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EricN Publications by Eric Niewoehner
EricNPublications by Eric Niewoehner

Student Debt: Are Colleges to Blame?

May 9, 2022


To solve the student debt problem, you have to look at the cause of the debt – the colleges. Colleges need to be held accountable.

The New Car


It was interesting to observe my son purchasing his first car. For many years he was able to benefit from the community of automobiles that seem to reside in our family. But as his income improved, he wanted his own car. Would it be used or new? What he discovered was that in Juneau, Alaska no bank financed cars over three years old unless you were willing to pay the exorbitant rate of 14%! It explained why almost all the cars in the used car lot were three years or less in age. It was also a lot of work to surf Craig’s list and seek out financing solutions. And you never knew what you were getting.


It was so easy. There was a new car that seemed to be not too much more expensive than some of the used cars he had been looking at. The salesman was good. He got his car and financing at a low rate. Within thirty minutes he went from carless to $25,000 in debt. Millions of Americans can relate to that story.


As an economist, I recognize that the price of cars and the price of college are a product of supply and demand. But surrounding cars and colleges is this thing we refer to as “market structure.” Market structure is the environment, the bits and pieces that make a transaction possible and can affect the cost. So an eighteen year old kid, instead of buying his first car for $25,000, is about to embark on a college track that may climb as high as $240,000! And it is so easy. They complete the registration form and the admissions counselor guides them through the financing process. In a matter of days, they receive their student loan and they now, with excitement, look forward to the coming semester.


Unbeknownst to them are what economists refer to as “opportunity costs.” They do not know it when they sign the dotted line for the student loan, but they will fully understand it when upon graduation they have to forfeit something each month in order to cover the loan. For many, it is significant. What they forfeit is transportation, a house or a marriage and family. Like my son would soon discover, there will be times when you have to ask yourself, “What have I just done?”

What Causes Colleges to Be Expensive?


Student debt is caused by one obvious element – colleges. In a previous article, the problem of student debt was outlined. In order to fix the problem of student debt, the cause of the debt needs to be explored. To put this on young people is a bit over-simplified. It is like the assertion that a person who blows their fortune at a casino is the only one at fault. Who took their money? Yet a college education is a risk. Calculated risk? Depends on how well a student calculates and how accurate their estimates turn out to be. But in the end, “the house always wins.” Who gets the money are the colleges.


What makes colleges so expensive? Let’s start with the selection process. Your child begins to investigate going to a select list of colleges. They often start with the parent’s Alma Mater. I went to a private school that usually sits in the 80% cost level. It is not cheap. But it is not Harvard. When my kids were attending college, Hope College sat at around $36,000 per year. In contrast, elite schools were ranging from $40,000 to $60,000 per year. I told my kids that Hope was a great school to attend, but at that cost it was not worth considering unless you were certain you would be pursuing a high-paying career. Their interests were not in science or engineering, so they ended up at the University of Missouri and attending a local college in Alaska. They saved thousands in doing so.


But the journey pointed out one important thing about colleges – the value of reputation. I sense it when I hear of parents discussing where their kids attend college. People value reputation. Having kids attend a reputable, private school is generally well-received. Is it really worth it? When students have to borrow money to attend Columbia University rather than the University of Missouri, what are they getting at Columbia University that they are not getting in Columbia, Missouri? If there is something they are gaining, what is it? What is it’s value monetarily? When I hear a student complain about their debt from attending Columbia University, the first question I ask myself is why Columbia University? The student decided to go to Columbia University for a particular reason, yet is somehow surprised when they find the debt they generated can never be paid off. I wonder how smart these students really are at Columbia University. Reputation has a price. Should American taxpayers subsidize that reputation? Maybe you are getting my drift, but what should be the under-written value of education? In other words, lending money at the full amount for Columbia University is ludicrous when the data shows that the same education can be obtained almost anywhere in the country for half the amount.

Removing liberal arts education requirements. Let’s be honest, very few colleges actually practice liberal arts education. Intellectual diversity and debate are pretty much held hostage by this aura of political correctness.1 I have heard time and time again since the 1970’s how students who engage professors in debate are often docked. I have seen good students come out of classes with bad grades. I attended a liberal arts college where debate was encouraged, and I have been stunned by how rigid and stifling the academic community is these days. My Alma Mater, Hope College, still holds a reputation for being a truly liberal arts college. It is a forum for learning new things, asking hard questions and hearing both sides of an argument. Since colleges generally do not uphold those standards, why pay for it?


