To Eat or Pay Back Student Loans?

This article is proof we need to bring back the debtor’s prison. These people borrow money to get degrees with little earning power and they want to blame someone other than themselves? They should have went to a community college, spent a tenth of the money and came out with a marketable degree. Also, somehow I cannot imagine that the organic food coop is any cheaper than your local Aldi. Fortunately these people will wreck their credit rating which should keep them from doing too much more stupid borrowing.

Well, Stinkcat — I think you should be thankful that there are no grammar prisons.

Wait–didn’t I just read an article on how they’re jailing the homeless? And putting millions of prisoners on chain gangs for 25 cents an hour? Are you sure you want to go down this road, Stinky?

I found the use of the term “neoliberalism” in a negative light throughout the article interesting considering that in the same article the author implies that the free-market system is part of the problem. Is that not a “neoliberlist” position?

“My friends, in their 30s, with B.A.’s in hand as well as a combined debt of over $100,000, just don’t make enough money to pay their Brooklyn rent, pay their student loans, AND buy food. A choice had to be made.”

Maybe they should have first “chosen” NOT TO LIVE IN GODAWFUL-EXPENSIVE NEW YORK CITY! (apologies for shouting)

It’s interesting that the blame is often placed on colleges and universities. As a financial aid professional for over 30 years, I have witnessed a serious lack of commitment on the part of parents to save for their children’s education — even though it is abundantly clear that they have had the ability. When you see a family purchase a home two years prior to their child attending college and their monthly house payment is $5000, it’s difficult to fathom why their child now has to mortgage his/her future to complete college. Many parents have simply pursued a lifestyle that precludes them from paying their children’s college expenses.

Also — should we become hysterical when a student’s total undergrad borrowing is $23,000? I don’t see this same concern expressed when Johnny or Suzy purchases a brand new car for $27,000 when s/he graduates. The beauty of a college diploma is that it does tend to appreciate more than the new car that depreciates as soon as it leaves the lot.

It’s a vexing issue, but I do wonder what Essig means when she says, “Why were they ever given so much debt for degrees that were never going to translate into high levels of economic capital?” Would Essig have preferred for someone to have told her friends, “Sorry, you can’t have a loan if you are going to major in Women’s Studies (or whatever the subject was). And what is the background here? Did they go to CUNY but had to take out loans to survive because they had no other source of income? Or did they take out loans to attend an expensive private university? Are they unable to pay off their loans because they were unlucky enough to have graduated in one of the worst economic situations since the depression? Or did they take a degree in a subject that would never allow them to pay off the amount of debt they took on? Were they that segment of the “population willing to take a huge financial risk in exchange for the promise of upward mobility?” And how upwardly mobile are we talking about? Were her friends aspiring to move from working into the middle class, or from the solidly middle to the upper middle class?

Again, I don’t want to sound completely unsympathetic. I think many people can find themselves financially ruined through no fault of their own. And I don’t know the situation. But if her friends are expensively educated liberal arts majors, I find it incredible that they (or their friends) can claim they were ignorant dupes of neo-liberal economic policy. What on earth did they learn while they were at university?

I need a car to get to work. Hmmmm… I think I’ll buy a BMW. Wait…I can’t afford a BMW, but maybe I should buy it, refuse to pay the loan off, and then blame BMW for selling me such an expensive car.

I work with high school seniors every day and I tell them all the same thing. Your career is the ultimate goal when getting a college education. Your career is your final destination. To get to that destination you have to purchase a car. You can either get to it in a Pinto or a BMW, but either way it’s the same destination. Too many students pick the BMW or their “dream college” without even considering the Pinto. They don’t understand that a car is a car and an education is an education. They don’t understand that a student can graduate from Harvard and still not be marketable because they cannot problem solve, multi-task or even get to work on time. The BMW may have more bells and whistles, but you are going to pay out the nose for them. Harvard may get you more opportunities, but can you pay for those opportunities? We can argue ad nauseam about the quality of different schools and the education students get but the bottom line is can they afford it and can they become productive citizens because of it. Pinto or BMW…

Laurie writes: “. . . this country long ago stopped believing that higher ed was a public good and that knowledge should be accessible to all who seek it.”

