http://www.businessinsider.com/student-loan-debt-state-of-the-union-2016-1 is one of a number of sources on this fact, first spied on Yahoo.
Despite trying to degloomify the blog a bit, I can’t let this factoid slip past us. Forbes reported we were at $1.2 billion awhile back. I do trust Forbes. Whether we are talking $1.1 trillion or $1.296 trillion, though, we are talking real money. My husband has an MBA from the University of Chicago and he thinks student loan debt is the next whammy that’s going to hit the economy up the side of the head.
I suspect he may be right. Debt per se will not be the problem. We are a nation in debt and as long as we can pay our debts, or at least our interest, the economy will not be on the ropes simply because we keep using other people’s money. But many households operating with this philosophy have finally hit the day when disposable income no longer covers minimum payments. Student loan debt is particularly tricky because you cannot discharge this debt in bankruptcy.
Loans are not evil. Loans make it possible to own homes. They allow students to attend colleges and universities that would otherwise be outside of their reach. When loans are assumed with understanding and purpose, loan debt opens up opportunities.
That said, student loans can also be the boggart hiding in the closet. College is not some magic spell we can cast to create buckets of gold galleons. A fair number of anthropology, sociology and art history graduates now living in their parents’ basements and attics can attest to this fact. A greater number of non-graduates can back up those would-be anthropologists, sociologists and art historians.
Our non-graduates are the real victims here. Anthropology and gender studies graduates can go to law school or pursue other advanced degrees. I know an anthropology grad who is currently studying for an advanced degree in publishing at Oxford College in England. How exciting is that?! Doors open for college graduates. Those same doors remain closed to the student who never quite got that sheepskin, however.
We push and push college at kids. We tell them they all have to attend a college or university. I have watched as high school counselors commandeered my bilingual, high school social studies classes to tell students about the necessity of college. Everyone got the message, but not everyone should have gotten that message. A number of those kids were destined to succeed, such as one mathematically gifted new arrival from Eastern Europe. But others were years from ready for college. I knew that. Anyone who read their papers should have known that. I am not saying these students will not eventually succeed, but they are not ready to take on any boggarts yet.
The downside of fluffy, pie-in-the-sky dreams? Let’s look at a real, concrete example, a friend of a former student who came to me for help I could not provide. That young, Hispanic man had taken out $26,000 in loans to study criminal justice, but he was unable to handle the work. He did not finish. He’s not a cop. But he still owes that loan. Assuming a 10 year term and 3.9% interest, he owes around $262 each month.
According to the Huff Post Business section of January 13, 2016 (http://www.huffingtonpost.com/2014/09/24/minimum-wage-increase-numbers_n_5868848.html), the “weekly take-home pay for a 40-hour-a-week minimum-wage employee, after Social Security and Medicare taxes, amounts to $267.80. That adds up to $13,926.38 per year, or just over $1,150 per month. The commonly cited minimum wage annual salary for a 40-hour-a-week worker is $15,080 — before taxes.”
At minimum wage, that man is working one week each month just to pay off student loan debt.
I recognize I just quantified the dilemma that leads high school counselors to wander the halls of their schools, saying, “College? College? Can I help you get into college. Would you like help with that application? Would you like to learn more about colleges? How can I get you into college? Can I help you with your loan form?” I support increasing the minimum wage because I’m damned if I can figure out how people live on $1,150 per month — especially since they rarely get that full amount unless they have two jobs. Employers don’t customarily give 40-hour weeks to minimum wage employees because at forty hours employers are often obliged to provide benefits.
But that non-cop has not profited from college — quite the opposite so far. And lots of people are failing out of college. Here’s a little-known and definitely scary statistic from CNN Money: “More than half of middle class kids who start college fail to earn a bachelor’s degree within six to eight years.” The graduation rate for lower-income students is only 20%. If we throw in associate’s degrees earned along the way, those graduation rates rise, and some students will finish later, but we are still left with many students who simply do not or cannot finish their degrees.
Eduhonesty: The do-nots I will leave alone. I want to talk about the cannots. Many of these failures are predictable! The ACT has estimated the ACT test score that indicates college readiness to be around 21 points. A kid who has attended U.S. schools for his or her entire life who gets a 16 on the ACT has no business going to college — and we have zero business encouraging this kid to go. Frankly, that advice constitutes educational malpractice.
We should provide realistic advice. I tell students who are academically unready for college or the university to start at a community college part-time and add on more classes when they see what they can manage on top of other life responsibilities. I try to steer them away from for-profits and some trade schools, in favor of more-affordable, community colleges.
We need to have honest conversations with our students. A dream is a wish your heart makes, but loans last long after the dreams are gone.