I am currently writing an article for the New England Journal of Higher Education about the problem of health issues, and covering health costs as an indentured educated servant. The piece includes testimonials from a number of courageous debtors who shared their stories with me, and I am grateful for their willingness to provide intimate details about their personal lives. These tales illuminate the devastating toll that the student lending crisis is taking. One particular story I received deserves further mention here. It comes from a young woman who, like so many of you, believed and was told that a college degree would ensure that she would make a good living and be able to enjoy a good life.
I read the story yesterday while an older taxi driver whisked me to work in Korea, and it was difficult not to cry (but I didn't want the old taxi driver to feel uncomfortable, not that he would have even noticed. Koreans, at least in public, have a fantastic way of ignoring one another). The email is nearly 7 pages long printed, and I finished it before classes began. Not only does the young woman - let's call her Ms.T - detail her health woes, which will be included in my forthcoming article for the NEJHE, but she also highlights a number of significant societal issues that intersect with the student lending crisis. Her piece was so moving that this post will be the first in a series that will demonstrate how her predicament exemplifies much larger societal problems.
Ms. T's story includes a little of something that we can all relate to. In 2004 she received her BA in Sociology from USC. After graduating, she had a difficult time finding a job. Thanks to a neighbor's father, she finally found work after 6 months of searching. Sadly, this was not an ideal job. Ms. T explains, "from day one, I hated that job with a passion. It had nothing to do with my hopes or dreams for my future."
Many realists who are job-hunting consultants would claim that Ms. T is foolish in thinking that her degree would allow her to pursue the job of her dreams. While it is true that college students or even job hunters shouldn't limit themselves to searching for jobs that are connected to things they're passionate about (I seriously cringed when writing that), Ms. T's job preferences are not without warrant. She wanted and wants to help people, and work in the non-profit sector. What's so wrong about that? Ms. T is yet another example of someone who wishes to be of service to other Americans, but is unable to do so, because she is an indentured educated servant.
Ms. T continues, "So there I was . . . I had to pay almost $1500 per month on my student loans. I couldn't work at a non-profit organization because I had to survive, you know? And, they don't pay enough. Where would I find money to pay for my rent and housing without a decent wage?"
So here's the question: how many of you are in a job that you hate because of your student loan debt?
I have no choice over what I do for a living now, and it is a very poor living at that.
My credit is destroyed because of massive Student Loan debt.
I cannot get a decent paying job because Companies look at a person's credit score when hiring.
A company will evaluate a credit score even for a low-level, low-paying job.
So I have to settle for work in the construction trades. Often dangerous. With no health Insurance, unless I buy my own. But so far I cannot afford it.
But for the sake of argument, let's say I was able to get hired somewhere.
It would not be without a wage garnishment.
Which means more work for the accounting dept.
Which they won't appreciate, to say nothing about the humiliation.
The future looks really grim, and I feel a real flutting fear in my stomach at times when contemplating it.
No way out.
I work at a department store replenishing the stock on the shelves in the wee hours of the morning for $1.00 an hour above minimum wage. I average 25-30 hours a week because the store doesn't hire full time or they have to insure them. Do I make my 1483.00 a month student loan payments? You do the math.
Zero sympathy for the person who gets a BA from a private school on student loans. Absolutely ZERO sympathy. That is absolutely insane.
We've all made a lot about law schools' inflated employment and salary statistics, but it's basically well known that a BA in sociology is only good for flipping burgers or stocking shelves. Same goes with several other degrees.
Sorry, but she made her bed and must lie in it.
I did post this on President Obama's Thank you message on Youtube, although there will probably be thousands of posts pretty soon.
Dear Mr. President:
Thank You for this Thank you message.
Yes, just a setback.
You did mention Student Loans, and if you have the time please visit the blogs such as Cryn Johanssen's and Alan Collinges.
Please keep an eye on Al Lord and Sallie Mae, because so many people have been terribly hurt by him and the Banks.
Always faithful, and Happy Holidays (a bit early).
I don't think anyone is asking for sympathy for this person.
Just give then the same tools someone like Donald Trump has.
You see Donald Trump, that icon of American busuiness, made such incompetent business decisions that his entire casino operation was on the verge of going under.
But not to worry. You see billionaire Trump had access to bankruptcy protection,he used it, and discharged billions of debt while insulating himself from lawsuits.
