In the US, we’re numbed to economic bulls*** that people in other countries simply won’t stand for. Our repeated exposure to the worst extremes of abject wastefulness and greed-fueled power plays makes anything that’s not immediately gut-wrenching begin to seem…acceptable.
Case in point: the cost of education and how we’re asked to manage it.Just three years ago, the government of Quebec announced plans
“to raise university tuition from $2,168 to $3,793 between 2012 and 2018″… and in Montreal people took to the streets, OUTRAGED. For WEEKS.
Meanwhile in the US, the average year of tuition at an in-state school ranges from $4890 in WY to $15160 in NH. (It’s $7644 in NY where I live.) For private schools, the average published price is $32,410 year, though private institutions often offer discounts bringing the paid price to an average of $15,000 annually.
There’s sometimes a difference between the published price and what students actually pay: state, federal, and institution-based grants and scholarships often lower the cost, and schools can opt to offer various discounts (There’s a great NPR Planet Money on this.)
However, room and board fees heighten the cost, and often the grants and scholarships aren’t available if you go part-time. So, “saving” tuition to attend school full time means potentially paying more overall if, say, you can’t work part-time.
Now, part of the reason Quebecers were so outraged about the price of school was: “if it goes up too high, we can’t pay for it with our current jobs.”
That’s right: people who live on the same continent as the USA expected it to be possible to pay as they go to school, with their wages.*
To attend school, what do people in the US expect to do?
– people with access to resources pay cash, either by a living family member with wealth footing the bill, or via the the ol’ working-class lottery: someone dies and leaves you insurance or inheritance money.
– people without access to large amounts of resources take out loans for some or all of the cost, sometimes working part-time to cover some costs.
So in the US we’re charged for school at rates that people other places riot over. And we pay. Between 2004 and 2014, the average student loan balance increased by 74 percent. During that same time period, the number of borrowers increased by 92 percent. (Source: Data for Good)
ADD-ONS: BUY THE WHOLE EXPERIENCE AKA WORKING IS GAUCHE
It’s also mythologized that one has to “go away” to school to truly have an educational experience. I never lived in a dorm and I’m quite cultured: just the other day I stuck Peeps on fried pound cake with MASCARPONE. (Happy Easter!) But frankly, while for some people living on-campus is the only or best option, it also is a huge “hidden cost”.
If you’ve read anything about sales or marketing lately, you may have heard that consumer culture is more and more encouraged to pay for an experience: and, you know — make it “nice” aka “upmarket” aka “gentrify everything”. Don’t just go to Iceland…go to bespoke Iceland!
In the US, school too is a harbinger of such anxious middle-class values: in the above-mentioned Planet Money, the curtain is pulled back as an admissions officer explains, “If we lower the price, people will think it’s a less good school – it’s better to offer a discount. It’s like a car: do you want a $50k car for $30k, or a $30k car for $30k?” (note: I want a 5k motorcycle).
Liberal-arts schools offer to act as sleep-away finishing grounds, offering surely great education with the sales point of cultural polishing, while casually locking so many of their attendees into decades of challenging payments… to support basically, marketing and some leftover vestiges of upper-class modernist bohemeanism (which was supported by a few rich patrons and patronesses btw): “I want the best for myself/my child!” “you have to be there, and take it all in!” “you can’t WORK and get everything out of school!”
Folks: I am here to bust myths. If you work and go to school, or don’t live in a bespoke dorm, or don’t attend an Ivy-league private school: your brain still learns.
Working may be tiring but it does not dirty your synapses. Think of the Quebec protestors: they expected to work and go to school — and to pay tuition as they go while they’re at it. Choosing aspects of your education with an eye on your future debt isn’t about denying yourself a “nicer thing,” it’s about the reality of making money and shelling it out later.
Everyone is going to have a different comfort level for that, but the current tuition system attempts to force a middle-class value of salaried dayjob employment. Not only is that option rapidly vanishing, but it is not the only way one might wish to choose to live after graduation. How many options (not to mention assets you’d otherwise save for) are changed when one has minimum payments to contend with?
IS IT THE LOAN OFFICERS? THE LOAN TAKERS? THE SYSTEM?
Say you want to buy in. It’s smart: higher education is STILL one of the major demarcating factors in economic stability. There are many, many good reasons to go to school and to take loans to do so.