On the other hand, one could say that the neoliberal philosophy indeed does supports higher ed as a public good and makes knowledge accessible to all who seek it, without discrimination funding public and private education. of course the elected officials benefit from providing apparent largesse to students, helping out the dear old state institutions and the proprietary satanic debt mills.

The neoliberal regime (which as far as I can tell is “politics as usual, and whether Republican or Democrat hasn’t made much of a difference) is all too happy to provide sub-prime loans to young people and their families, giving them an apparent “good.” In Europe, higher education is “free.” But of course it isn’t really free, and Europe has been going into debt because of subsidies to education and other sectors. The Euro students have little debt, but ask the Irish students, for example, about their job prospects in an economy that is now (once again) a virtual debtors’ prison.

In our country, our enlightened legislators have, as noted above, made student loans non-dischargeable. Truly a vile policy: you can via bankruptcy negotiate private debts but not the debt to the government, which is supposed to be “your” government. As the bondholders for Chrysler found out, and as debtors to the IRS have known for years, the government can do what it wants.

Again,

There is a lack of comprehension of what Neoliberalism is and how it works in society. The overarching issue which I was waiting for people to clearly excavate is:

How will we manage education, healthcare and retirement. The shift in unchecked corporatized power has led to greater risk assumed by individuals all systems. The belief that creating markets (and for-profit businesses in these areas) changes not the mission of our once stellar safety net but also the outcomes. To miss this, is to miss industry’s and government’s collusion to create an “externality” where the consumer is the one paying the bill.

No one is asking for a handout, but when older generations can make it work better with less longterm debt then what is happening here becomes all too understandable in the game of quarterly earnings, for-profit industries invading human services fields. I will say this again, those who lend have a greater responsibility than those who borrow to be ethical. Because the usury laws have been amended (see Glass Stegall), it does take a genius to see how the process works:

Open Up
Assess Profitability
De-regulate
Privatize
Cut Social Supports
Protect Profits

This is how Americans are in this place. In terms of education, healthcare and retirement risks (we all witness that these are more risky and expensive endeavors than in previous generations).
We have to ask why that is and who is profiting from this cultural mandate.

My personal belief is that industry is out of news ideas after screwing up the environment, global economy through the use of technology. Instead of sticking to what they know best, they have begun a hostile takeover of those industries that least resemble them (Host Cell) and converting them in a form of colonization (RNA Synthesis). If you look at the demographics of higher education, new healthcare numbers and future baby boomer retirees, you see why they would want to play ball on this field when ‘industry’s field of play’ has been so severely damaged. And the thing about existing professionals in these areas are that they are so easily co-opted by business interests.

I don’t buy the author’s argument one bit. Ponzi scheme? Give me a break! Are we supposed to think that students who voluntarily accumulated debt during university study compare to those who’s fortunes were bilked by criminals?

The free market is not the problem here. The looming student debt crisis speaks more to the failure of individual students and our education system. What does it say about our schools when we graduate people who have no idea what their degree is worth in the end, people who cannot manage their finances, people who believe that their debt is the system’s fault rather than their own.

I can feel empathy for people like this but, as someone who paid off every cent of their student loans – taking 10 years to do it – these people need to grow up and cultivate some responsibility.

Oh, and I have yet to meet a “poor” person who has the money to afford to eat organic and local foods.

Here’s a novel idea – it’s called doing what one can afford.

I could not afford to attend college full time without incurring debt. So I took the path of working full time and attending college part-time. This permitted me to graduate with a degree and no debt.

It’s amazing how free one can be when one does not believe in entitlement.

was it worth all of those loan payments for 10 years to pay back every single dine? can you think of anything else you’d rather have done with the money? anything that would have had a greater utilitarian effect? was your education worth the tens of thousands you paid?

of course we need to operate with a sense of morality and responsibility. morality and responsibility don’t seem to be the problems. if the debt was 10k, rather than 100k, i might agree that said virtues were lacking. the the reality is that students – whether they attend a public or a private institution – are capable of accumulating considerable debt. and specifically in the case of public universities – since when is it morally sound to ask an astronomical price in exchange for a public service?

there is no question in my mind that institutions are capable of lowering the cost of education. but that achievement would have to be a holistic effort – think private and public sectors working together – and we can’t even ask two parties to collaborate effectively in congress at the moment.

seems to me that its high time for collective resistance.

