Student loans approach $1 trillion

As the total student debt in the United States exceeds a trillion dollars, more than the total credit card debt, according to the Federal Reserve Bank of New York (USA Today, Oct. 25), some financial analysts are pointing out that another bubble has been created — for borrowers.

Students are graduating with more than $25,000 in debt on average, according to the latest figures from 2008. Since these figures are old, only being collected every four years, all the other available data — tuition increases, a decline in family income, lower wages — point to an even higher figure for ­indebtedness.

More than two-thirds of all students — in public as well as private institutions — need loans to pay for their costs. It is the most prevalent way of paying for higher education.

A big reason for youth taking on all this college debt is to transport themselves across the sea of a college education to the other shore where their credentials will enable them to get a “middle-class” job. While the unemployment rate for people with a college degree, according to the Bureau of Labor Statistics, is 4.1 percent, the rate for recent college graduates is 9.1 percent. (projectonstudentdebt.org)

What these figures mean is that about 10 percent of recent college grads can’t find a job, any job, much less one that uses, or requires, their expensively acquired skills.

The debt that is incurred by graduate or professional school students is often substantially higher. According to statistics from the Department of Education, debts over $150,000 are not unheard of.

The solution a lot of politicians promote for getting out of poverty and finding a “good” job is education. But it doesn’t seem to be working.

Rather than employers bearing the cost and risks, such as training workers in a technology that can quickly become obsolete, they have managed to shove those costs and risks off on the individual student looking to become a skilled worker.

The federal government guarantees a lot of student loans, mainly through Sally Mae, a government sponsored corporation that started as a nonprofit but became a very profitable private enterprise in 2004. The banks that handle student loan processing find it very profitable, because these loans can’t be discharged by bankruptcy, only by death.

With refinancing and paying off the interest that accumulates — raising the total cost of the loan — many students don’t finish paying for their education until they reach their forties. If they started their higher education late, some even have to put off their retirement.

Student loans are not guaranteed by a house or a car, like the other common situations that lead people to take on debt; they are based on what a person can earn, and pressure is put on individuals to do nothing that hinders their earning enough to pay off their loans, such as joining the struggle to organize a union.

Because access to higher education and the jobs that it promises are based on an individual’s ability to pay for it, persons coming from communities of color or working-class backgrounds have to take on higher debt. Because of racism they have more trouble finding a “good” job when they graduate.

The last 30 years have seen an explosion in student debt and a corresponding erosion of public financing of higher education in the U.S. Public universities are expected to finance themselves from tuition and other student fees and by using more part-time, contingent teachers and staff, who are paid far less than regular faculty and receive fewer, if any, benefits.

Politicians and appointed, high-paid managers of higher education have proposed all manner of tweaks for dealing with the rising costs of a college education.

Students in the Occupy Wall Street movement have proposed a simpler solution — cancel all student debt and make public higher education free.

See “Academic Freedom and Indentured Students” by Jeffrey J. Williams in Academe Online January-February 2012. (aaup.org)