Good afternoon. Thank you ladies and gentlemen, for turning out on a cold, late fall day. I can assure you its going to be worth your time. Im daniel disalvo, an associate professor of Political Science at city college of new york and a senior fellow at the Manhattan Institute here its my pleasure today to introduce our speaker, beth akers. So first things first id like to welcome beth to the Manhattan Institute wishes result become a fellow. Prior to joining us she was a fellow at the Brookings Institution center on children and families. And before that she was a staff economist at the president s council of economic advisers, and worked extensively on Higher Education policy. Second, i like to welcome beth back to new york. Beth received her ph. D in math excuse me, her ba in math and economics from suny albany at a ph. D in economics from columbia university. So beth is here today to talk about her book, game of loans the rhetoric and reality of student debt. Recently published by Princeton University press and written with matt chingos of the urban institute. So after reading her book i can assure you she is going to fit right in at the Manhattan Institute. Where the scholars would delight in debunking poorly argued narratives in the press and the public debate. Her book does just that. Its a timely corrective to the wildly exaggerated student debt crisis that persists in the media. Her thesis is that theres no broadbased student loan crisis that the New York Times and others would have us believe. And she makes a powerful datadriven case that i think while also giving the reader really broad and full accounting of the Higher Education finance and how it works. In light of her analysis i think its safe to say that hillary clinton, or Bernie Sanders proposal to make college free is an indulgent solution looking for a problem. Beths book i think will be of enormous value to lawmakers, policymakers, university administrators, to parents, Prospective College and graduate students and concerned taxpayers and citizens because it explains things simply and clearly, even if there are things that not all of us or not Everyone Wants to hear. Ill take my own case. In our culture today obsessed with selfesteem, no one likes to be told that they are average. Well, from reading beths book i learned that, well, i was average. Like other prospective students, young people from family of modest means, i made a decision to invest in my own future and took out what turned out to be, i have learned in retrospect, the average amount of Student Loans required to attend a private selected new England Liberal Arts College in the 1990s. Like other borrowers i had a little offense of how much id actually borrowed at the time or from whom. Then that woman, sallie mae, started sending me all these letters. However, like other average borrowers also had little difficulty actually paying back the loans to my own space because it didnt seem quite daunting at first. So much for the media narrative that all undergraduate borrowers are in deep trouble. I also learned another hard truth from beths book come when it came to graduate school i learned that it was, in fact, well, below average. I was below average in the sense of the amount of loans they took me to compete complete my ph. D. In this case for joy for me, being below average actually turned out to be a good thing. This is because as beth shows, sure she will discuss in her remarks, one of the most disturbing elements of the world of Higher Education that is the amount thats taken out by graduate students. So look, i could go on about the virtues of beths book which are many, but let me just and by encouraging all of you to pick up a copy of the extent i gather they are for sale outside and if you dont pick one up there, i suggest amazon or the equivalent online and as i said i think theres a lot to chew on in the book. So without further ado let me welcome beth akers. Beth. [applause] well, thank you, dan, very much for that generous introduction. Im thrilled to be here, meaning here at the Manhattan Institute and part of this great organization, but also here today to be able to put some ideas into your ear and hope that they stick. So thank you so much for giving me the applican opportunity to o you today. So it sounds like, you only heard what the book is about but i will do my best to fill in a little more of the details, and kind assault on some of my arguments here. I think you took the first page of my notes which is going to make it [laughter] i was going to say, thats not the first idea i wanted to talk about. I think its helpful in talking about the book to start back before the book started into the sense of whatever the book, why i embarked on this agenda of research in the first place. I joined the think Tank Community about five years ago. I just finished graduate school and i was studying economics in a pretty theoretical department. I had this new experience of having reporters call me and had to pick of the vote and enter whatever questions they to my way which was a fun and dauntig exercise. What are the questions i found i was asked almost daily through that process was, is a student loan crisis on the horizon . I had come out of graduate school at this point so i was intimately familiar with the academic literature on the financial returns to investments in education. I was somewhat familiar with a headlines that were pervasive on the issue of student at but it wasnt as obvious to me why the media was obsessed with this question about a student loan crisis. We were just a few years out from the more, the mortgage crisis and i believe a lot of people were