
Advocacy research starts with its conclusions in mind, and while this report employs data, it is no exception. Seeking to understand “the causes and consequences of student loan struggles,” policy wonks Jason DesLisle and Alexander Holt commissioned a set of focus groups conducted by the FDR Group, a nonpartisan public opinion research firm. According FDR’s own supplement to the report, the New America staff “gave us complete freedom in designing and conducting the focus groups and in formulating this report.” Even so, the focus groups were designed in such a way that the findings were practically predetermined. More specifically, the people participating in them were all selected because they were “struggling” with student debt, meaning that they “really” struggled to make payments or were already in default. If the goal of the focus groups was to find out why people struggle with loan repayment, then researchers needed to speak with people who struggle as well as those that do not. Without engaging that latter group, it is impossible to know what factors cause struggling. And yet, the report concludes, “The cause of so many struggling to repay student loans these days is a combination of uninformed borrowing — mostly due to ignorance, youth, naïveté, and a weak job market — and a messy system that is difficult to understand and tricky to navigate.”
The FDR team accurately states that focus groups are most appropriate for exploring peoples’ views on a topic, as well as their feelings, beliefs, experiences, and reactions. But social scientists know that focus groups are not a good tool for improving our understanding about how and why people do what they do. They constitute a performance by those involved, as the participants interact with one another in making their statements. They provide information only about those engaged, and are subject to the biases that stem from dominant voices. It is unclear whether the New America writers or the FDR researchers understand this; the only limitation stated is that the results of six focus groups cannot be generalized to any population. (Despite this stipulation by FDR, DeLisle and Holt call the study a “broad and objective look” at borrowing). Nowhere is the reader warned that the methods in the study are misaligned with the research questions posed, and the analysts do not convey an understanding that careful analysis of the data obtained from focus groups must be performed to ensure that conflicting, contentious, and non-normative views emerge.
Instead, the report is essentially a laundry list of statements attributing borrowers’ struggles to repay their loans to specific factors including unemployment, family responsibilities, financial shocks, inadequate information, and deceitful practices of schools. DeLisle and Holt seem to accept these claims at face value and report them without ever questioning whether borrowers they did not talk to (especially those who are successfully repaying) also face these challenges.
At the end of the day, the report’s main conclusion is highly uninteresting. We are simply told “Student loans are very different from other forms of credit, like auto loans and home mortgages, and those differences influence how borrowers approach taking on and repaying that debt.” Well, yes, student loans are different. But none of the evidence presented tells us that the differences between types of loans that DeLisle and Holt describe — differences having to do with the amount of information the borrower possesses, the structure of payments, etc. — cause observed differences in repayment outcomes. A competing explanation is omitted entirely: perhaps the reason that students struggle to repay their loans is that college was unaffordable. When the price is too high for students to pay, they borrow more than they can handle. The fact that growing numbers of students face too-high prices because of declining state investment in higher education, mushrooming college costs, and inadequate support for grant programs, is ignored entirely in this report. So is the downward trend in real family income, the eroded social safety net, the paltry minimum wage, and the segregated and unstable labor market students face. Instead of considering the role of these structural forces, the focus of this report is on using individual students’ voices to place the blame for default rates on the borrowers and their schools and on the design of the student loan program. This approach reifies a policy trend that unfortunately focuses far too much attention on bandaids rather than efforts to stop the bleeding and prevent it in the future. It is troubling that the authors claim it is backed by “a new type of research of how borrowers interact with the federal student loan system, less based on correlation and more based on behavior and psychology.” Nothing could be further from the truth. If we want to create a sustainable approach to higher education financing, we need rigorous social science research, not pseudo-science that begins with conclusions in mind.