“Why has the burden been shifted onto faculty as if the rises in tuition have been clearly identified as emanating only from them over time. ”

I never said that rises in tuition emanate only from faculty. But neither are they innocent bystanders. Have teaching loads gone up or down since 1970? Has university research and technology support gone up or down since 1970?

There are many truths in this article, and in everyone’s comments. There are also many unsubstantiated opinions, half-truths and tangential issues that fail to provide the overall “big picture” of what has been going on in higher education over the last twenty five years.

To address “stinkcats” issue about “these people should…” and debtors prison – many, many students and working people returning to school to “retool” for new jobs (since their old trade or IT jobs were sent overseas) earnestly believe that they will earn a substantial salary from their degrees to provide an income that will justify their loans. Where do they get these optimistic ideas? Why from many schools that even provide “earning potential charts” with Madison Avenue slick pictures of young couples living in a nice house, well dressed with new cars in the driveway. The students get through school, and to their dismay, if there are any jobs for them, they may pay half of what they thought! Also, read Deborah Tanner’s comments on the implications of people who use the word “should.”

trendisnotdestiny posits an excellent addition to this dialogue identifying how we experienced what the economists called “stagflation” (stagnant inflation) for middle class families during the 1970′s and early 1980′s. Most middle class and poor families have seen no real rise in personal income adjusted for inflation, since 1967! In 1967 I worked for a Fortune 10 company as a laborer and earned $12,000 per year without overtime. I could also buy a brand new Jaguar XKE Sports car with leather seats, double overhead cam straight six cylinder engine, four speed with air conditioning for $6,000. In 1990 I went back to the same company, working as an IT manager, and earned $35,000. A Jaguar then cost almost as much as I earned for an entire year!

Health care and higher education costs in America have risen at an almost exponentially higher rate in the past twenty five years compared to groceries, fuel, and housing. Colleges and universities have become, for the most part, bloated bureaucracies of often redundant function, and many of their grossly over compensated provosts and presidents seem to have a focus on their own career and earnings as opposed to any common good towards working with other colleagues in identifying and implementing cost reduction members. It must be easier to petition the states and Federal government for more money.

Don’t forget the shark schools – those schools that offer a narrow curricula and are aimed at getting students who have a poor probability of success into their clutches, milk their student loan money until it’s gone, and then kick them to the curb, unemployable and debt filled. These are among the worse. They include some community colleges, welding schools, computer schools, and other of the ilk.

I earned a B.A. from one of our country’s finest liberal arts school, then two masters degrees from solid, but second tier schools, both private. When I reached my middle age, I knew I would need a Ph.D. to become a full-time professor, so returned to an old school that offered an innovative program, and after my employer failed to meet their agreement to provide 100% reimbursement, I took out student loans to pursue my course of study. I had elder care during this time, and finally had to quit my job in order to focus to complete my course work and dissertation. I graduated after six intense years of study, and $150,000 in debt. Instead of the $70,000 a year anticipated income as a professor, I couldn’t find a job for two years! my starting pay will be less. So now, I ask myself, how do I pay my house payment, energy bills, etc., plus pay back these loans in a timely manner? I am in my sixties! I have much energy, work hard, etc. but it will be a long time until these loans can be paid!

The answers are:

Drastically reduce the cost of higher education through a nationwide reassessment of higher education, redesign of higher education, and intelligent use of cooperation and collaboration between many schools, providing services to one another so that different schools may be “centers of excellence” in certain areas, and in other areas use a conduit of resources from a sister school. Also create administrative hubs that can provide common billing, accounts receivable, etc. Eliminate bogus research, as opposed to value added or genuine research that may better inform certain fields. Create partnerships with corporations that can provide employability for many students who need more internship work in all fields.

Provide much more grant funding as opposed to loans.

For Federal Stafford and Perkins loans, provide reality seminars for prospective loanees, so they know their responsibilities, and potential “real earnings” when they graduate.

Have a reasonable, and compassionate way for those who are truly going bankrupt due to job loss, foreclosure, etc. to also cancel their school loans.

My first student loans I was able to lock in during the Clinton era – they were very low interest, around 2%, and during the Bush era, more like 6.5%. higher than my home mortgage! It became obvious that George W. Bush wanted to make sure that the bankers involved in student loans would make a serious profit from students. I do wonder what would happen if suddenly 85% of student loan holders withheld all payments until major changes were made to the system.