And guess what. About two yeras later he messed up so badly again, that he declared bankruptcy again.
And, oh yeah, he declared a third time just recently. How come when wealthy peole F up and manage to dismiss billions in debt no one seems to get upset, but if you make the unpardonable sin of...oh my.. the horror, of getting a BA at a private school it's "she made her bed she must lie in it".
I think all people are saying is that if the Trumps of the world can F up and get a fresh start by discharging billions in debt, a poor shmuck who simply got a degree from a Private school and now is in trouble, should certainly have the same tools available to them.
People are young when they start school, and the economy and job market can change drastically by the time someone graduates. Also, people are not fully informed about how the debt can grow exponentially just from a few months of job searching. The whole system is a set up for failure, which is why so many student debtors are in trouble. Schools are responsible for encouraging students to sign up for these loans, and the wider society is also responsible for not helping people who go into social work pay for their degrees. We need social workers, so we need to fund their education properly. I believe the answer is more scholarships and almost no loans for most of the BA and BS degrees colleges offer now. Schools need to raise money in other ways. With all of the retired baby boomers out there with degrees, we could be encouraged to volunteer to teach part time in return for reducing our student loan debt. We need new ideas, creativity.
EvrenSeven- when millions of people are all making the same mistake, it's a systemic problem. I don't think others should pay for it, least of all taxpayers, however laws should change so that debtors can repay just what they borrowed and others won't be conned into a low-income career path.
These last to points are excellent (the one about Trump and the one about it being a systemic problem). I'm not sure why people like EvrenSeven can't see the bigger picture, and understand that the problem is costing taxpayers millions of dollars. They just don't get it.
Sometimes, after reading comments such as the ones above, I sit back and marvel at how much the very basic and universally accepted assumptions about Education have changed in a mere 10 years, or maybe less.
Speaking very generally, there was a point in time--not too long ago actually--when Educational Debt was regarded as "Good Debt." Few people would have disagreed.
People dreamed about "Sending their kids to College" so that "they would have all the advantages that their parents didn't have."
Now, these kinds of phrases sound like stale cliches. Outdated Baby Boomer ideals that were passed down from the Boomers Parents and Grandparents.
And it pretty much did not matter what the Undergraduate degree was in. Liberal Arts majors could still get jobs in business, and it was preached that some businesses actually favored hiring someone with a BA.
Another cliche was: "once you get working for a few years, no one cares or asks what school you went to or what your grades were."
I still talk to older people with this Baby-Boomer mindset still very much intact. Retired people, who don't understand that an Education can actually result in financial disaster.
And Re: the study of Sociology: I remember it being a popular Major or a Minor. And an interesting and respected discipline. I wish I had taken a course or two.
In fact, the Student Loan Crisis can be said to be a fitting topic for Sociological Study.
Such study to be undertaken,ironically by a poor and indebted Sociologist.
But there are also poor lawyers, and BA's and on and on.
Lastly, as Cryn Says @1:49
How to make the taxpayer understand how the system works, and how the taxpayer is harmed by it. That is the big, big question.
And so, to Cryn and Warwick555:
Here is a flow chart you have probably seen already. It has been around for a few months, but I still think is very helpful, and should be on the front page of every newspaper in the country so that every "Taxpayer" can become informed.
It tries explain a complex situation and its history in an understandable way. And that is key, because there are many elements involved:
I don't understand this focus on "debtors should be able to repay only what they borrowed." If you get a $100,0000 mortgage, no one complains about repaying $215,000 over 30 years. It is a loan, not a grant: interest is contractually required!
In addition, the interest paid is much smaller than it looks: $115,000 in 2010-2040 dollars is very small compared to $115,000 in 2010 dollars only. With net present value, the $215,000 melts down to only slightly more than you borrowed anyway -- $104,000.
If you get a $15,000 car loan, no one complains about repaying $17,500 over five years. It is a loan, not a grant. You are compensating someone for the use of their money for that time period when they could have been using it for something else. This applies whether it is a for-profit bank, a nonprofit entity, a for-profit nonbank lender, or the government.
If loan holders are capitalizing more often than permitted under the Higher Education Act -- or not enough -- then they should be prosecuted. But the whole system shouldn't just write off billions in loans because someone says so.
@Anonymous Nov 6 - so, let me ask you a question: are you familiar with the differences between student loans versus owning a car or a home? You seem so damned certain of your position, I'm curious to know if you know the SIGNIFICANT differences.
