The Burden—or Gift?—of Student Debt

It should be a glorious, celebrated day: Today I pay off my undergraduate student debt, more than 15 years since I first got into the university of my dreams.

Yet, to be honest, I felt a little mournful when I hit “submit” on the online payment feature. I yearned for a loud sucking sound to erupt from my computer as the funds electronically drew from my bank account to the offices of the Federal Perkins Loan Program. But there was nothing—just silence, my own thoughts circling around the fact I am no longer burdened by the cost of my undergraduate education. I am now debt-free, but the lingering experience, of being one of those people presidential hopeful Mitt Romney told to “shop around for loans” or a cheaper college, stings.

Student loan debt in the U.S. totals over $1 trillion, more than any other type of consumer debt. And while Obama and Romney’s student debt policies have not received much attention, their differences are worth noting: Obama wants Congress to take a second look at how borrowers might restructure student debt in bankruptcy proceedings; Romney’s only statement on this is that government shouldn’t be involved in absolving anyone’s student loans. In his term, Obama doubled funding for Federal Pell grants and capped federal student loan payments at 10 percent of discretionary income. Romney thinks the student loan sector would benefit from more private sector participation. Meanwhile, Romney’s running mate, House Budget Committee Chairman Paul Ryan, has proposed limiting eligibility for Pell grants and income based student loan repayment.

Beyond the rhetoric, in this election season there seem to be two starkly different philosophies over the path to education as well as wealth: one that recognizes the role of governmental programs and funding and another that asks those who can’t afford college to “shop around.” It’s a polemic that perhaps runs deeper than mere politics; after all, as Janet Novack writes in an article on the topic in Forbes, it’s one thing to be rich, it’s another to be rich and oblivious. In other words, the debate over student debt policies says a lot more about our beliefs about wealth accumulation, the right to education, and, at an even deeper level, the definition of education itself.

In the midst of one of the worst economic meltdowns to hit the U.S., I finally said farewell to my undergraduate student debt and I wondered: Is student debt a gift or a curse?

My path to undergraduate debt was typical: During my childhood, my parents worked staunchly middle class jobs—my mother ran a small business she’d taken over from her parents when they died, and my father was a pilot suffering from the unpredictable vagaries of the airline industry (he vacillated between happily employed and discouragingly laid off). My younger brother and I both attended public school through eighth grade. At that point, living in New England, there were too many good prep schools in the area not to consider a private route: we both were accepted at a prep school in New Hampshire, close enough to home to be day students and save our parents from the costly boarding fees.

During high school, I didn’t think about the fact that my education was extremely burdensome for my middle class family. Without knowing it, they took out a number of loans to pay for my brother and me to attend high school, while also remortgaging our house three times. To pay for my own incidentals, I worked throughout high school on campus (proctoring the computer lab and photography studios), nannied and worked at a local motel and ice cream shop during the summers.

When I was accepted into the Ivy League college of my dreams (and one of the world’s priciest), my parents didn’t question finances: I’d go; they’d figure it out. And so the debt, already accumulating from high school tuition loans, mounted.

As an undergrad in an Ivy League university, the difference between those of us financing our degrees and those who weren’t was a lot clearer than in high school: there were easy demarcations between the “Loaners” and the “Loan Nots.”

From my observation, the Loaners at Ivy League schools usually had parents who worked in education, public service, or owned small businesses. We competed for the most coveted of work-study jobs, including collecting the laundry of those “Loan Nots” who subscribed to the school’s costly laundry service (nothing reinforces class warfare better than folding your classmate’s underpants).

The Loan Nots had parents who worked in more lucrative industries: law, finance, medicine. They went on expensive international trips during intercession. They had credit cards in their parents’ names that they used to buy clothing and booze, and eat at restaurants rather than in dining hall (a luxury for most Loaners).

At the same time, the Loaners didn’t want to miss out on the experiences of the Loan Nots, so we often did something Suze Orman would spank us for: We applied for our own credit cards, lying on applications to say we made $100,000 per year. Amex, Visa, and Mastercard rewarded us with fresh lines of credit (this was the early 2000s, the time of easy money). By the time I graduated from college, I’d racked up $7,000 on my American Express Blue (I still think fondly of that sleek white card that held my passage to trips to London, Iceland, Scotland, and numerous meals around campus). One of my best friends, whom I’d met working the laundry service, graduated with over $30,000 in credit card debt (she played with a high roller set from New York; in order to keep up, she needed the Gucci sunglasses, the Chanel No. 5 scent).