drawing parallels between what could happen in Student Lending and we had seen happen in mortgages. So using the economic lens that i had been given in my training i was imagining a Higher Education in the lens of it was an investment that pays off over the course of the lifetime. The estimates we have from the academic literature suggest if you think of education that way, aggravate tension aggregate across all the expenses over history, over the past decade the financial returns to this investment have held steady at about 15 . So a 15 rate of return and i do fell desha i knew full well, about four to 6 . If you think of it in this way, think of it again in the lens of a long Term Investment that pays off over the course of the lifetime, yet students making investment with a pretty decent margin, a large margin of return at least for the typical borrower. It seemed obvious there was a huge distance between what people are talking about Student Loan Debt in the popular media, piper discussion o of the issue and the policy world and the evidence we had to support that conversation. This really inspired me to embark on this agenda of research that was aimed at one, reconciling this dissidence that i saw but also just giving more descriptive evidence to what was happening in the student loan market more generally. So what does it look like . A bit of an overview. So the first thing, we know that more people are borrowing today and i ive ever borrowed in the past. Some of the most recent data tells us among young households 40 are holding some form of Student Loan Debt. Thats up a drastically from about two decades earlier when it was 14 of young households were carrying some form of household debt. People are borrowing more than ever before. During the same period of time, over the past 20 years, the average debt has more than tripled for the same young households who are holding some level of student debt. The statistic with her over and over and over is that those two things have amounted to an outstanding student debt burden for this nation, 1. 3 trillion. Weve heard the statistics over and over by the discussion generally stops there. Instead i say lets consider applying a different lens to this. As with think of investment in education as paying off over the course of a lifetime we can think of these increases in debt as a symptom of increased investment in education which we know pays dividends both to the individual and to society. For instance, we talk about the 1. 3 trillion in Student Loan Debt we rarely talk about the increases our estimate increases in gdp that result from increased Productivity Fund investments in Human Capital that have taken place. This is the right way to be thinking about investment in Higher Education and what needs to be done if anything with our Student Lending situation. What else do we know . In contrast to the general understanding, the out, the very large outstanding student loan balances are exceedingly rare. 7 of households are more than 50,000 in Student Loan Debt and just 2 at more than 100,000 in Student Loan Debt. The large balances are held by the folks who have very lucrative graduate and professional degrees and have high incomes. There are individuals who dont have high earning but generally speaking this is the trend we observe in the data. Among bachelor degrees holders less than 40,000 is the norm, and greater than 60,00 60,000s largely unheard of for individuals who are just attained a bachelors degree. Its easy to understand why the media has focused on these very high balanced borrowers. In contrast to the more typical expenses that are far less newsworthy. I imagine what the headline would look like if instead the stories were portraying whats happening. I think would look Something Like student borrowers get wellpaying job after college and faces affordable Monthly Payments. It sounds a little bit like an onion article headline in fact. I think the problem is that the truth in this case is not as catchy of a headline, and weve been able to quantify this in fact. In 2014 someone did a study looking at the popular Media Coverage of Student Loan Debt. They look at 100 recent articles about debt on which provide the least one or two individuals who had borrowing and the average borrowing was in excess of 85,000 which is three times the actual average for borrowers. If youre getting information about what the student borrowing looks like in this country from newspaper articles you are going to have an inappropriate understanding of the issue. So burdens are not as large as we imagine imagine them to be be question remains are they squeezing borrowers . What does a squeeze look like for individuals . This is an important question for us to begin to empirically to get an understanding of what this looks like. What we find would look at the data is the average Monthly Payment that he borrower is facing is under 300, 276 a month, 76 a month, amounts to 7 of income in the median is even lower, 4 . That is is declined or held steady over time. The monthly squeeze out these types of debt has declined or held steady depend on it looking at the mean or the meeting. This is an incredible finding. Its largely in contrast to what most people believe to be happening in this space. Things are not getting worse a lease on a monthly basis for these borrowers. Dramatically different conclusion what we would have drawn prior to this research. The other thing that we uncovered with his work is that the struggling borrowers are not who you think they are. Again, the newspaper covers the stories of high balanced borrowers and we are all led to believe these are the folks who