You may or may not know that in the United States, you must pay for tuition and housing up front in order to attend a university. This means that you either are very rich, have a great story for a nice scholarship, or you take out loans. (Or maybe two of the three. I don’t judge.) I was lucky enough to have the scholarship for my undergraduate degree, but my graduate degree was financed entirely through scholarships and loans. I even got one of the largest tuition scholarships offered at my institution that year (I’m a smartypants), but in order to afford the remaining tuition and life in Chicago, I had to take out about $90,000 in student loans at between 3.0% and 7.9%. There is no way out of this debt other than death. Or total incapacitation, but sometimes even that’s not enough. And let’s be clear: I did not take ANY private loans, which are even more difficult to pay back. All of my loans were disbursed by the federal government.
Thank God for the Income Based Repayment plan, which I have to recertify every year and which allows me to pay back my student loans based on the money I am making at work. Having just gotten my recertification letter, I have been informed that all of my loans should be paid off in 2025. By that time, I should have my “American Way Approved” home, white picket fence, and 2.5 children. I could literally have a third grader before my loans are paid off. My puppy will be old and lazy by the time I am free of student loan debt.
All that having been said, here are two things I have realized about student loans:
1. Higher education and the resulting loans are creating an American oligarchy. Because only the very rich or very lucky can afford to go to college debt-free, everyone else has to take out large sums of money to pay for an education that has become necessary to obtain just about any job in the United States. Because obtaining that money is so easy, colleges and universities raise their tuitions to make more money. Thus requiring students to take out more loans. In the end, the only people who can actually afford to go to college, never mind obtain a graduate degree, are the very wealthy. Or the children of the very wealthy. Thus, they obtain higher-paying jobs, and because they don’t have the loans to pay off, are able to accrue wealth more rapidly, eventually perpetuating the whole circle. (And, of course, with the latest Supreme Court rulings, they’ll also control politics, so there goes all the need for the rest of us to learn things! The rich will just make our decisions anyway!)
2. You want economic stimulus? I’ve got economic stimulus in spades! It’s just all going to the loan repayment service that owns my soul. I pay approximately $550 per month to my loan servicer. That is a mortgage payment on a home priced between $90,000 and $100,000. It is most of the money I would otherwise spend on consumer goods or a vacation somewhere. Why can’t we get out of this cycle of nationwide economic depression? Because we have a whole generation (or two) of people who are trying to pay off the education that they got to be able to get a job to participate in the depressed economy. This cycle will continue until some kind of loan reform is achieved.
I’m not saying that we need to “forgive all debt” now. There needs to be some level of accountability for what has taken place on all sides. But to tell everyone that education is necessary and then make that education impossible to live with for the rest of your life seems a little unfair to me. We need not only financial reform, but we also need to teach young people how money works, and we need educational institutions that cease acting like corporations.
Until then, I’ll be looking at my student loan bills and telling my biological clock to shut up. I decided that I should be allowed to use my brain, so I will hereby be foregoing my white picket fence. I just wish I had known that was the choice I was making when I made it.
10 replies on “Two Things I’ve Realized About My Student Loans”
Wow, this post really touched something raw at PMag. Thank you for writing it. It seems to be something a lot of us (myself most definitely included) are worrying about these days.
This is why I’m terrified to get a Master’s. I got accepted into a very good school in the UK and even though the program is only a year long, I’d have to take on so much debt as an international student. I was so excited about it, but when I sat down and looked at the numbers and my job prospects, I couldn’t take the leap. I’ve gotten so much shit for it, but mostly from people whose parents are upper middle class/rich and have no understanding of not having a safety net. I may still get a degree in non-profit management, but it will most likely be online.
Parents are so complicit in it too. I spent years after graduating alternating between being a temp and a seasonal worker. My father’s solution? Go back to college, get a graduate degree, pay for it with ANOTHER student loan (keep in mind, I barely make enough to pay back the one I have that paid for a degree that has only led to jobs that I could’ve easily gotten without it) so that I can ditch the private sector for the security of the public sector (remember when California was paying gov’t workers in IOUs?) even though it means less pay, just so I can skip the exam process!
And each “loan” is actually made of multiple loans, all at varying interest rates, which makes the repayment process harder to understand.
I think my first post here was about Dutch education and (the lack of) student loans necessary so I won’t toil on that but by golly gosh, this will never not terrify me. I’ve looked at doing semesters in the States or even just Summer School and there are such high amounts tied to them.
After many years in academia, I feel fairly confident in stating that academia, as an institution, largely reproduces and perpetuates existing, oppressive power relations. That’s not to say that there are no exceptions or that academia can never be a site of resistance, but that this institution, in conjunction with others, is structured in a way that makes resistance difficult to say the least.
As a recent alum of a graduate school of education, I sat in one of my (many) education seminars about Higher Ed listening to people vent their frustration about how they’re complicit in the system while trying to dismantle it. Almost all the students there had over $50,000 in loans, but were all well aware that starting salaries in education make paying this back feel improbable. There’s nothing more disheartening than sitting in a room full of academics and educators who ultimately have no idea how to help change the system they’re already too invested in.
What they really don’t tell you is that debt is now how we make capital in our capitalist society. See, rather than paying people money to go do things like get degrees or buy houses, we decided a long time ago that we’d let them take out lines of credit. And then some geniuses realized it’s more profitable to keep people paying the debt (because interest). And then some other geniuses started selling debt to other people and making money on that (it’s more complicated than that, but you know).
So the way we feed the capital machine is by fueling debt. Because having workers who actually make money is not at all a way to generate capital these days.
tl;dr: Our economy is screwed.
I defaulted on one of my student loans because I was homeless. I remember sitting on the steps of the San Francisco Public Library and telling the agent on the phone that I had nothing, literally nothing, that I could provide screenshots of my negative bank balance and proof from the government that I was living on food stamps. The agent just went uh-huh and said that in that case I might qualify to pay 3/4 of my monthly payment. Student loans really helped me solidify and understanding of anti-capitalism.
This was a good article and you should feel good about writing it.
They don’t tell you that there’s really no such thing as “defaulting” on student loans, do they? There is a failure to pay, but that debt never leaves you, never. It’s no wonder private lending agencies are so eager to lend that money to students who don’t have the financial background to afford college or the financial knowledge to understand what they’re getting into.
I don’t necessarily identify with an anti-capitalist view myself, only because I haven’t seen an alternative economic structure that works on such a large scale. (Lesser of two evils, as it were.) I always find that kind of stuff interesting though.
And finally, I think I’m blushing a little. Thank you!