Home Book Reviews The Debt Trap and the National Student Loan Catastrophe
The Debt Trap and the National Student Loan Catastrophe

The Debt Trap and the National Student Loan Catastrophe

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When I heard about Josh Mitchell’s soon-to-be-published book about college student debt, The Debt Trap: How Student Loans Became a National Catastrophe, I pre-ordered a copy. Recently, I read an excerpt from the book in The Atlantic and wrote about it. His book arrived yesterday and like the excerpt, I could not put it down until I finished reading it.

In some ways, Mitchell’s book reads like a James Michener novel. It begins with a story from 1957 when U.S. Senate majority leader and future president Lyndon B. Johnson (LBJ) led guests attending a dinner party at his ranch outdoors to gaze at the skies in hopes of seeing the Soviet Union’s newly orbiting Sputnik satellite. That incident, claims Mitchell, led LBJ to conclude that for America to win the Cold War against the Soviets would require brainpower and more college graduates.

The Debt Trap covers America’s history in providing state, federal, and local financial assistance for students attending college. However, Mitchell’s interviews with some of the politicians and bankers responsible for specific laws, amendments to laws, and regulations adds the personal perspective, confirming or justifying why America focused on providing primarily loans instead of grants to college students.

The debt balances are staggering. More than $1.6 trillion in student loans are currently outstanding, and no solutions to reduce annual increases in borrowing are in sight. The entities that benefitted economically from unrestricted growth in student loan programs are not limited to the colleges and universities that increased tuition and related charges at levels much faster than the consumer price index. The other financial beneficiaries are the banks that provided student loans, the federal government, state governments, and shareholders of companies participating in higher education as lenders or providers.

It’s not the legislative history, the stories of large banking profits, or overall borrowings that make this book so outstanding. In addition to providing an historical perspective of legislative and national events, Mr. Mitchell’s narratives of four people who have struggled under the burden of student loans hit home, because many of us know people whose college loan balances have made their lives financially challenging.

Fittingly, Josh Mitchell completes his book with a few recommendations to fix the existing system. Setting the stage, he writes that reforming the system requires the achievement of two goals:

  1. Ensure that all Americans have access to a quality higher education regardless of their financial background.
  2. Remove incentives for schools to raise tuition to unconscionable levels without any regard to how those prices will impact families.

Mitchell writes that policymakers should first deal with those who already have student debt, and then take steps to prevent another run-up in student debt as well as more loan defaults.

His recommendations include:

  • Forgive accrued interest on all student loans.
  • Make four-year colleges and universities be on the hook for a portion of defaulted loans.
  • Make community college truly free.
  • Reward alternatives to the four-year degree such as apprenticeships.
  • Stop subsidizing grad school with federal loan programs.
  • States, cities, and communities should provide more grants to college students.

It’s hard not to agree with Mr. Mitchell’s recommendations. I would add or clarify the following:

  • Subsidize the accrual of interest on student loans while a student is attending college.
  • Implement a Gainful Employment regulation for all colleges and universities that choose to participate in the federal student aid programs in order to avoid the accumulation of debt balances that can not be repaid over a 10 year period.
  • Eliminate the Parent Plus loan programs and make colleges responsible for funding non-covered gaps.

America didn’t need Josh Mitchell to write The Debt Trap to tell us that major reforms are needed to the college financial aid programs. At the same time, I hope that his informative, easy to read, and memorable narrative leads to productive conversations among policymakers as well as prospective students that accelerate positive change.

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Wally Boston Dr. Wallace E. Boston was appointed President and Chief Executive Officer of American Public University System (APUS) and its parent company, American Public Education, Inc. (APEI) in July 2004. He joined APUS as its Executive Vice President and Chief Financial Officer in 2002. In September 2019, Dr. Boston retired as CEO of APEI and retired as APUS President in August 2020. Dr. Boston guided APUS through its successful initial accreditation with the Higher Learning Commission of the North Central Association in 2006 and ten-year reaccreditation in 2011. In November 2007, he led APEI to an initial public offering on the NASDAQ Exchange. For four years from 2009 through 2012, APEI was ranked in Forbes' Top 10 list of America's Best Small Public Companies. During his tenure as president, APUS grew to over 85,000 students, 200 degree and certificate programs, and approximately 100,000 alumni. While serving as APEI CEO and APUS President, Dr. Boston was a board member of APEI, APUS, Hondros College of Nursing, and Fidelis, Inc. Dr. Boston continues to serve as a member of the Board of Advisors of the National Institute for Learning Outcomes Assessment (NILOA), a member of the Board of Overseers of the University of Pennsylvania’s Graduate School of Education, and as a member of the board of New Horizons Worldwide. He has authored and co-authored papers on the topic of online post-secondary student retention, and is a frequent speaker on the impact of technology on higher education. Dr. Boston is a past Treasurer of the Board of Trustees of the McDonogh School, a private K-12 school in Baltimore. In his career prior to APEI and APUS, Dr. Boston served as either CFO, COO, or CEO of Meridian Healthcare, Manor Healthcare, Neighborcare Pharmacies, and Sun Healthcare Group. Dr. Boston is a Certified Public Accountant, Certified Management Accountant, and Chartered Global Management Accountant. He earned an A.B. degree in History from Duke University, an MBA in Marketing and Accounting from Tulane University’s Freeman School of Business Administration, and a Doctorate in Higher Education Management from the University of Pennsylvania’s Graduate School of Education. In 2008, the Board of Trustees of APUS awarded him a Doctorate in Business Administration, honoris causa, and, in April 2017, also bestowed him with the title President Emeritus. In August 2020, the Board of Trustees of APUS appointed him Trustee Emeritus. In November 2020, the Board of Trustees announced that the APUS School of Business would be renamed the Dr. Wallace E Boston School of Business in recognition of Dr. Boston's service to the university. Dr. Boston lives with his family in Austin, Texas.

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