Too much fixation perhaps here on the mere fact that these lost souls live in Brooklyn. However student debt is so pervasive that there is no location where its malevolent effect is not noted, and so no safe location where people do not have to make decisions premised on the manipulations and deceits sold in academe. I have even seen the adverse effects of student loans, and abuse of debtors on reservations. So if the poorest of our society has been fed into the pervading maw of the lenders what place is there that they cannot penetrate. And as such moving out of Brooklyn will not matter. One could find more respite in hell than from the educational lending industry.
The student loan industry being free market, or driven by the federal government obscures the fact that this system is a cabal co-opting government and making the free market a mockery.
The tragedy is that this system has no reason to have ever existed except for the effect of cash cronyism on the part of lenders, academe, and politicians. And it will collapse but when it does it will be the ruin of a already economically shaken generation.

Your friends need to read Dave Ramsey and grow up. You took the loans, you pay the debt. You drop your stupid co-op membership, eat beans and rice, and move in with your parents. You get a second job.

And those of us with children in high school/college today MUST make sure they understand the implications of a “dream” college, MUST say “no” to the extras such as spring break in Florida, a car on campus, and super-duper everything. We, as parents, also have a significant responsiblity to properly educate our children on the risks and rewards of a college degree, and not letting them take on thousands of dollars of debt. If that means telling them that they must go to community college, so be it.

@ atana09

So many good points here; keep writing and I’ll keep reading!
‘

Two points:
1) There is a big difference between defaulting on government loans, which are set up to be fair and of limited availability, and defaulting on private student loans. I find it crazy that students cannot declare bankruptcy on private loans because many of these are loan sharks that charged exaggerated fees and jacked the rates just after students graduate. My brother has both government loans (fair) and private loans. The latter he got thinking that they were through the school (U Chicago), but it wasn’t until after a scandal came out about the school funneling students to unfair lenders that he learned he was trapped. The school changed their policies but no provision was made for him and his classmates to get out of unfair loans.

2) The government policies on when you can get deferments of loan payments is also unfair. I’m currently a grad student in my last semester of a Master’s. I’m paying 1 credit hour, out of state, because my out-of-state tuition waiver was only in effect when I was taking classes and GA-ing full time.

So I call up my friendly loan officer and explain the situation: it’s my last semester, 1 credit hour, working 30 hrs a week on thesis and academic papers (unpaid), working 20 hrs a week on internship (unpaid), have no car to get to a job, live 60 miles from town, living on a small amount of savings, have no money to pay back and am still in final semester of training stage of my life. Hope to start a good job in January.

Sorry, they say, you don’t qualify for the student (must be full-time), unemployed (actively looking), economic hardship (must be working for pay), internship (med students only) or any other deferment. What??? Who comes up with these regulations?

How can they expect people to pay back when they can’t even delay it for two months for someone who is still working full-time on academics?

None of the comments here conceive of education as a basic social right. This is not surprising to find among older folks who may likely be of a more conservative bent, but it is a political goal for many younger people- as well it should be.

While the public education system in the US is being dismantled and privatized under the guise of “reform”, college-age students increasingly cannot afford an education, as the data in this article show. What’s worse is that students are being scolded in the comments section of the premier higher ed publication for getting that education anyway- on the same credit their parents have used for decades to supplement historically low wages- since it is virtually the only means left of landing a decent paying job. Personal responsibility, indeed.

Introducing “what one can afford” is a red herring, intended to distract from the grim reality that there are few decent paying jobs available relative to the unemployed and unemployment among youth is at historically high levels. Without a job, no one can afford much at all, and perhaps that’s just fine by some of those writing here.

Faculty, staff and student workers must fight alongside students for education- including higher education- as a basic good, fundamental to a functioning modern society, and denounce those who provide ideological cover for the austerity measures intended to pay the gambling debts of a financial aristocracy. Clearly, we can’t afford them.

Readings from LFOD2′s (or How to succeed in blogging without really trying)

Every time I find one of these comments, its like watching a car crash (notable for its auditory thud and nauseating encroachment into our consciousness that previously did not exist). Sit back and take in the glory of LFOD2 & all his/her wisdom.

1) “No, the personal responsibility card is the only one.”
WHO FIRST CAME UP WITH THIS IDEA?

