The Ethics of Student Loans

Theresa Popp BraunEDLS 7110

Spring 2014Dr. Patrick Pauken

ASSUMPTIONS

• An educated citizenry is a desired societal goal - society benefits

• Balance access, cost, student rights & responsibilities, institutional rights & responsibilities

• Work In Progress

• All data - US student loans

• Terminology defined

HOW MUCH IS ONE TRILLION DOLLARS?

TOTAL U.S. STUDENT LOAN DEBT NOW EXCEEDS

$1,000,000,000,000+

AND INCREASES BY APPROXIMATELY$3,000 EVERY SECOND

Source: Consumer Finance Protection Bureau and American

Student Assistance, 2013

Average debt 2012 graduate

$29,400

Since 1985 the cost of higher

education in the US has risen

500%

Current default rate is 14.7%

WHY IS STUDENT LOAN DEBT A PROBLEM?

• Limits choice and opportunity for borrowers - economic, social, additional education

• Negatively impacts economy

• Negatively impacts college accessibility for some students

• Contributes to the increasing cost of higher education

THE$ETHICS$$OF$

STUDENT$LOANS$

CA

RE

Adapted'from'Starra-,'1991'

JU

STIC

E

CRITIQUE

PERPETUATION$OF$A$FLAWED$SYSTEM$WHO$CONTROLS?$$

WHAT$LEGITIMATES?$WHO$DEFINES?$

BEST$INTEREST$OF$STUDENTS$

$TO$BE$$MAXIMIZED$

HOW$SHALL$WE$$GOVERN$

$OURSELVES?$

STUDENT$TRUST,$

QUALITY$OF$LIFE,$&$

EMPOWERMENT$

WHAT$$DO$OUR$$

RELATIONSHIPS$$ASK$$

OF$US?$

THE ETHIC OF CRITIQUE • Social arrangements lack neutrality - the usual structure

benefits some segments of society at the expense of others (Starratt, 1991)

• Critical Theory - expose which group has the advantage over others, how this social arrangement came to be, and how this situation is structured to maintain the legitimacy of the social arrangement (Adorno, 1973; Habermas, 1973; Horkheimer, 1974; Young, 1990)

• Ethical challenge is to enable those affected to have a voice in evaluating and changing the arrangement (Starratt, 1991)

THE ETHIC OF CRITIQUEWHO CONTROLS?

WHO LEGITIMATES? WHO DEFINES?

• Federal Legislators

• State Legislators

• Lenders & Collection Agencies

• Lobbyists

• Colleges and Universities

• Financial Aid Counselors

• Admissions & Career Counselors

• High School Guidance Counselors

Who benefits at the

expense of students?

Who controls the loan process?

Source: www.collegescholarships.org

PERPETUATING A FLAWED SYSTEM

STUDENT CRITIQUEDID I BORROW THAT MUCH??

• Financial aid/loan information is confusing, complicated, and not timely

• It’s difficult to compare cost and financial aid award information across institutions

• Where’s the information on outcomes? Career/Income counseling? Loan Repayment?

THE ETHIC OF JUSTICEHOW SHALL WE

GOVERN OURSELVES?

• Principle of Benefit Maximization (Strike, Haller, and Soltis, 2005) The best interest of the students is the benefit to be maximized.

• Students must play by loan and education funding rules they have no part in formulating (Howe, 1993)

• Students have a right to receive the information needed to make competent choices and “decide responsibly” (Strike et al., 2005)

THE ETHIC OF CAREWHAT DO OUR RELATIONSHIPS

ASK OF US?

• Students should be treated as ends not means (Starratt, 1991)

• See and respond to student needs (Gilligan, 1982)

• What are the motivations behind the relationships? Students, lenders, legislators, lobbyists, counselors (Starratt, 1991)

• Desire to see a person enjoy a fully human life (Strike et al., 2005)

...SOLUTIONS??• Standardization of financial aid and loan information

and loan/debt counseling

• College and university accountability for cost containment and outcomes

• Redesign the higher education funding system

• Student loan forgiveness - BIG debate!

?????

REFERENCES

Abernathy, P., Asher, L., Cheng, D., Cochrane, D., Mais, J., & Thompson, J. (2013). Aligning the means and the ends: How to improve federal student aid and increase college access and success. Retrieved from The Institute for College Access & Success website: http://www.tcias.org

American Association of State Colleges and Universities. (2007, July). Student loans and public accountability. Washington, D.C.: Hillman, N.Chen, H. & Volpe, R. P. (1998). An analysis of personal financial literacy among college

students. Financial Services Review, 7, 107-128. Collinge, A. (2009). The student loan scam: The most oppressive debt in U.S. history and

how we can fight back. Boston, MA: Beacon Press.Howe, K. R. (1993). The liberal democratic tradition and educational ethics. In Strike & Ternasky (eds.), Ethics for Professionals in Education (Chapter 2, pp. 27-42).Johnson, C. L. (2012). Do new student loan borrowers know what they are signing? A

phenomenological study of the financial aid experiences of high school seniors and college freshmen (Doctoral dissertation). Retrieved from http://lib.dr.iastate.edu/etd/

Gilligan, C. (1982). In a different voice: Psychological theory and women’s development. Boston, MA: Harvard University Press.Ross, A. (2013). Mortgaging the future: Student debt in the age of austerity. New Labor

Forum, 22(1), 23-28. doi:10.1177/1095796012471638Starratt, R. J. (1991). Building an ethical school: A theory for practice in educational leadership. Educational Administration Quarterly, 27, 185-202.Strike, K. A., Haller, E. J., & Soltis, J. F. (2005). The ethics of school administration (pp. 7-20, 52-64). New York: Teachers College Press.Vedder, R. K. (2004). Going broke by degree: Why college costs too much. Washington,

D.C.: The AEI Press.Whitsett, H.C. & O’Sullivan, R.O. (2012). Lost without a map: A survey about

students’ experiences navigating the financial aid process. Retrieved from NERA Economic Counseling website: http://www.nera.com