Picture a 5 year car loan that you cannot pay anymore because you are in a coma for a few months.
You have only had the car for a year, but the Lender has repossesed the car in the meantime, and you still on the hook to pay off the loan.
Moreover, the lender has decided to double the amount you owe on the car, and raise the interest rate.
Also, the lender has decided to ruin your credit score, and revoke your professional license, therebyu making it impossible for you to get a job so that you can pay off the car loan.
And it gets better, because the lender has made impossible for you to declare bankruptcy, so you will carry that car loan to your grave.
Now you have no car. No decent job. A future of garnished Social security. Depression, suicidal thoughts that haunt you every waking hour.
A very strong deterrent to get marrried, have a family, buy a house.
That is sort of what a Student Loan is like.
You Silly Billy!
Actually, Student Loans are fun! They tickle!
Oh, and top of that, they've taken the car and have garnished your wages without a court order. If you don't have wages and are on, say disability, they can garnish those. Again, they can do that without a court order. God forbid someone else is one the title of that car. They will get it too. You have no idea how different it is to have a student loan vs. a mortgage or a car payment. No one here is asking for a bailout. Everyone for whom I advocate takes responsibility, but the system is broken. There is no transparency. The system is rigged. The system is a scam.
Of course when Donald Trump f--ed up, he could declare bankruptcy. But don't you dare let your fellow American who pursued a degree have the same rights as Donald Trump. Oh! If that were to be allowed again, that country would surely go to hell!
I forgot to add that as your car loan grows ans grows and grows over your lifetime, the lender is getting instant cash in hand from the taxpayer.
So a 20 thousand dollar car loan is now 100 thousand.
The lender wins because they have collected the 80 thousand from someone else (the taxpayer)
Yet you are still on the hook.
Why is that?
And it gets better......the taxpayer is really mad at you for screwing up you car loan and getting disabled in the first place.
And the veterans will heap shame upon you the most, and the suicidal thoughts will creep and creep into your mind like a dark fog.
A last question.
Suppose a student loan starts out at 100 thousand, then grows to 300 thousand over 10 years.
Now, Sallie Mae has alresady collected from the taxpayer and has been made whole already.
But the borrower suddenly wins the lottery and decides to pay off the 300 thousand.
Won't Sallie Mae in this hypothetical then be collecting twice for the same debt? Once from the taxpayer, and twice from the original borrower?
I appreciate the sentiment of what you're saying, but you undermine your point with the typos in your blog. I don't say this to be hypercritical, but to point out that a college degree on its own won't get you a job. You have to have skills that employers need to go with that degree, such as strong writing and critical thinking skills, language skills, computer skills. No one promises students a job at the end of a degree and graduates have to be willing to move, to take jobs that require travel, etc. My students put so many restrictions on themselves--such as, I can't move away from my family, I won't take time to learn Spanish, etc--that I'm not surprised when they have trouble finding jobs.
You're pointing out that a college degree on its own won't get you a job by pointing out typos in a blog post? You do understand what a blog post is, right? Bloggers, by and large are not paid and have no editorial staff. I noticed two very minor typos. Do you know how many typos would be in the NYT if reporters didn't have (paid) editors? Are you really being that pedantic? Oh wait, you then reference your students, you are being that pedantic.
Also, with unemployment at almost 10%, you think people can't find jobs because they won't learn Spanish and aren't willing to move? Is that what you tell people in Michigan and Rhode Island, where unemployment is twice the national average? If so, I pity your students, because that's an extremely simplistic, short-sighted take on unemployment.
I think the thrust of this post, like most by the blogger, is not that students can't find jobs, but that the system for funding a college education in America today is fundamentally flawed. No, not just flawed, but broken. Even if everyone who graduated were guaranteed a job, the problem would still exist. Do we really value education so little that we're willing to sell it out to the highest bidder? As of now, apparently we do, and if that means someone has a student loan with 10-15% interest (with a principal that is now double or triple what was originally borrowed) because they've been sold a bill of goods whose expiration date has passed, so be it. That's a very cynical position to take. (By the way, I'm not inferring any of this last bit from the comment above, I'm just expanding on the broader issues that this blog generally addresses.)
Some may have left a few typos behind, but you jumble up a number of different ideas and issues in one continuous paragraph with poor transitional language between the ideas.
