Yes there is a Student Loan Crisis

October 8, 2015

I can only assume those who don’t believe there’s a student loan crisis don’t have student loans. I’ve seen it written off as merely the result of students not discerning a proper major—and I’ll get to that—and I’ve been surprised to hear the shock and awe of those without student loans or recent experience in higher education at the amount of time most of us will take to pay off our loan notes. Incredulous is the reaction I see quite often on blog comments or in general conversation—the “surely you must be exaggerating” style of comment. 

I’ll affirm it—there is a student loan crisis in America. There are many factors for this and these factors feed off of each other and exacerbate the situation as a whole. The reason many in my generation delay (or forego) purchasing their first home, having children, starting businesses or new careers or putting down roots in a community is because they have a large amount of debt hanging over their heads that guarantees a not-insignificant portion of every pay check they earn for the next 30-odd years goes to Sallie Mae or her cohorts.

 Those that think we (e.g. the upcoming, my own, and the previous generations, those 18-40) brought this on ourselves through faulty planning, poor educational choices or “partying too hard” in our twenties ignore multiple factors, some which we had a part in but many we did not. First—the cost of a college education has multiplied at an astonishing rate since the 1970s (rocketing up more than 1100 %). At one point you could actually work in the summer and save enough money to actually pay for semesters out of pocket. Today you would have to be working on Wall Street or Congress to do so. Secondly, lending grew more predatory and reached its evil nadir in the 2000s. Whereas the function of a student loan once was simply to help young people go to school and thus carried little to nothing in the way of interest fees, by 2008 student loans were being assessed far more interest than home or car loans. Additionally, the bodies granting loans were free to sell or trade the loan without the loanee’s permission assessing additional fees in the process. Outrageously, it is rarely possible to discharge student loans even by filing for bankruptcy—so someone like Fiorina or Trump can bankrupt a company and ruin the careers of thousands, escaping personally unscathed and owing nothing while the average State U student with a Business Degree and $100,000 in student loans working at Burger King cannot escape those loans in the same manner.  

Also, consider these details—as recently as 2010 the terms of the average student loan were not typically explained to students who entered the financial aid office to accept them. Students were rarely (if ever) informed of how much their payment after college would be or how long they would have to make payments. Remember, we are also talking about young people right out of high-school. Studies have shown the last part of the brain to develop is that which comprehends risk and consequence. Your average 18 year old college student in 2000-2010 also grew up believing the ticket to success must first include a college degree—entire generations were told that to succeed and become middle class a 4 year degree was largely enough. The thing is—it was! For many, many years. A funny (in a bitter way) meme a few years ago detailed “Steve and the economy” vs. “Steve’s Dad and Steve’s Dad’s economy”—poking fun at the generation of middle class 50-somethings who were able to simply “show up” at college and earn a middle class position not comprehending today’s “lazy young people.” At one point going to college was enough. Everyone heard this and a drastically larger number of people went to college, graduated—and found a crashed economy on the other side, competing with everyone else who went to college unable to find work.

One comment I often hear is that young people should just “get a degree in a field that matters.” While I will acknowledge not every possible degree is functional—there are areas of specialized knowledge that excelling in only benefits you if the knowledge is in and of itself worthwhile to you and/or you plan to work as an academic in that field—I think such comments deride entire fields of knowledge that are valuable and worthwhile. Sure a proficiency in English Literature, Philosophy or Russian History may not qualify someone for a job as a Dentist but is it really wise to completely deride the existence of these areas of knowledge? Are they not worth preserving or expanding? Do unexpected developments in the arts, culture, and even science not sometimes spring from the unlikeliest of places where deep intelligent discussion is fostered? Should we let all humanities fall by the wayside so only “practical” knowledge is developed? Besides, a serious education in any such fields should (and traditionally has) first immersed the student in a rigid basic coursework and the skills honed even in specialized fields spill over to strengthen widely applicable skills like writing, editing, research, creativity, public speaking, debate, organization, teaching and leadership. Referring to the previous point, such majors used to be enough for the graduate to find work in the business or professional world even if the area of specialized knowledge wasn’t in itself applied.

So to recap: For generations a college degree ensured entry into the middle class. Parents raising children thus taught their kids to go to college by any means necessary so they could become successful—some of these parents never made it to school themselves and wanted better for their children, others did graduate from college and saw how it worked for them and also encouraged their children to follow suit. The price of college skyrocketed. Students whose parents couldn’t afford to pay for their education went to the admissions office of the school they were accepted to and were presented with a letter detailing pre-approved loans for them. These students most often had never taken a loan of any kind and had no credit but were nonetheless pre-approved for $20-200,000 loans and were not informed of the details regarding the loan. Of course they knew it would have to be paid back but they usually didn’t realize it would include interest which could one day double the loan amount. And most probably did their math as naively as I did at 18 (“Well, I’ll make $50 or $100,000 a year as a college graduate and pay it all back in a couple of years”—disclaimer: I’ve never made anywhere close to 100,000 in a year). Then, said student graduated into an economy that had suffered through what many economists define as the worst financial crisis in US history (the fact that we didn’t have Depression era breadlines should provoke you to reassess how our leaders handled the situation). The student then found themselves in competition with the largest degree-holding group of new job-seekers in history. These job-seekers were also in competition with the two older generations who were living longer and deferring retirement later than any previous generation.

 In many ways I have been extremely lucky in comparison to so many of the horror stories of student loan debt. I have never gone hungry or been evicted and I didn’t have to move back home and crash with my mother. I was lucky to have a long-suffering hard-working significant other to help cover the bills and we collectively were lucky to always make it work and we’ve done okay for ourselves in spite of several career non-starts and a pile of student debt. I also take every advantage of deferment as able which my significant other is not always as keen on—while I agree with her on most bills (get rid of it as quickly as possible when able) on student loans I am happy to kick them on down the road as far as possible as often as possible. This is because I have paid them off and on for more than 10 years now (granted I did go on to grad school and a bit beyond, glutton for punishment and sucker for knowledge that I am) and I have yet to make a dent in them. So when out of work, when making less in a year than previously, when moving, etc.—when possible I reduce or defer and pay as little as possible. We’ve worked hard, we’ve invested as wisely as we can, and we’ve been lucky financially at times we most needed it where others I know have not been so lucky. But these student loans just seem like facts that will always be there and they were certainly a factor that let to our long wait to shift from renting to owning houses and they have been a not insignificant factor in our decision to defer (and contemplate foregoing) children. I can name you a few dozen others from personal experience alone and point you toward a slew of new stories and statistics of even more who have done similar.  

So when you hear that people in their thirties just can’t get started like their parents, remember—that’s a symptom of the college debt crisis.   Think of all the money and creativity that would go into the economy if we fixed it.

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