Earth to Academia: Student Loan Debt Is Mounting - And It's Unethical.
Unemployment among those aged 16-29 is at its highest rate since WWII. “Follow your passion,” while hard to argue with, is clearly an inadequate career plan.
What's the Big Idea?
You are 27 and earning just enough at your minimum wage job to rent a room from your parents - two Boomers who found their bliss, signed a mortgage, and made a killing on their investment.
You, on the other hand, owe more than you will ever earn in your lifetime. Work, when you find it, is temporary, with no benefits. Your diploma? It’s that framed square of ivory parchment on the wall that fills you with a confusing mix of gratitude and humiliation every time you see it.
Talk about being in the wrong place at the wrong time. An entire generation of young people around the world has come of age only to find that the self-help-y mantras served up during their adolescence as a sort of substitute for economic policy no longer apply post-2007. (Which is of course, to say nothing of those who never had a fair shot in the first place). Unemployment among 16 to 29-year-olds is at its highest rate since WWII. “Follow your passion,” while hard to argue with, is clearly an inadequate career plan.
The average 22-year-old graduate now starts off $23,000 in the hole. "Student loan debt is the only form of debt that is not dischargeable in bankruptcy," says Michael Ellsberg, a writer who himself went to Brown and spent a good part of his twenties living with his parents.
"It's frightening that we encourage young people, often when they're not even legal adults yet -- they can't legally vote, they can't join the military, they can't legally buy a pack of cigarettes or beer -- but it's fine if they want to sign their name off to a $100,000 in student debt, which they will not be able to get out of."
What's the Significance?
A combination of inflated tuition costs and the proliferation of low-wage jobs is making the promise of financial security -- and the dream of prosperity -- increasingly elusive for many. "What you're finding now is a lot of young people who are in a significant amount of debt... [were] depending on being able to get a good job to be able to pay that debt off," says Ellsberg. "Instead they're making seven dollars an hour, ten dollars an hour, fifteen, twenty dollars an hour."
In the U.S. alone, the total amount students owe will soon reach a trillion dollars, surpassing the amount owed on credit cards. Defaults on student loans rose sharply last year, to 15% within the first two years of repayment.
And the marketing departments at institutions of higher education aren't doing students any favors, according to Ellsberg. "Quite frankly, the salesmen of higher education are not warning their customers -- their marks if you will -- about this risk... [which] borders on fraud, and it is certainly unethical."
Yesterday, President Obama announced an executive initiative which aims to relieve some of the burden shouldered by indebted students. It features a provision that would allow 1.6 million students to cap their loan payments at 10% of their discretionary income -- but it is a far cry from the debt forgiveness that some have called for as a way to stimulate the economy, and it does little to address the concern Ellsberg raises about the predatory behavior of universities (or the system as a whole).
Tell us: what do you think of the plan? What are the alternatives to the ivory tower, and are they worth pursuing?
This is the first post in a new series, Storming the Ivory Tower, which will be an in-depth exploration of the challenges and promises of higher education.
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