After graduation, most of us Loaners were lucky to find jobs that would pay off that debt expediently—investment banking, finance, consulting. Some of us accrued even more graduate debt, although usually of the professional type (medicine, law, business). Others, like me, chose the path less traveled—work in the creative arts.

Now we Loaners and Loan Nots are in our 30s. Some of us still carry that debt around with us; it haunts our bank accounts every 1st of the month. Others have paid it off, and maybe have ‘One Percenter’ salaries, dreams of mortgage-free homes, sending children to private school and our alma mater.

But what did the experience of debt teach us? Did we learn a lesson the Loan Nots will never know? At the heart of this question is a philosophical divide, one that perhaps transcends politics: Is the money we earn and save meant to be passed along to our children so they don’t have to work as hard as we did, or is something lost in not experiencing (first-hand) the value of a dollar?

H., a Ugandan-American friend, recently told me that when she was at a high-priced college in Chicago and didn’t have a computer, a classmate asked her, “Why don’t you just get your dad to buy you one?” Another friend, L., who immigrated from Mexico as a child, painted an even starker picture of the challenges facing Loaners: the sixth child of a public accountant and a homemaker, she says as an immigrant, she didn’t qualify for many of the grants and loans she applied for. Nevertheless, she says, “I feel it is important for someone to understand the implications, costs and responsibilities associated with going to college. A lot of ‘kids’ don’t care about their academic performance because ‘daddy’ will pay for a 5th or even 6th year.”

Then there are the very real consequences of student debt—one friend wrote to me about how her student debt delinquencies still haunt her. Even though she’s a single mother earning income below the poverty line, there’s no way for her to wipe her slate clean. In other words, a corporation can erase business debts while a struggling ex-student can’t.

A report this summer from Young Invincibles, an advocacy group for 18 to 34-year-olds, explored how college graduates from 2004 looking to buy a home at the age of 30 will be unlikely to qualify for most mortgages even with just an average level of student loan debt. Couples who both have student loan debt will have an even more difficult time, the report found.

When I look back on my debt-saddled life, I waver between pride and envy; I’m proud I worked side jobs in order to do the things others likely took for granted (and I certainly learned the ‘value’ of a dollar), but I’m also envious of those who exited college debt free and wandered into the world unimpeded. I wonder: Do we do our nation’s youth a disservice by hiding from them the costs of their education? While many of us begin preparing for our un-born children’s educations by setting aside savings in our 30s and 40s, are we only perpetuating a ridiculously over-priced college experience? After all, my friends in those (gasp!) socialist countries in Europe tell me college was something they knew they’d get around to, but had no real impetus to rush—instead, they spent their 20s living in places like China and Greece, studying language, culture, and history, the same lessons we learned in Gen-Ed classes in our liberal arts educations, but they were getting that stuff first hand. Because their educations were state-funded, they didn’t have to hurry up and get it over with. In many ways, their lives were like those of the very rich in this country, summers in expensive study abroad programs, a year post-college traveling in Europe or Asia.

A recent book, The Righteous Mind, by Jonathan Haidt, may shed some light on the political (if not psychological) divide regarding the rights to student debt and what role government should play (as reviewed in Scientific American): “Liberals, Haidt says, tend to value caring for people who are vulnerable, and fairness, which for liberals tends to mean sharing resources equally. Conservatives care about those things, too, but for them fairness means proportionality—that people should get what they deserve based on the amount of effort they have put in. Conservatives also emphasize loyalty and authority, values helpful for maintaining a stable society.”

This psychological divide applies to my experience with the Loan Nots at my pricey undergraduate institution: The Republican Loan Nots tended to be protective of their right to a good education, often feeling “entitled” to it, based on their parents’ and their own hard work; the Liberal Loan Nots were more likely to desire for the experience they had in college to be equally available to others. Is one perspective more right than another? In the end, isn’t the valuing of education the same?

Aristotle wisely said, “The roots of education are bitter, but the fruits are sweet.” But what if education is more bitter for some than others? Is this an equitable lesson to teach our nation’s youth?

I’d like to think that, when I do finally have children, my husband and I will ask them to contribute to their educational costs in some way (through part-time work or loans), ultimately providing them with a lesson that isn’t explicitly taught in our nation’s top institutions: in this country, there are those who are born with an easier path, and those who aren’t. Regardless of the opportunities bestowed upon you at birth, there is nothing more intelligent than recognizing the pains some have taken to attain that same status for you, and that for many, your spoils are unattainable.

Oh, and that oft-repeated kindergarten lesson: Sharing is good.