So what adds to the cost of college is the pretense. Drop the requirements except for those that truly augment the degree. Engineering students do not need to be taking courses in sociology or even a foreign language. They may need to take a course in English grammar and professional writing. The controversial courses you hear about these days have nothing to do with meaningful degrees. No one should be required to take them unless they have something to do with the degree. This would shave at least a semester of courses.


Reduce the degree requirement. Removing the pretense reduces the hours required. That would save thousands of dollars. It would also reduce the time required to be in college, accelerating the pace at which students enter the marketplace so they can pay back their loans quicker. More and more colleges are now offering three year degree programs. We need more of it.


Adversely, take a hard, skeptical, look at non-conclusive degrees. What really sticks in my memory was the Miami Hurricane team that played in the Orange Bowl back in the 1990’s. All I saw was a parade of grinning athletes majoring in “General Studies”. At some point, government under-writing of a college experience needs intentionality to be justified. More on that in the next article.


Transfers. Transfers continue to be a major barrier to education. Smart students will pay close attention to accreditation standards when selecting a college, understanding how these standards align with other colleges can make it easier to transfer to other schools. But overall, I find the whole thing a bit ridiculous. My personal experience was a great example. I considered returning to my hometown of Columbia, Missouri beginning my junior year in 1975 to complete a pre-law track. I sat down with the admissions person at the University of Missouri and listened with astonishment that about thirty hours (or roughly half) of my courses were unacceptable. My English courses were thrown out for some reason. My first semester course in composition focused on the writings of CS Lewis! For Pete’s sake (pun intended), we are talking about a semester of reading dozens of books and articles by CS Lewis, composing short papers for each one we read! Most of my history classes were out because they involved religion, as if learning about church history has nothing to do with learning medieval history, the Renaissance, the emergence of diverging philosophical schools, and the evolution of democracy. My Religion in Society course was unacceptable because, well, because it was “religious,” even though it was applied against a sociology degree at Hope College and had an equivalent course at UM. It was my first lesson in the farcical dance of credit transfers. Needless to say, I did not finish my undergraduate program at the University of Missouri. Ironically, I would later attend UM as a graduate student. Trust me, my experience at Hope was three times more intense and challenging than my graduate school experience – and I had a good experience at UM. I found the professors were honest, engaging, believers in the liberal arts tradition. But Hope was a significantly higher quality education experience.


Transfers need to be turned upside-down. Students need to prove they can’t compete instead of wasting their time retaking classes that some clueless admissions counselor is requiring. Removing such artificial barriers would enable students to be more mobile, something that is critically important these days. With the advent of YouTube, providing students with course lectures should help them decide for themselves whether they need to retake a class. Students can also be interviewed and assessed. It needs to be an honest appraisal of whether they can succeed.

Cost of Living. Colleges often are not at fault in this regard, but every student has to live. I have heard people say that students get a Cadillac treatment with the dorms and dining plans. I don’t get worked up about that because I have had two daughters go through college for the first time far from Mom and Dad and having a structured, comfortable living arrangement is worth something. Eventually, they find less expensive living arrangements in friendlier environments. So they save a few dollars, but it is still expensive to live. My arrangement with the kids was that they were largely responsible for the tuition, but I would help with the living expenses. Even so, they got jobs and worked their way through school. Interestingly, even though my parents paid for my college and living costs, I still got a job so I could have some financial freedom.


Where cost of living becomes an issue is how some students have lumped living expenses into the student debt. I know some students are going through very difficult circumstances, but accruing debt to pay for living expenses is not wise. It is never recommended, in fact. How this formula magically is addressable just because you go to college is beyond me. Under any other circumstance, it is nearly impossible to dig yourself out. I know there are reasons for doing this – all I am saying is there are few economic solutions for it! There are circumstances when borrowing to cover living expenses is unavoidable. I can’t imagine going through medical school and working part time. But medical school has clear income potential. Doing the same for a sociology degree is financial suicide.


Cost of living factors in on how many years you expect to attend college. When I attended (back in the 1970’s), it was almost a given that you went to college at the age of 18 and graduated four years later. But I noticed some of my colleagues graduated the following year, or the next. They had to work their way through college. So they worked half time and actually paid for their college experience in cash. Students need to consider extending the college experience rather than accruing debt. What is unfortunate is that some financial aid provisions require you take twelve hours a semester. For some people, that is very difficult, forcing people who can least afford it to request additional financing to cover their cost of living.


