Let’s Talk About Student Loans Some More
“The question isn’t the debt per se. It’s what the students are getting in return,” says Richard Arum, a New York University sociologist who specializes in education. Many students are incurring heavy debts for an education (ethnomusicology, theater arts) that just isn’t worth it from a strictly financial viewpoint. (Money isn’t everything, but try telling that to the collection agency.) Education benefits society by creating a workforce that creates wealth, pays taxes, and stays off welfare. But state governments—whose schools educate 7 in 10 students—have raised tuition abruptly because of their own financial problems. So far the federal government has offset the state cutbacks by boosting financial aid, but Education Under Secretary Martha Kanter testified to Congress earlier this year that “this path is not fiscally sustainable.”
Whenever someone writes a new, big feature on student loan debt, I’m all over it. The cost of going to college is getting out of control, and having an on-going discussion about how to fix it is a good thing. Although I don’t have the $100,000+ burden of student loan debt that other students are lugging around, I will probably be paying off my loans—mostly from grad school—until I am in my 40s. So let’s talk about Bloomberg Businessweek’s big feature on student loan debt for a minute, and see if we can gain anything from it.
The setup is what you’d usually expect: People who have college educations consistently earn more than people who don’t, and that’s why we’re willing to pay to get one. But getting a degree now comes with a huge price tag [insert stories of students with various degrees who have graduated, or are ready to graduate with massive debt they’re not sure how they’re going to pay off]. Next comes a short explanation about why costs have been rising so quickly, which is basically: state and local support has fallen dramatically because local governments have had budget problems, and if you combine that with colleges’ persistent need to expand and adopt new technologies to remain competitive, all those costs are being passed onto students and families (here’s a map from Marketplace showing how much funding each state typically gives to students).
Okay, so now the discussion of possible solutions, and they’ve all been addressed before:
• People have not been able discharge their student loans in bankruptcy filings since restrictions placed by Congress beginning in 1976, unless a judge rules that you are completely hopeless, which is very hard to convince a judge to rule, because you basically have to convince the court that things are never ever going to improve for you (see: this story from the Times this weekend about how difficult it has been for this unemployed man who went blind to convince a court about his hopelessness). Singling out student loan debt as something creditors should pursue someone for until they die doesn’t make a lot of sense, and the restrictions should be removed.
• Making repayment plans more feasible. There have been enough stories about people who have pursued expensive degrees and then taken middle-income jobs (i.e. people who get law degrees and decide they want to work for non-profits instead of corporations), who are then asked to make massive monthly payments that eat up their entire paycheck, or more. Income-based repayment, followed by loan forgiveness after 25 years, an idea the current administration has pushed, is one solution we can pursue. People need to see a light at the end of the tunnel.
• Keeping the cost of college affordable so that students don’t have to take out loans in the first place, is another obvious solution, and this is something colleges can take the lead on, rather than having us rely on Congress to legislate. This means postponing expansion plans, or seeking cost-saving initiatives. When I was an undergrad, some of my literature classes took place in temporary classrooms in what were essentially large trailers. Nobody cared—we didn’t need high-tech classrooms to talk about books. One cost-saving measure mentioned is more online courses: Take out the campus altogether, and you’ll certainly save a bunch of money. But I believe that an important part of the college experience is being able to be on campus and interact directly with professors and fellow students. As Ann Friedman mentioned in an article for CJR today, “every profession is about connections.” I got a lot of job leads from people I met in school.
Bankruptcy law revisions, IBR repayment plans, smart cost-cutting measures—should be easy, right? Except it’s not. Not when there’s money to be made. And colleges and lenders make a lot of money off of students.