need help. The highest rates of default are among borrowers have less than 5000 in Student Loan Debt. People of lots of debt have made big investment in education and only statistically speaking we know those pay off with larger dividends. The problem is not what we believe it to be. So generally speaking, i draw the conclusion that, in fact, we do not have a crisis in Student Lending in this country. At least not the crisis that a lot of folks have been talking about. What i like to say is instead we have crises. There are places where there are very Serious Problems with our federal lending and Student Lending system more broadly, but it is not appropriately characterized with this notion of a still in crisis in which the sky is falling on all borrowers in which every dollar of debt makes individual necessarily worse off. So who are the people who we need to be worried about what it is a people and made these investment in education but do not see those returns that ive been talking about repeatedly. The are people who are upside down on their Student Loans. So where are these crises coming from . With a huge issue with College Completion in this country, people who have invested in the degree but do not see the dividends from having completed that degree and gained access to increase upon opportunities that come from that. Amongst folks who started college in 2009 only half of them were able to obtain a degree within six years. Where a lot of people spending money on college but not getting the financial returns because they never get that the foam into their hands. We also have a repayment crisis in this country. So we have a set of repayment plans that offer very robust safety net for borrowers. In essence, in theory, venture and borrowers should never have to face an unaffordable Monthly Payment. In practice this system of repayment plans is incredibly complex. Individuals have a difficult time accessing the benefits that are currently available to them. As a result we have millions in this country who are in default on their Student Loans despite the very robust safety net that does exist. We also have an information crisis. So we expect in this country consumers to access the Higher Education, make savvy choices and do a costbenefit analysis, vote with their dollars and go to institutions that will pay off for the unfortunately we dont give them the information necessary to do that so the government is Holding Information on the financial returns to every institution in this country, but because of lack of Data Availability, consumers are not able to use this to assess the options that are available to them. We know the information problem existexist after students enroln school with a borrowing issue as well. In survey data we know that it asked people who are enrolled in school how much they are paying to be enrolled, only half of them contained within a reasonable margin of error. If you ask him instead how much they have borrowed to be in school can only about a third of them can tell the within a reasonable margin of error. Among the people that we know are borrowing, again the survey, 28 will tell you that they have no debt at all. These are very concerning facts, especially if we wish this Higher Education system to look like a market because we note that a market cannot exist if, in fact, the consumers are not operating with information. Some have criticized the narrative of this book and said if you do believe that there are crises are issues that need to be addressed in Higher Education financing space yb dismissive of a notion notion of the crisis . At least it is bring attention to the issue that does need some sort of reform. The argument is clear, mischaracterizing the problem that exists in this space will lead us to the wrong solution. Solutions that do not provide relief to the people who need them the most. As an example one of the most prominent policy reforms thats been discussed in this space is refinancing of outstanding Student Loan Debt. This is essentially reducing Interest Rates on all of the outstanding point of debt that folks are holding. This sounds like a great idea off the bat for providing relief to the people who are struggling the most writing effectively take a second look at it we know again the borrowers are the most debt are the most welloff, at least on average. So the positive relationship joint income and debt means that this is a largely regressive policy and does not succeed in helping the people are really struggling with those debts. So when general of the popular discourse on this issue is missing the necessary nuance thats needed in order to create reasonable and appropriate policy. Generally we are missing the point that not all debt is bad debt. Debt in which a borrower ends up upside down is concerning. That which enables an individual to make an investment in education is up over the course of a lifetime with a positive return is less conservative but we need to capture that nuance in a policy discussion. In order to characterize what we should be thinking about i think the conversation needs to shift away from the number of dollars people are paying for tuition, the number of dollars people are borrowing and rather think about the notion of risk. This is the investment that amounts to a gamble. Some people going to win, some people will lose. We need policy to focus on helping the folks that make it a gamble but lose rather than cropping up the system are generally. I will stop the edit think we will open up to some questions. [applause] ive been asked to help beth field some questions. Lets start right of your with this gentleman. [inaudible] ple