Is $1 trillion a number we should fear?

The most popular number in higher education today is $1 trillion—the total amount of outstanding student loan debt, according to the Federal Reserve Bank of New York. It’s big and scary; the size of figure we're more used to seeing attached to wars and national budgets, and easily encapsulates a broadly held sense that college is unaffordable for all but the wealthiest families. Not surprisingly, the figure is ubiquitous in the media,  producing alarming charts, such as this one from a piece in Mother Jones about different plans to deal with student loan interest rates: 

There’s just one problem—the number isn’t necessarily the boogeyman it’s made out to be. That’s because the $1 trillion loan balance is an aggregate number.

It just so happens that at the same time studnet loan debt was expanding, so too was enrollment in higher education. As the chart below shows, from 2000 to 2011, fall enrollment in higher education increased by 6.2 million students. (From 2003, the first year in the chart above, to 2011 it grew by 4.5 million).

While the rate of change in the above chart does not look as steep as the Mother Jones chart, it still represents a 40 percent growth in enrollment in a little over a decade. And not surprisingly, the steeper jumps in both charts occurred initially in the 2008 to 2009 period, when the economic downturn made going to college a much more attractive option. Not only did enrollment growth explode, but 43 percent of the observed growth occurred at nonprofit private and for-profit institutions, which tend to have higher prices and borrowing rates to begin with.

All of this isn’t to excuse the growth in student loans. Is the outstanding student loan balance going up because more people are borrowing and people that do borrow are taking on more money? Absolutely. But it’s also going up because there are just more people in college in any given year. As a result, figures from the U.S. Department of Education show that the median debt owed by undergraduates grew more from 1990 to about 2000 than it did from 2004 to 2012: 

One trillion dollars is undeniably large enough to stoke the fears of overindebted students. And in general, the trend where a larger percentage of students take out more loan debt is not a positive development. But the aggregate debt ifgure is also at least a partial testament to our success in getting more students into college--more people are borrowing at least partially because there's just more people in college to do so. The trick now, though, is ensuring that those investments are resulting in high-quality credentials and that the per-student debt figure—the number that really matters—does not stay on an upward path.