The Investment Imperative

60 Pages Posted: 10 May 2019 Last revised: 17 Oct 2019

Date Written: October 17, 2019


This Article names and identifies the “investment imperative” as the widely-held belief that higher education is necessary to increase one’s financial prosperity and social standing in America. Increasingly, higher education policy has supported the investment imperative by shifting the benefit, burden, and risk of higher education from the public to the private consumer. This has resulted in a patchwork of laws that encourage education at any cost, primarily driven by personal debt, and without concomitant regulations that control for instructional quality.

Drawing on interdisciplinary scholarship, empirical studies, and original interviews with student loan borrowers across the country, this Article argues that the investment imperative drives and distorts students’ financial behaviors and decisions. Because students are conditioned to see higher education as an imperative investment in their own human capital, many fail to connect college attendance with college financing. More specifically, this Article argues that the investment imperative (1) permits and encourages an “ostrich effect,” whereby student borrowers ignore information about higher education institutions and the cost of debt; and (2) creates the conditions for a “student debt cascade,” whereby the disconnect between the financial promise of higher education and the student’s financial reality leads to distress emotions, avoidance, nonpayment, and default. Throughout, this Article recognizes that, in its implementation, the investment imperative leaves students vulnerable to exploitation and ignores the effects of systemic inequalities related to race, gender, and class.

Keywords: student debt, consumer law, civil rights, empirical

Suggested Citation

Elengold, Kate, The Investment Imperative (October 17, 2019). 57 Hous. L. Rev. 1 (2019), Available at SSRN: or

Kate Elengold (Contact Author)

UNC School of Law ( email )

Van Hecke-Wettach Hall, 160 Ridge Road
CB #3380
Chapel Hill, NC 27599-3380
United States

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