Student loan regrets: Don't be a victim

There's a new source of regret for college students and recent graduates -- student debt. According to research conducted by Consumer Reports, almost half of these young adults wish they'd taken less financial assistance, or none at all.

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The next generation should heed their counsel -- and borrow more responsibly.

True, a college education has never been more valuable. And borrowing may be necessary to make college a reality.

But to make that investment worthwhile, students have to graduate. All those in the higher education ecosystem -- students, institutes of higher learning, and the government alike -- must make completing college a bigger priority.

The federal government owns or guarantees $1.4 trillion in student debt for about 44 million Americans. That's more than the amount outstanding on credit cards or car loans.

That liability may seem risky -- and it is. After all, the government is unlikely to collect on all that debt. But it can claim it will, plus interest, for accounting purposes. That, of course, is good news for the government's finances -- at least on paper.

In other words, the federal government can actually benefit by making more student debt available.

Colleges have responded by raising tuition willy-nilly. Since 2000, the tab at a private four-year institution has increased 46 percent, after adjusting for inflation. The cost of a public school has risen even more -- 94 percent.

The feds have responded to tuition hikes, in turn, by steadily raising borrowing limits. That response may seem reasonable as it enables more students to attend college.

But subsidizing higher education in this way exacerbates the upward march of tuition. Indeed, research from the Federal Reserve Bank of New York indicates that the ready availability of federal funds to pay for school has contributed to, if not caused, the problem.

A separate study from researchers at Indiana University and the University of Missouri concluded that "expanded student loan borrowing limits are the largest driving force for the increase in tuition."

Fortunately, things are starting to change. The typical college student borrowed slightly less last year than four years ago. It's obviously in borrowers' interests for that trend to continue. The federal government and higher education also have a long-term interest in encouraging responsible borrowing.

Federal taxpayers are on the hook for any of the trillion-plus dollars that student borrowers fail to pay back. In addition, federal loan forgiveness programs will cost taxpayers $108 billion over the next decade, according to the Government Accountability Office. That figure could reach $170 billion if student borrowing increases further.

Colleges, meanwhile, won't have students to educate if the cost of attending surpasses what people can afford or are willing to pay.

Responsible borrowing: What's needed

Borrowers need a clear view of how much they can expect to make in their chosen field and how much they'll have to pay back -- before they take out loans. They could also use a robust course in financial literacy.

Many would never think of paying only the minimum on their credit card each month. Yet they often do just that with their student loans -- and allow interest obligations to mount.

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Finally, as the ultimate recipients on student loan dollars, colleges should be held accountable for helping students graduate on time.

Borrowing wisely can ensure that students look back on their college experiences with fondness -- not regret.

Sarah Reeves Johnson is a marketing and communications consultant for universities and nonprofit organizations who previously directed student programming for the Belmont University Center for Entrepreneurship. She is a former board member of the United States Association for Small Business and Entrepreneurship and holds a masters in education policy from Vanderbilt University.