Concerned by stories about Third World nations weighed down with debt? You might go to the family room window and look next door at your neighbor’s house, where there are two kids in college. The chances are good that those young people are as much into debt-indenture hell as AIDS-riddled Africa.
America is turning out millions of college graduates groaning under the burden of paying off college loans carrying interest rates of anywhere from 9 to 20 percent. There are lower-interest federal loans available, but the private-sector loan industry has lobbied through limits on how much a college student can borrow and the limits are much, much less than tuition, books and living costs.
Many of this spring’s college graduates can look forward to having to start repaying their student loans at upwards of $1,000 a month. So much for the dream of graduating and working for a modest salary in teaching, social work, health, the environment or the arts.
Kristin Hough is a Benedictine University graduate with a DePaul University master’s in public-service management and public policy and $60,000 in student loans, on which she must pay $535 a month–assuming they do not raise the interest rates on her again. “My heart’s in social-service work, but I know I have to pay off these loans…. I’m just praying that I will earn a decent enough salary to make the payments,” she is quoted as saying in the Chronicle of Higher Education. Instead of working in the public-service field, for which she borrowed the money and spent the time, energy and enthusiasm to train, Hough, who is 25, is working as an assistant property manager.
The result, in the words of one executive in the college loan field, is that “we are creating a generation of students who are leaving college with long-term debt that is similar in size to a mortgage, only there is no house.” And when will there be a house for these college graduates under their present financial circumstances? Is it possible that we may have a generation of college-educated people arriving on the adult scene, half of whom will never be able to afford a home of their own?
Total private-sector student loan debt is estimated to be about $20 billion and growing. It is more than the external debt of the Ivory Coast. Many of these young people are in this situation because they have been betrayed by administrators in their own colleges and universities. The betrayers are the student aid officers who took bribes from loan companies to steer young people just out of high school into signing up for the high-interest, high-profit loans.
You are wrong if you think that cheating one’s own students is confined to down-at-the-heels, no-prestige, low-status diploma mills. In recent weeks officials at Columbia University and the University of Texas, Austin, have been fired for conflict-of-interest schemes at the expense of those they were supposed to help.
Colleges and universities have allowed their names to be used to hornswoggle students into signing up for expensive private loans. Once a young person has signed up, it’s a pay-or-else situation.
The laws have been stacked against the young college graduate. As the Chronicle of Higher Education recently explained, “After five years of lobbying, the loan industry won a major victory early last year when Congress approved legislation making it virtually impossible for borrowers to avoid repaying private educational loans by filing for personal bankruptcy.”
The next time somebody calls for a march and rally in front of the World Bank to demand debt forgiveness for Africa, maybe the marchers could also tramp over to the US Department of Education and demand the same for our own young people. Charity, they used to say, begins at home.
Nicholas von HoffmanNicholas von Hoffman, a veteran newspaper, radio and TV reporter and columnist, is the author, most recently, of Radical: A Portrait of Saul Alinsky, due out this month from Nation Books.