Glittery Debt Perspective

Since nothing illustrates college excess like, well, college excess, I was planning to write about the blue-glitter-blowing University of Alabama sorority video making waves for its excessive girlishness/whiteness/etc. I still am (though not for the excesses already mentioned). But first, I want to discuss some excess from Purdue University president Mitch Daniels.

In a recent Washington Post op-ed, Daniels sang the praises of income-share agreements, a means of financing college in which investors pay for a student’s schooling in exchange for an agreed upon percentage of his or her earnings over a set period of time. I like ISAs — Cato published a paper on them back in 2002 — and they are decidedly not an over-the-top idea. What I thought excessive was this: Daniels wrote that student debt, averaging around $27,000 per borrower, is equivalent to “indentured servitude.”

Let’s not go overboard by suggesting that paying higher education’s price is equivalent to years of unpaid, painful labor. It really isn’t.

Now, debt is almost certainly too high because college prices are almost certainly too high. (Thanks, federal aid!) But indentured servitude? According to the American Heritage Dictionary, an indentured servant was “a person under contract to work for another person for a definite period of time, usually without pay but in exchange for free passage to a new country.”

I’m sorry, but having debt in exchange for an education that is supposed to enable one to earn a great deal more over a lifetime, without an obligation to furnish years of unpaid service to the lender, is not indentured servitude. If anything, ISAs actually sound slightly more like indentured servitude than loans because they are explicit about the borrower owing part of the proceeds of his labor. Even more starkly different from indentured servitude, though, is the nature of what the borrowed money is used for. Which brings us back to the girls of Alpha Phi…

It is impossible to watch their video or others like it — or learn about many other gleaming college excesses — and not see how different from indentured servitude the higher ed deal truly is. This is no five years of unpaid, back-breaking work in exchange for grueling passage across the sea to a largely untamed wilderness. Assuming that many of the students in these sorority videos, or riding campus water slides, have student loans, this is debt often taken on, at least in part, for four (or more) years of fun, to be followed by those big expected earnings boosts. Oh, and increasingly, these loans include capped repayment and forgiveness.

Clearly, there is a lot about higher education that is excessive, including the price. But let’s not go overboard the other way by suggesting that paying that price is equivalent to years of unpaid, painful labor. It really isn’t.

Neal McCluskey is the associate director of the Cato Institute’s Center for Educational Freedom.