2) “Like every other problem we’ve had in the last 50 years, this one can be traced directly to liberals wanting to “help.””
LOVE TO KNOW THE SOURCE OF THIS NUGGET?

3) “As soon as you permit people to obtain something without having to consider the cost, the cost will go up.”
OVER WHAT TIME PERIOD? WHAT ABOUT ABUNDANCE’s & SCARCITY’s ROLE?
CAN YOU FIND EXAMPLES WHEN THIS DOES NOT APPLY?

4) “The way to stop all of this is to take the government out of the picture completely.”
ORIGINS OF THIS IDEA?

5) “The increased competition will drive down costs, including faculty and administrator salaries, and probably cause a return to rigorous academics (Basket weaving/Freaky Sociology waste of time courses would probably disappear)”
PLEASE HELP US KNOW WHAT INCREASED COMPETITION LOOKS LIKE (MORE MONOPOLIES WITH CORPORATE SOCIALISM or MORE PLAYERS IN THE MARKETPLACE WITH LESS SHARE OF THE WHOLE)

6) “True. A lot of folks that might do well in college wouldn’t get there, but the bright side is that they wouldn’t have the debt!”
PLEASE DISCUSS BRIGHT

7) “Rights are things that you can have all by yourself.”
LIKE THE RIGHT TO MASTURBATE VERBALLY ON BRAINSTORM

8) “Here’s the basic rule. If I have to pay for you to have a “right,” it ain’t a right. ”
WE HAVE TO PAY FOR YOUR IGNORANCE, BUT YOU STILL RETAIN THE RIGHTS TO IT

9) “And you damn sure have the right to start with nothing, at the bottom, and work your way up just like a lot of folks before you have done.”
HELP US UNDERSTAND YOUR VERSION OF NOTHING & BOTTOM

10) “Financial aristocracy indeed. Take all that proletarian nonsense and stick it. What you really want is to benefit from the sweat of others without lifting a finger.”
YOU MEAN LIKE FINANCIAL DERIVATIVE TRADERS ON WALL STREET WHO MAKE NOTHING TANGIBLE AND FAIL TO LIFT A FINGER FOR MIDDLE CLASS FAMILIES WHO WERE FORECLOSED AND BLAMED FOR BEING OVER-EXTENDED?

11) “It’s no aristocracy that would have to pay to give you a “free” education, it’s hard working middle class folks who have their own lives to worry about. Stop whining and get busy taking responsibility for yourself.”
OH YOU MEAN THE KIND OF RESPONSIBILITY ONE TAKES FOR WRECKING A WHOLE ECONOMY, FACILITATING SECURITIZED INSTRUMENTS OR ASKING FOR PUBLIC MONEY WHEN PRIVATE MONEY LED TO INSOLVENCY?

There are so many errors here and so little time. LFOD2, maybe you could help us out by educating where these thoughts originate from? Since you are so clearly interested in references (Sir Walter Scott), maybe you could walk us on a path of readings so we may too drink from the well of Hayek, Rand and Friedman. Specifically, each quote listed above, could you find Brainstorm readers at least 2 or 3 references for your words or places that we too could be enlighted?

@jungianscholar–

Your story is, unfortunately, one of a train wreck that can be seen coming from miles away.

I’m 55, and I simply can’t imagine quitting my job at this age to pursue studies full-time. Maybe I would take that risk if I was financially independent. But the idea that someone as bright as you obviously are could misjudge his odds of employment (and his likely salary if employed) so completely is disturbing.

At this age, there are no amount of slick brochures that could convince me of unrealistic earning potential based on attending any school. At this age, there’s no way I would let a misunderstanding develop with my employer about who was paying for my continued studies. And at this age, I know very well that elder care is a responsibility that I’m facing.

Is there no chance that perhaps you, like so many middle-aged adults, were sick and tired of working at a boring job and just decided to have some fun through intellectual pursuit? I mean really, be honest. Did you truly expect to be hired at a nice salary as a professor at age 60? That would be a whole lot easier to believe if you didn’t write so darn well.

So, in the end, could it be that it’s not inflation, or your employer, or duplicate research, or Madison Avenue, or inefficient/greedy administrators, or elders, or even the hapless George Bush who’s responsible for your incredible debt load, but it’s just you and your own decisions?

Just sayin’.