Politicians in both parties say getting a higher education is not only the ticket to the middle class but also that it is vital to America’s future prosperity. Yet they’ve created a system that prices college out of reach and forces children to take on growing levels of debt to pay the fare. That debt too often becomes a millstone on the young people it was intended to assist.
Student debt now totals about $1.5 trillion, more than credit card and auto loan debt. About 4 in 10 people who have attended college have taken out loans to help pay for it. These are the children of working- and middle-class families, not the affluent. As the price of college has skyrocketed nearly 400 percent over the past 30 years, the debt burden of those who take out loans has soared as well. The College Board reports that, in 2016, the average debt for those who took out loans to finish a bachelor’s degree was $28,400 — an inflation-adjusted increase of about 30 percent since 2001.
Why is college 400 times more expensive than it was 30 years ago? I’m sure institutions could argue that it contributes to more rigorous academics, opportunities and events, and the appearance of the campus. But are these things really worth it if they are setting students up for failure? While students may be receiving a great education all while having a good college experience, they’re left with unbearable debt after college. This ultimately sets them up for failure in life and defeats the purpose of college in the first place.
The onerous debts sabotage the ability of a college education to serve as an instrument of upward mobility for disadvantaged groups. The students from the poorest families are forced to take on the highest amount of debt. Women hold about two-thirds of all student loan debt in the United States, and since they still earn less than men make for comparable work, women pay their loans off more slowly, incurring higher interest payments. African Americans who tend to start off with fewer family resources fare worse than whites. And those with a larger debt burden often can’t begin saving for retirement or afford to buy a home, and they increasingly put off decisions about marriage and children.
The millennial generation has taken the hardest hit. About 75 percent have some form of debt, according to a recent survey. As a result, they save less than previous generations: Around 25 percent have no personal savings. Two-thirds say they would have difficulty paying an unexpected bill of $1,000. More than one-third say debt has forced them to put off buying a home, while 30 percent say they have put off saving for retirement, and 16 percent say they have put off having children. This comes at a time when some 94 percent of the new jobs created in the “recovery” are precarious — part time, short-term, on demand. This is a recipe for calamity.
I constantly hear complaints from older generations that millennials don’t work as hard as they do; that they’re lazy, unmotivated, and unskilled. Maybe this comparison is true on some level, but it surely can be contributed to the student-loan debt crisis. Not only is school debt impossible to pay back, but current generations are now getting paid less to do what they trained for. They are unable to progress in the professional world and make a decent life for themselves no matter how hard they work. I’m sure anyone would be unmotivated to work if these were the results.
Not surprisingly, a growing percentage of borrowers — now about 1 in 5 — are “severely behind” on their payments, incurring penalties and interest charges and hurting their credit. We are condemning those who tried the hardest to carry the largest burdens.
And it isn’t just millennials who are troubled. AARP, the nation’s largest seniors lobby, warns that the fastest-growing category of student-loan debtors are older than 60, with soaring numbers of retirees having their Social Security payment garnished to pay for student loans — mostly loans they took out for their children, but sometimes for themselves.
The reason for the debt crisis is clear: The cost of college has exploded in recent decades while median household-income growth has been relatively flat. Part of the cost increase is because state funding didn’t keep up with rising costs, so students and parents are expected to bear more of the expense. A big reason, though, is the obscene growth in administrative salaries and staffing at public colleges and universities, even as more and more of the teaching is done by impoverished adjuncts.
The debt burdens not only the debtors but also the entire economy by dampening consumer demand. The federal government guarantees more than 90 percent of all outstanding student debt. A recent paper by Scott Fullwiler, Stephanie Kelton, Catherine Ruetschlin and Marshall Steinbaum of the Levy Economics Institute found that if the government canceled the debt it owns and bought out the remaining private creditors, it would increase gross domestic product by between $86 billion and $108 billion per year over the next decade, adding between 1.2 million and 1.5 million jobs.
More importantly, if combined with making all public universities tuition-free, this country would ensure that no young person is condemned to debt for pursuing the higher education or technical training that virtually everyone agrees is vital to this nation’s future.
