The burden of student loans hangs over a generation
Posted on January 19, 2021 at 6:00 a.m.
Image credit above: The cost of a college education is rising almost eight times faster than salaries, making it harder to pay off student loans. (Photo | Unsplash)
When Michael Wolfe was in high school, his economics teacher told him to follow his dreams and go to college for a film production degree.
Wolfe still considers this to be one of the worst advice he’s ever received.
At 25, Wolfe has a student debt of $ 92,000 after just three years at Chapman University in Orange, California. His student loans have become a ball and a chain.
“I feel trapped. Completely trapped. And I am one of the privileged, ”he said.
The American Dream seems to promise, in part, that opportunities will rain down from the sky for anyone who works hard and graduates from college. However, more than a few of America’s 45 million student loan borrowers might disagree.
Collectively, these 45 million borrowers owe an estimated $ 1.6 trillion in student loans. The cost of higher education has been rising rapidly for decades and salaries are simply not keeping up. According to an article in Forbes, the price of college education is rising almost eight times faster than wages.
There you have it, in a nutshell, the student debt crisis in America.
Missouri is class 20th in the country for average student debt per borrower ($ 33,700). Kansas, ranked 35th, has an average debt of $ 31,300 per borrower on student loans.
Wolfe said he was constantly at an accident of ruin due to his student loan repayments which came in at around $ 750 per month. He was barely breaking before COVID-19, and when the pandemic hit, he lost his job in retail. At any time, a car accident or medical emergency could push him into bankruptcy.
His federal loans are now on a reduced payment plan linked to the pandemic, meaning he only has to pay $ 0 to $ 67 per month. While the reduced payment helps keep him financially afloat, it means that he basically only pays interest on his federal loans each month.
In other words, these loans are not being repaid anytime soon.
This common case of someone on the verge of collapse due to student debt crash is exactly why many, like U.S. Senator Elizabeth Warren, are asking President-elect Joe Biden to write off student debt. .
Biden has promised to write off $ 10,000 in student debt, but some are still asking for $ 50,000, or even all, of student debt to be canceled. Rumor has it we could see some executive action in his first 100 days in office
So what if $ 10,000 in debt goes away tomorrow?
For borrowers like Wolfe, very little. But for people like social worker Aleesa Lennon, it could make a difference.
For all intents and purposes, Lennon did everything right. She attended Johnson County Community College for her general education classes and worked several evenings a week to avoid debt. But when she transferred to the University of Kansas, going into debt was virtually inevitable.
“We blame the people who are in poverty for being there, and if they had just budgeted properly, then they would be fine,” Lennon said. “But this is not true.”
At age 30, Lennon has a student loan debt of about $ 20,000. She has been working almost full time since the age of 15, and much of her time at KU has been spent moving straight from school to waitress positions. From a young age, she made her own car payments and paid her own rent. Despite discipline and budgeting, it was a struggle to stay afloat.
Today, her take-home pay as a social worker with seven years of experience is close to what she did at the waiting tables.
Even though she claims an incredibly high level of job satisfaction, she has to work a second job to pay the bills.
“When the next bad thing happens, I won’t be able to afford it,” she said.
So how do we get out of this mess? Canceling student debt will provide immense economic relief now, but the system that puts people in debt will remain unchanged.
A small college in Mobile, Alabama, may have part of the solution.
Dr. Joseph Lee, president of Spring Hill College in Mobile, Alabama, recently announced a $ 20,000 reduction in tuition fees. Not only that, but the college offers more course options and enhances the student experience.
For most people, including the school board, when Lee first proposed cutting tuition fees, it seemed impossible. But according to Lee, it will actually make the school more money in the long run.
In theory, Spring Hill College will essentially offer its school at market prices. The hope is that the lower price and better experience will increase the student body, and over time the changes will pay for themselves.
“We want to open the funnel,” Lee said. “We believe we will become more diverse. We will be able to further serve the people of Alabama, which is part of our mission.
While Spring Hill’s analysis predicts that it will work for them and their student body of around 1,500 students, could it work for larger schools like the University of Missouri or the University of Kansas? Lee said yes, and it might even be necessary.
“Student debt is in crisis mode,” he says.
Rising tuition fees and stagnant salaries are pieces of the puzzle, but there might be another factor to consider – this college isn’t for everyone.
While attending Blue Valley North High School, Wolfe undoubtedly spent four years completing his resume to become the perfect candidate for college.
“I did everything right,” he said.
He considered his extracurricular activities, managerial positions, and after-school jobs, but there was one thing he hadn’t considered – not going to college at all.
The culture of his schools and that of Lennon was the same in this regard. Going to college was assumed by all students.
While not having a college degree can seriously disadvantage you in some job markets, there are others where experience is more important.
While Wolfe attended Chapman University, he was repeatedly told that he did not need a degree to enter the film industry. While he doesn’t regret his time in school, he now knows he has little or no chance of owning a home or earning a graduate degree because of college.
The causes of the student debt crisis are many and the problem continues to worsen as the pandemic continues. Forbearance on student loans is expected to end on Jan.31, and 45 million borrowers are waiting to see if relief is on the horizon.
Catherine Hoffman covers community affairs and culture for Kansas City PBS in cooperation with Report for America.