That's not good writing composition.
And you say you actually teach?
As for moving to get a job, some people have sick and elderly parents to care for.
As for learning Spanish? Are you implying that it is now necessary for everyone in the US to learn Spanish in order to find employment? That's a new one to me.
Of course they should repay "just what they borrowed" plus a reasonable amount. What's reasonable is debatable, but it's certainly not a multiple that more than doubles the original figure.
If people are not repaying a loan by refusing to work, hiding income, or faking a hardship, then they must go to prison. That's why a major overhaul of the system is needed - small changes in policy won't be enough to fix anything.
If you are disabled you can get your student loan discharged with no damage to your credit history. Many people with outstanding medical debts cannot get their loans discharged, though. Here's why: Let's say that the medical treatment cured what was ailing you. Thus, you are not disabled but you still have a stack of medical bills.
Car loans are generally between 10% and 20% depending on your credit. Mortgages are generally less than 10% unless you got one before 1995. Student loans are 6.8%. How are the amounts owed doubling and tripling? Even with a number of defaults (with the added fees), this is not very plausible.
On unsubsidized loans, interest accrues during deferment (on 'subsidized' loans, the taxpayer picks up the cost, so the interest does not accrue during deferments). Accrued interest capitalizes at the end of a deferment. Deferments were created as a benefit to the borrower. Would it be easier to simply repeal the availability of the unemployment deferment, economic hardship deferment and educational deferments and require payment at all times, just to prevent the accrual of interest? This makes no sense.
There is no "system" that can be "overhauled." Thousands of different organizations run the colleges in the USA. The only way to force a change would be to organize a boycott of colleges that don't go along with the overhaul. All that the federal government provides is money. According to the U.S. Supreme Court, this does provide an immense amount of power. Recall how DoT forced all 50 states to raise their drinking ages to 21, despite significant resistance and litigation; ultimately the states decided they needed the federal highway funds, and they rolled over like dogs.
However, with education, local control is sacred. It is unlikely that we get to the point where the central government is writing the textbooks and setting the curriculum. A good argument could be made that colleges, even the Ivy League, are essentially part of the federal government, due to their immense dependence on a wide variety of federal funding sources. Their attorneys will fight it to the end, though.
"How are the amounts owed doubling and tripling? Even with a number of defaults (with the added fees), this is not very plausible."
Good question. It deserves a good answer, but I have to go for a while and will do so later.
But for now, answer if you can
I have heard that All the Stimulus money (including Student loan funds) are borrowed from China.
That if China decides to stop lending money to the US, a 1929 type panic could happen overnight.
Why do people have to be so venomous with their posts and responses? Any good arguments are lost in the yelling. Please be civil.
I didn't mean to sound like a blowhard. Of course it's going to blow up in the taxpayers' faces, but I don't think her decision to finance a 6 figure degree in sociology can be defended in any way. The obvious solution here is to make student loans dischargable. However, what happens then? I doubt the girl in your story would have gotten a 6 figure loan to get a BA, because the actuaries at the loan company (or the government) would have to deny that student loan since they know their chances of repayment are slim. In the end, only people of means (having parents who can cosign) will be able to get student loans for anything other than hard sciences which all but guarantee post graduate employment.
Of course, maybe she wouldn't have gone to private school. She would have taken out far smaller loans to go to her local state school while living at home, and maybe working part time.
The unchecked availability of federally backed student loans is the cause of the problem; with that I'm 100% in agreement with you.
Sometimes, it's best not to defend some behavior because speaks ill of your cause. The decision to get a BA at a private university that probably costs almost $200K to attend is sheer insanity.
@EvrenSeven I did't think you were being a blowhard. I have more to say on this matter, and I appreciate your follow-up. However, I think we'll just agree to disagree on this particular case. I do not think that her story in any way hurts the cause.
I always appreciate healthy debate, and you are certainly one of my readers I look forward to hearing from.
OK, now shake hands you two, and come out fighting!
I thought the question was how many of us are working in jobs we hate because we own on student loans.
I like my job. But there aren't any full-time positions open, and if there were, the pay still wouldn't be enough to cover my loans, half of which were paid out to an unethical school that financially ruined hundreds of its students. Yet, the federal government, Department of Education, accreditation agencies and anyone else who could turn it all around won't do a damn thing. They just pass the buck--OURS!
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