In just the last decade (from 1994-2004), the average debt for undergraduates more than doubled, to $19,800, while that for graduate students shot up 150%, to $37,600. (See “Quick Facts on Student Debt” from the Project on Student Debt here.) Even at public universities, 66.4% of students had debt; half had over $15,472; a quarter had over $22,822; and ten percent had over $32,994. The class of 2006 has debt 8% higher than the class of 2005. In response, colleges are asking themselves whether they should offer personal financial advice to students and maybe even a formal course (BYU is really ahead of the curve on this). As a financial aid director at Missouri told the Associated Press, "It seems that many of the students getting into bad financial situations are getting degrees in fields that are difficult to market, like psychology and history," he said. "The schools have to start giving students information about the financial consequences of their choices."

BYU warns students about financial products and encourages students to take a personal finance class, which is open to students in any major. Counselors advise students based on their expectations, from incomes in the fields they’re entering to future home ownership.

It makes sense that many students would get into situations they didn’t anticipate (as many indeed are): why would a seventeen-year-old college freshman understand the implications of long-term debt, especially when (1) the problem is new to this generation; and (2) it is routine in his/her peer group to borrow like this?

In addition, leading lenders are actively misleading students. For example, on the hand, Sallie Mae recommends a “1-2-3” approach to pay for college: grants 1st, federal loans 2nd, and private loans 3rd. But, as the New American Foundation noticed, it has taken out an ad on Google to market private loan products as more convenient than federal ones (it says “No FAFSA”). Because students can borrow up to $40,000, Sallie Mae is esentially directing students straight to #3. Sallie Mae is hardly alone (many private lenders stress “convenience”).

The New American Foundation suggests that universities be required to certify private loans, which universities could make part of a mandatory counseling. But, as NAF is quick to remind readers, universities have not exactly proven themselves trustworthy, as a number have guided students to lenders that provide personal “gifts” to financial aid officers. As several Warren Reports have noted as well (see here and here), some universities also push credit cards irresponsibly.

At the end of the day, financial counseling by university officials seems doubtlessly like a good thing, but the question is badly put. Not only is college becoming unaffordable, but these costs are transforming university education: middle-class students must focus on training for “useful” skills rather than on education to make themselves more critical, independent, and humane citizens. (See this interview with Martha Nussbaum discussing her book, Cultivating Humanity, in which she forcefully envisions this role for education in the twenty-first century.) Liberal education is essential for a democracy; it should not be an indulgence for the idle rich.