 

K.S. is a debt-free writer. Photo: Patricia Drury

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13 Comments / Post A Comment

oiseau (#1,830)

This essay should have been published in the Times – so good, hits so many great points!

highjump (#39)

I thought the perspective of a middle class kid rubbing elbows with the 1% at an elite school was really interesting. However, this appears to be a picture of Harvard (am I wrong?) which famously has the most generous financial aid policy in the country (Harvard Financial Aid Initiative) and all Ivies are need-blind. Paying off student loan debt is a great accomplishment regardless of the amount, but I suspect this author’s debt was below the national average. I would be more interested to hear about the accumulation and (I hope, by now) payoff of the consumer debt.

Everyone can learn lessons from their debt, but if we’re going to talk about fairness and liberal policies we need to talk about state investment in public higher ed. Not this vague and impossible notion of wishing the Ivy League was available to all.

readyornot (#816)

@highjump Well, I don’t want to assume what the author’s alma mater was based on the picture – that seems to undermine not naming it in the article.
Going with your guess, though, Harvard’s Financial Aid Initiative is great, but it began in 2006, and K.S. says s/he was in school in the early aughts. And we all know there’s a gap between the expectations for parental contributions of even the most generous offerers of financial aid and the realistic ability of parents to pay.

highjump (#39)

@readyornot Yes the author said she graduated 15 years ago (though all Ivies have long had generous aid policies, Nicole Cliffe on The Hairpin is very open about this), but the conclusions of this article suggest society should think about future access and the way our higher education system is structured. So I think it is important to point out the changes that have been made in the interim in financial aid, as well as to point out that emulating a European system will not result in everyone having access to the Ivy League education of their dreams.

readyornot (#816)

this is really great to read the day before the election. candidate contrasts to consider. go vote!

cloudy (#680)

I work in financial aid, to start. There are a few points drilled into you when you first start in financial aid: 1) our job is to determine a family’s ability to pay, not their willingness; 2) We, as a financial aid office, are not going to subsidize a family’s poor choices, such as providing grant money because a family has consumer debt. 3) Families need to really discuss if the school that their child wants to go to is going to be worth it and if so, who is going to shoulder the burden of paying for that education.

In my office, which is at one of the Ivies, every colleague with whom I have discussed this has said that they are going to be sending their children to a state school.

As a note on the elections, a major one, if Romney wins, is that he would likely try to roll back the Direct Loan program back to FFEL, in which banks are the lenders, as opposed to the federal government.

lhorntx (#2,302)

@cloudy thanks for your comment. It’s nice to be able to hear a perspective from someone who works in the financial aid office and about the discussions that are taking place. As a recent graduate, I find this very interesting.

sventurata (#27)

@cloudy #3 is key. Nowhere in these stories do I hear parents saying no to their children – “No, we can’t afford to send you to [school]“.

Perhaps they didn’t know. Perhaps they figured it’d be easier for a 22-year-old to deal with crushing debt than a 17-year-old to face rejection. Either way it is a gaping omission in so many situations.

@cloudy There are plenty of articles on this site about student debt, but I haven’t seen one from the perspective of a financial aid officer. I’d love to read more about this.

(If this article already exists on The Billfold, apologies, and please point me in its direction.)

theotherginger (#1,304)

@TheclaAndTheSeals I second this. I have been enjoying this series, and open, frank, discussion.

deepomega (#22)

This doesn’t address the fact that subsidizing loans provides no incentives for schools to cut costs. If there’s federally guaranteed money, they may as well raise prices (and compete on luxuries) instead of trying to cut the already-exorbidant tuition.

SterlingCooper05 (#2,529)

I wonder if the the author paid off her loans in the standard 10 year repayment term. I’m guessing the interest rate at the time was under 3%. It would have been nice to hear the total debt load as well.

Ellie (#62)

Sorry but “At that point, living in New England, there were too many good prep schools in the area not to consider a private route”? Are you serious?

Further in “are you serious,” “At the same time, the Loaners didn’t want to miss out on the experiences of the Loan Nots, so we often did something Suze Orman would spank us for: We applied for our own credit cards, lying on applications to say we made $100,000 per year.”

This is not exactly a requirement of college. I went to a good school and have student loan debt. I don’t attach an emotional value to it! Lots of people have student loan debt, I pay it every month, it’s a part of life, who cares. However, I don’t have idiotic self-accrued credit card debt. You can’t just say that like it’s no thing. I’m so sick of middle class people with careers they chose and like pretending that they’re burdened by their very typical debt. College tuition and the student loan system is fucked up, but the solution isn’t to intellectually whine about it in a self-congratulatory fashion.

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