Textbooks. Textbooks are the operational footnote added to the college bill. With my children, I was not surprised to see them spend as much as $500 per semester for textbooks. I was amused how my colleagues, and later my children, would explore various avenues at getting the cost of textbooks as low as possible. But as a former university instructor, I can tell you that textbooks are a racket. When I took over a course at the University of Alaska Southeast, I was handed a textbook that the previous instructor had used. For the first semester, I used the textbook and required that the students get the latest edition, as recommended by the department chair. As someone who worked in the field for years, I found the textbook engaging and practical. But uniquely evolving to require a new edition each year? Heavens no. I know IT changes a lot from year-to-year, but not to that degree. I looked over four previous editions and discovered very few changes. Subsequently, I saved students hundreds of dollars by doing two things. First, unlike most other professors, my textbook requirements were posted months ahead of time so students could plan out the true cost of the class. Secondly, I authorized the use of the textbook as far back as four previous editions. I simply added the disclaimer that they were responsible for noting any additional material that I provided in class. It was one of the highest compliments I received from students. I started doing that for other classes, reducing their costs by as much as 75%. Math, in particular, is famous for requiring new textbooks each year. As if math evolves!! English teachers would use different reading lists each year. Science and economics would require a different textbook each year. Smart students began to wise up to this scam and I noticed that they would buy subject-relevant books from the used-book market, rather than the specific title required by the class. If the teacher assigned lessons from the book, they photocopied the pages they needed (which was relatively few).


Take high school education seriously. UAS made remedial education an industry. Unfortunately, so does every other college in the US with a few exceptions. Those exceptions are those “reputation” schools. Presumably, the public have invested roughly thirteen years in a young person so they can be prepared for either a trade or for college. And somehow they are never prepared for college. It begs the question – what have we been paying for? Well, another college loan seems to fix that? That needs to end. If a student requires remedial education, let him or her take the courses as adult education courses. If they need financial assistance, send the bill to the local school districts to cover the cost. That student, when they graduated from high school, should have had the ability to read at a college level and should have had adequate exposure to mathematics. We delude ourselves into thinking that racking up debt to make up lost time is a solution. It isn’t. It is an expansion of the problem.

The Used Car


I have become quite adept at buying used cars in my life. The last new car I bought was the first car I bought. It lasted about fifteen years before I replaced it with a used car. Having to live in two different places in the country, I found renting a car for a month quite expensive. So I went searching for a used car with a $6000 budget. While hunting for the car, I explored my financing options. Missouri was a lot more creative than Alaska and I found a way to finance a transitional loan for only 4% interest. The car I purchased as fifteen years old, but was in good condition and had relatively low mileage. All-in-all, it took some time to do the research, find a car, evaluate it and complete the financing. To arrive to that point was not easy. Twelve months later, the car was paid for.


Anytime you use general terms like “colleges”, you have to admit that not all colleges are the same. When you look at the details, you will see that colleges are exploring multiple ways to reduce the costs of education. But it is a cumbersome process. Colleges cannot simply reduce an engineering degree to three years without first consulting the accrediting standards of engineers. To graduate “pre-law” or “pre-med” implies you have taken all the requisite courses. Whether you can swing that in three years is not always clear, and never easy.

But as we will later see, colleges can be scored in much the same way I kick the tires on a used car. Like my experience in buying my used car, every parent and prospective student can score colleges for themselves using the suggestions above. It takes work.


  • Am I paying for reputation?

  • What is the likelihood of getting a job in the fields I am interested in pursuing?

  • How well does the college address the cost of textbooks?

  • Are there shorter-term degree options that could reduce the hours required to graduate?

  • What skills can I develop before going to college paying out-of-pocket?

  • What will be the likelihood of going through college without borrowing money for my living expenses? And related to that, will it be necessary to attend college for five or six years because I will need to work part time or full time?

  • How many of my courses are transferable?


In my experience, there are two people you will need to engage. First, there is the front-line admissions counselor. Hit them with the questions above and evaluate their response. My guess is you will find their responses rather flat. That leads to the second person you need to talk to and that is someone in the department you intend to major. That will be tough, but it can be done, especially in regards to affirming your degree options.


In conclusion, to solve the student debt problem, you have to look at the cause of the debt – the colleges. Colleges need to be held accountable. The best way to do that is for students to demand more efficiency from colleges. They can do this by aggressively finding ways to cut the cost. This may mean foregoing “reputation,” seeking three-year degrees, and assuring that credits are transferable and that there are no penalties for extending your college experience.


And finally, let’s hear what Bill Mahr has to say about the college experience:



Avoid Losing Community College Credits When Transferring to a University”, Community College Review, by Grace Chen, December 24, 2021.

This article points out that transfer credits are still a serious problem for community college students.


Infographic: Textbook Costs Skyrocket 812% in 35 Years”, Applied Educational Systems, September 7, 2017.



1Needless to say, this is another rabbit hole to go down into. May save this for another article on what exactly a “liberal arts” education should be.

By Eric Niewoehner

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