Borrowing Inequality: Race, Class, and Student Loans (review)

The development of student loans as an integral part of student financing of higher education has been well documented. The College Board, in its annual Trends in Student Aid report (2003), has demonstrated how loans have come to replace grants as the primary source of funding for millions of students. While many scholarly books in recent years have examined the state of student aid, up to now only an edited book by Richard Fossey and Mark Bateman (1998) has focused primarily on the role of loans. Borrowing Inequality by Derek V. Price, seeks to fill this void.

Price's slim book (132 pages of text, plus appendices, reference list, and index) provides a good introduction to the current state of student borrowing for higher education. The introduction provides a history of the rationale behind social investment in education in the United States, citing Thomas Jefferson's belief in the importance of education for political democracy and John Dewey's explication of the importance of schools in advancing society.

Rather than higher education becoming an equalizing force in society—one that helps erase class differences—Price cites other authors and data to demonstrate that higher education in America helps to reproduce existing inequalities. He documents that, almost four decades after the passage of the Higher Education Act of 1965, we still have large gaps in college access and degree attainment, between rich and poor in the nation.

In Chapter 2, Price provides more data to demonstrate how students and their families have borne an increasing proportion of the cost of paying for higher education, with the public (largely in the form of state taxpayers) providing a smaller and smaller share. Along with the inability of the federal Pell Grant program to keep pace with increasing college prices, this shift is the primary reason for the growth in student borrowing for financing higher education.

The next three chapters provide Price's analysis of how much different students are borrowing to finance their postsecondary educations. He also analyzes the level of debt burden (or the relationship between the salaries they earn after graduating from college and their monthly student loan payments) incurred by these students. For many of these analyses, he uses data from the "Baccalaureate and Beyond" survey, a national study conducted by the U.S. Department of Education of students who attained a bachelor's degree in AY1992-1993.

While Price provides a good deal of data to support his thesis, some of his conclusions are based on shaky interpretations. For example, he shows how lower-income and minority students are more likely to be enrolled in less expensive (and less prestigious) comprehensive institutions, in contrast to upper-income and White students who are more likely to attend research universities: "Thus, one manifestation of the overreliance on loans to finance higher education is that lower-income students and African American students, by choosing less expensive colleges and universities, are less likely to graduate from research and doctoral institutions" (p. 53). In this statement and throughout the book, Price attempts to ascribe these differences in postsecondary attendance and attainment almost exclusively to the costs of education and the reliance on borrowing. While finances certainly play a role, Price pays scant attention to other factors, most importantly the quality of K-12 schooling and academic performance and the role they play in ensuring the persistence of these gaps between rich and poor students and between Whites and minorities.

In the third chapter, Price cites differences in salaries earned by students who came from different class and racial groups, noting that White students and those from upper-income families end up earning more after graduating from college than minority students and those from families who are less well off economically. He says that these differences "are consistent with the contours of the unequal social system—a system of race, ethnic, gender, and class inequality" (p. 67). This may be true; but again...