Borrowers under 30 in the United States owe an average of $21,000 in student loans, which means we’ve reached a new record. A dubious distinction, I think you can agree. In the seven years since 2005, the average has more than doubled from what it was before, which spells bad news for what I’m coming to think of as the debt generation. A combination of factors are coming together like a perfect storm to trap people pursuing higher education in a maelstrom of debt that will be difficult to escape, and it could cast a pall over our future as well as our present.
So what’s with the kids these days owing so much money?
Well, for one thing, college is getting expensive. A lot more expensive. And tuition, which is rising higher than ever before, including at public colleges and universities, is only part of the picture. For residential students, room and board are growing more expensive, and all students face a long list of fees for everything from Internet access to student health. Many of these fees are not optional, which means that the total sticker price for a semester can be a shocker.
In states like California, administrators of public university systems vote for fat pay increases for themselves over protests from students, and meanwhile, they vote for escalations in tuition and fees. Pretty much anyone, including a liberal arts major1, can do the math there.
Not living in on-campus housing? Well then, meet the vicious housing market, which continues to be bad in college towns, where rents and the general cost of living are high and tend to stay high even through recessions because of high demand. Living off-campus can cost big bucks unless you land into a sweet deal, and even then, that “deal” might be something like living in the pantry of a house with 11 other people, like one of my friends did while she was at Berkeley.
Colleges and universities are also cutting scholarships. Endowments are shrinking as a result of falling contributions as well as declining investment value; like other institutional investors, universities and colleges have lost out big in a rough market. With less money to spread around, colleges are trying to allocate it as efficiently as they can, but expected family contributions are still on the rise, which is especially bad news for low-income families struggling to put people through college.
Yes, this is an original copy of my master promissory note.
Then there’s the booming for-profit education industry, which preys on young adults, especially those from disadvantaged backgrounds, as well as veterans. Despite repeated attempts at regulation, the industry has thus far largely evaded accountability, and students can be left with very high debt and no degree to show for it at the end due to high drop-out rates. Those sweet ads in the subway promising a new career aren’t all they claim to be.
Meanwhile, the student loan industry is growing by leaps and bounds, much to the delight of the companies leading the charge. Even as graduates protest, Congress makes “deals” like the recently negotiated legislation that eradicated the six-month grace period that many new graduates (including myself once upon a time) once benefited from.
Students are being forced to take out more loans than ever before, and the industry is quite happy to meet the need. While the terms on some loans are better than those for conventional loans, that’s not the case for all student loans, especially supplemental loans, which are growing increasingly necessary. Students are also bearing a growing percentage of the cost for school, which equals even more debt.
At the same time, starting salaries are dropping while the unemployment rate climbs. That includes professional degrees; the market for newly minted attorneys, for example, is dismal right now. Once you graduate with your shiny new degree, you’re faced with a mountain of debt and no way to pay it off. Which is not really a great way to start your adult life, especially if you were planning on saving money, let alone buying a house or making investments to prepare for retirement.
One area where this can have unexpected implications is in the wide world of romance; dating becomes a lot more complicated when your baggage includes tens of thousands of dollars in student loans, especially once you start to get serious. How do you negotiate moving in together when one partner is carrying substantial debt that might make it hard to contribute to paying household expenses equally? If you get married, are you ready to assume legal responsibility for your partner’s debt?
Some people get around this problem by dating people with similar levels of debt, which leads me to envision a dating site where you can sort people by outstanding financial liabilities instead of something mundane like interests or location.
The United States is in the grip of a growing student loan crisis, and some students and graduates are starting to rebel, realizing that their futures have been mortgaged to Sallie Mae, and the government no longer has their backs.
It leaves me feeling a lot like J. Cole:
Momma said I should reconsider law schoolthat means I wear a suit and bend the truth and feel awfulhell naw, got a degreebut what that cost youyou make a good salary just to pay Sallie Maethat's real as everducking bill collectors like Jehovah’s witness when they showed up at your door at Christmas
Got loads of debt yourself? Consider sharing it in our upcoming Debt Gallery!
1. I’m allowed to joke about this because I’m a liberal arts major. Deal with it. Return