Does forgiving $1.5 trillion in student debt over 10 years cost too much money? Republicans clearly didn’t think “$1.5 trillion” sounded unreasonable when they forced through that amount in tax cuts to overwhelmingly benefit corporations and the wealthiest Americans. Somehow, “conservatives” think we can afford to lard the pockets of the wealthy but can’t rescue a generation drawn from working- and middle-class families burdened with education debts that many cannot afford to pay. That choice will surely not make America great again.
While I agreed with most of this article, the ending paragraphs seem to blame just one group of people for a major crisis. We need to step back and evaluate the issue as a whole. The student-debt crisis can be attributed to the universities, students, government, and the entire nation as a whole. This is not a problem that one group is at fault for, but rather one that has built up because of corrupt institutions and poor decision making. Our country can fix this issue as long as everyone involved is willing to make change and move forward in hopes of seeing a positive outcome.
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America’s $1 trillion student debt problem heads into its sixth year
By Jillian Berman, Marketwatch|Apr. 26th, 2018
Students protest ballooning student loan debt outside Hunter College in New York City.
Getty Images
Student debt has been a $1 trillion problem for at least six years.
Six years ago, on April 25, 2012, activists took to the streets to mark the country’s outstanding student loan debt surpassing $1 trillion. And in the years since, many of the trends that pushed student debt levels to climb have persisted, and in some cases, they’ve gotten worse.
Focusing on the $1 trillion mark is somewhat “arbitrary,” given that it doesn’t change the debt burdens individuals are managing every day, said Mark Huelsman, a senior policy analyst at Demos, a left-leaning think tank. (Outstanding student debt reached $1 trillion during the second quarter of 2012, according to the Federal Reserve, which includes April.)
Still, Huelsman said these kinds of “big round numbers” can help galvanize people around the issue. “Rising student debt has really happened over a 20-year period,” he said.
I am shocked that we didn’t started panicking about student debt until it hit the $1 trillion mark. Why were we not super concerned about it before? Why is fixing this crisis not a bigger priority in our country? It is something that burdens the lives of nearly every American with hopes of advancing professionally or receiving education after high school. This overwhelming amount of debt it hurting the economy. Something must be done- we can no longer be satisfied with exorbitant tuition rates and low-paying post-graduate jobs.
A variety of trends are fueling that growth. At the same time that the cost of college has climbed — caused in part by state disinvestment in public higher education — a college degree has become more necessary to earn a decent living. That means that as more people are attending college, they’re increasingly relying on debt to finance their schooling, pushing the level of overall student debt up.
In our modern world, a college degree is seen as essential to earning a decent living as an adult. If this is the case, why is it such a burden for individuals to receive that degree? If respectable jobs hold their employees to such high standards, then meeting those standards should be more feasible. I’m not saying college should be free- professors and other expenses still need to be paid. However, it is not appropriate for institutions to charge $200,000 to provide ambitious students with an education.
Sluggish wage growth and the rising cost of other necessities, such as child care, also mean that families have less money to rely on to pay for school. And once students leave college, those stagnant wages can make it difficult for them to pay down their debt effectively.
Why is there such little wage growth? If employers require college degrees from all employees, shouldn’t they get paid more? Raising wages, as long as it is deserved, would allow post-graduate students to pay back some of their student loans.
“There are broader issues in the economy that show up in the student debt figures,” Huelsman said. “But it’s also a set of deliberate policy choices that we’ve made at the federal or state level to not meet the rising demand with the investment that previous generations have received.”
There are indicators that if student debt continues to climb, it could have a major impact on the economy. For many borrowers — particularly those who graduate from a decent college — student loans are a manageable investment in their education. Still, levels of student loan delinquency remain persistently high.
That gives cause for concern, particularly given that federal student loans offer so many options for borrowers to stay current, Huelsman said. Borrower advocates have said high levels of student loan delinquency and default point to student loan companies hired by the government not doing enough to work in borrowers’ best interest.
“I often hear that the big numbers are not necessarily what we should worry about with regard to student debt, but at some point it has to matter,” Huelsman said.
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