Yet, I think the amount of debt one might be taking on is minimized: young people get “financial counseling” from their schools that amounts to a cloud of difficult-to-comprehend large numbers which is hand-waved away into an employed or employable future, one the person is locked into due to the loans they agreed to. (Honestly if I worked in a financial aid office I wouldn’t be able to sleep at night.) Hello creation of compulsory workers! Is motivation to succeed out of school a good thing? Sure. Is setting up a person for 15-30 years of payments something that truly makes sense to someone who may not have experienced a lot of financial responsibility before, someone who might not really dig what a $350+/month payment means, ethical? I just don’t think so.
Suggesting that having high five- or six-figure loans is normal means that more people say yes to them, then more people have them, and then it becomes normal for schools to expect to get this much, and the tuition we’re used to in the USA remains in effect. God, it’s enough to make you want to go to Canada for school.**
Using averages: private tuition is $15k a year after discounts, plus living expenses are $10k a year if you’re lucky. This is one way you might graduate with $100k in loans after four years like 5.6% of borrowers. Or, perhaps you go to public school and graduate with less debt, say the national average, which was $35k in 2015.
No matter how much you end up with — once you graduate, the payback begins. And unlike certain presidential candidate hopefuls, we can’t declare bankruptcy like they used to.
The 1970s-1990s: A GOLDEN TIME AND NOT JUST FOR MUSIC & SOCIAL CHANGE
When we who experienced the ’90s think back: it was pretty cool. You could be gay and gas was cheap and there was a lot of righteous activism and good music. That’s how my friends who experienced the ’70s talk about it too — only difference is they could just declare bankruptcy after college and then start anew. Not so for us, anymore…
Through 1975, all student loans were dischargeable in bankruptcy. In 1976 federal loans required a 5-year repayment before possible discharge. In 1984 private student loans became non-dischargeable, and in 2005 “Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act” making it so that no student loan — federal or private — could be discharged in bankruptcy.
Friend: You may have student loans, and I don’t blame you or want you to feel bad about it. (I have loans too.) You wanted to go to school and that was how you made it work! The system was set up before you were born. So, before you glaze over with a bleakness, there are options.
1. Paying, a few methods:
- You can defer or request forbearance on some loans if you’re not working, or working at wages that don’t allow you to live and pay, but then you’re not adding time on the loan forgiveness clock.
- You can pay your loan amounts, plus a little extra *one one specific loan* to knock out the principal faster and thus take your overall debt down faster.
- You can pay the payments automatically each month so you don’t miss a payment, and thus at least boost your credit by demonstrating regular payments.
2. Time-based Loan Forgiveness
- “Public Service Loan Forgiveness program discharges any remaining debt after 10 years of full-time employment in public service. The borrower must have made 120 payments as part of the Direct Loan program. It is not taxable.”
- (Regular) Loan forgiveness of the remaining balance after 25 years of repayment under the income-contingent and income-based repayment plans. BUT, the amount that is forgiven is TAXABLE INCOME. 🙁
Gosh I’ve written a lot, and there is still so much more to say.
One blog post, even if it’s long as heck like this one, cannot encompass all the nuances and edges and realities of student debt, and certainly you fine reader, will have things to add. Frankly, so will I!
Over here I started trying to calculate the assumed salary and repayment schedule of an average student loan debt burden. Hint: I don’t think it’s super-achievable.
Over here I look at the history of debt itself.
Here I share one strategy on managing debt.
And finally – one life hack: Getting a student loan is one of the few times in your young life you’ll have access to large amounts of money at relatively low interest rates. Think about it: if there’s any way to put that money into a low-risk asset in addition to your education, that earns more than the interest you’re paying… I’m just saying I’ve seen people do some smart things with down payments with extra student loan money. It’s not all bad!
*While leaving your comfort zone is a great way to challenge your own thinking, and for some it’s a crucial-life-saving experience, that doesn’t mean you should just accept that your only option is to take out $5,000-$10,000 in living expenses annually for four years. That, friends, is a potential cloud of trouble. If it’s your best option, that’s cool: go in with your eyes open.
**Actually that’s exactly what I did: worked my way through community college for two years, then transferred to the University of Toronto for my last two years of undergraduate school. Why? It was USD $6500 a year, the same as SUNY. And I did want to get out of my home city, and it was worth it.