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Author and cultural critic Lee Siegel is catching a lot of commentary right now for telling it like it is in the student loan department, in the opinion pages of the New York Times, no less. There have been a lot of reactions to his piece articulating why he chose to default on his student loans, with some describing him as the same type of selfish, narrowminded person that's driving loan rates up for everyone else by increasing lending risks, but that's the wrong angle to take.
Between the hyperbole, the bluster, and the terrible financial advice, there's a grain of truth, one that people have been pushing at repeatedly over the last several years. Young adults have repeatedly cited the student loan crisis as a major obstacle to success and they've been ignored, so perhaps this op-ed, as irritating as it is, will really push the conversation to the national stage.
Yes, he defaulted on his loans and yes, every time someone defaults on a loan, it contributes to decisions on the part of lenders when it comes to risk assessment and interest rates. No, a mass student loan default is not the solution to the financial problems plaguing education or the lending industry.
But let's not kid ourselves; student loans are nearly impossible to escape, with some of the most aggressive enforcement of any kind of debt except taxes. Lenders can afford to be relaxed about it because they know they'll get their money eventually. Or they did, until recently, when students started defaulting in such huge numbers that it was functionally impossible to catch up with them all. And it's time to talk about why that's happening.
This isn't evidence of some sort of mass recklessness event, with everyone throwing up their hands and demanding college for free — though college should in point of fact be free. It's the result of being in an incredibly terrible economy and graduating with an absurdly high burden of loans. Siegel by contrast was lucky; as a 57-year-old, he went to college in a very different landscape. Tuition and fees were more affordable, and the cost of living was much lower — my father, a decade older, paid $30 a month for his apartment in Hyde Park when he went to the University of Chicago, for example.
We can make moral judgements about Siegel, his educational choices, and his career all we want. And there are some eyebrows to be raised, including comments on what looks like pretty poor financial planning and the inability to distinguish between being unable and unwilling to repay loans — there's a difference between being trapped by mountainous debt and making poor financial decisions that lead to money problems, and it's a distinction I'm certainly aware of as someone who doesn't manage money well. (Ask me about my tax debt!) Siegel's op-ed certainly reads at points as irritatingly self-indulgent and self-centered, but there is a core point here that needs to be addressed.
Student loans in the United States are a huge problem.
College is more expensive than ever before, and it's more expensive than ever before just to be alive in the United States, especially around big colleges like, say, Columbia (his alma mater). At the same time, many families are facing radically reduced liquidity, which makes it extremely difficult to kick in for college expenses. The result has been a mushrooming market in student loans, something lenders particularly love to get involved in because they are nearly impossible to default on, persisting through bankruptcy and financial hardship.
Those in favor of tough stances on student loans argue that students shouldn't be going to college "at taxpayer expense," and while they may deserve compensation like debt forgiveness or reduction in the case of loans associated with predatory private colleges, those who go to reputable institutions need to put in their time like everyone else. This notion, though, presupposes that this is a generation that can even do that. New graduates, with an average of nearly $30,000 in debt, enter a landscape where that kind of debt can be not just a temporary obstacle to success, but a permanent one once that interest starts compounding.
That's just for undergraduates. Try going to professional school to become an attorney or doctor, or pursuing graduate degrees in journalism, academia, and other fields. Thanks to degree inflation, such degrees are increasingly favored and sometimes necessary, making undergraduate degrees far less valuable than they once were. That means more time in college to benefit in the long term, and increased debt along the way. Doctors and attorneys usually make out all right, but people like historians, not so much; liberal arts degrees are highly expensive and highly undervalued.
Student loans have extremely low interest and low monthly payments, which is something in their favor, but that's about all they have going for them — and when you're starting out on your own, even a payment of a few hundred dollars can represent a huge obstacle. New graduates are falling into a terrible employment market, with even highly qualified individuals searching for employment over months and sometimes years unless they have highly specialized and marketable skillsets, like programming in Silicon Valley. In many industries, entry-level employees are still paid incredibly poorly despite high cost of living in the surrounding region — take media, for example, where people in publishing are still effectively required to complete unpaid internships in order to enter the business. Enjoy paying for an apartment in New York while completing your summer internship, masters students.
Debt this large, paired with high cost of living and difficulty finding work, can seem insurmountable. Young adults in the U.S. are having trouble building lives for themselves and it's creating a feedback effect as they're unable to do things like buy houses and invest in other big purchases — in other words, they can't participate in the cornerstones of the economy. They're also facing limited career choices, and it's hardly selfish to want a job in the industry you trained for and got a degree in.
These are things we need to be talking about for the good of the economy as a whole. A mass default like the one Siegel is proposing would be a disaster, but default rates as they stand now are already a problem. If we don't find a way to bring college costs down and control costs of living — perhaps even by taking steps like establishing a guaranteed minimum income — this problem is not going to improve.
Yes, Siegel is a bit of a selfish prat, and his column, left uncountered, makes some dangerous arguments. But he's not wrong when he says that student debt is a huge problem in the United States, and it's limiting the freedom of the nation's youth — not in the sense he means, of being able to follow the butterflies of dreams wherever they lead, but in the hard, cold, real sense of being able to survive. The question is: Are we ready to talk about this yet?