As a new semester begins, college student loans are approaching the $1 trillion mark, more than all US households combined owe on their credit cards, and colleges are encouraging the vast student debt as a lingering recession compounds the problem.
The last decade has seen a rapid increase in student debt, fueled in part by colleges themselves, in the form of rapidly increased tuition. A solid two-thirds of undergraduates have gone into debt seeking a higher education and many middle class families, saving for a college education, are feeling the hit.
According to The Atlantic, the College Board states the average student loan debt is “only” $27,650. However, the board does not factor in unfortunate circumstances, such as those provided by a lingering recession, late payment penalties, interest on that debt, and other fees which can escalate the figure upwards to $100,000. For a college education that might be marginal at best.
In addition to books, room and board, and travel, there’s the seemingly mandatory social life associated with college life which quickly ratchets up the cost of education. Parents who thought they had enough money saved for that college education quickly realize they don’t. All the ails associated with the country’s ongoing recession amplify the problem. Student loans become the short-term savior and a long-term nightmare.
The tuition-student loan debt keeps many colleges afloat. At Loyola University in Chicago, for example, 77 percent of students enrolled do so with loans. At New Hampshire’s Franklin Pierce the number is 85 percent. The Atlantic notes at historically black colleges, with traditionally low endowments and in many cases, poor students, the percent of students with loans is 90 percent.
These high percentages allow many colleges to indulge themselves in extravagances such as multi-million dollar sports facilities, non-competitive sports teams, and overseas centers. Students can thank their loans for these non-essential higher education distractions.
Many parents, and students, are entrenched in branding, resulting in a belief that prestige associated with big-name universities equates into academic quality. Often, the reverse is true. By the time this reality surfaces, students are already in debt.
As colleges encourage professors not to teach through a lucrative sabbatical system, students are faced with the distinct possibility of dealing with subpar teachers.
In an interview last year with The Atlantic, Andrew Hacker, professor emeritus at Queens College in New York, said the academic world has become over-professionalized, with college professors being identified by their “esoteric research.” Colleges achieve status by hiring professors better known for their research ability than their ability to teach. As such, students suffer.
Hacker, who co-authored Higher Education? with writer Claudia Dreifus, believes the educational system needs an overhaul. Too many teachers are busy doing research in order to be published. In the interview, he added
The problem is that there are just too many publications and too many people publishing. This is true even in the hard sciences. If there's a research project on genetics in a lab, they will take certain findings and break them into eight different articles just so each researcher can get more stuff on his or her resume.
The Atlantic reports Stanford gives its professors paid sabbaticals every four years. That’s $115,000 not to teach for a year. It goes on to note the president of Vanderbilt gets a hefty $2.4 million salary. Although endowment earnings and alumni gifts help with such costs, the bulk of supporting such burdens comes from student tuition.
Adding to students’ woes are many for-profit colleges, some which entice their students into expensive programs, loading them up with debt and eventually leading them to limited job prospects upon graduation.
Students, upon graduation, are put in the unenviable position of being burdened with a huge debt, thanks to their college education. Some are forced to accept jobs enabling them to deal with a staggering repayment schedule, rather than taking a job where their aspirations truly lie.
Part of the student loan debt crisis lies with the federal government, which encourages young people to further their education. In an interview with CNBC, Secretary of Education Arne Duncan said: “We have to educate our way to a better economy. The only way we’ll get to there from here is through many more students not just graduating high school but going to college.”
Although a portion of President Obama’s health care reform package included a restructuring of the student loan system in the form of the government lending directly to students, rather than providing subsidies and loan guarantees to private lenders, a rising student loan default could leave US taxpayers footing the bill. It’s not clear at this point, after an auto bailout and a financial bailout, how much more taxpayers can continue in the government bailout program.
One of the most expensive colleges in the nation is Sarah Lawrence College in Westchester County, New York. Tuition for the 2010-2011 academic year was around $56,500. The school justifies its high cost for education by noting its low student-to-teacher ratio. By comparison, Harvard’s admission price tag for the same school year was around $42,000.
“We have a nine to one [student-to-teacher] ratio,” said Tom Blum, vice president of administration, at Sarah Lawrence College, CNBC reported last December.. “Our average seminar size is between 11 and 12 students. We cap our seminars at roughly 15 students. Ninety-four percent of our classes have 19 or fewer students. That’s a very cost-inefficient model for delivering a superb education. It means that we have to rely on many faculty to deliver this education. Labor is expensive.”
Roughly 60 percent of the school’s students receive financial aid from the college through its grants program. Around 52 percent of the school’s graduates carry with them student loans.
Those considering reneging on their student loan debt would do well to heed the words of Barmak Nassirian, with the American Association of College Registrars and Admissions Officers. “You will be hounded for life,” he said, according to The Atlantic. “They will garnish your wages. They will intercept your tax refunds. You become ineligible for federal employment.” He added your professional license can be revoked and should you still carry the student loan debt at retirement, your Social Security checks can be docked.
Give thanks for that bit of “sadistic” news, as The Atlantic calls it, to the banks, who basically wrote the fine print in the student loan law, which states these loans are not “dischargeable.” As defaults continue to increase, student debt will become the next subprime crisis, as the Atlantic notes, it will start with for-profit colleges and make its way to the doorsteps of the Ivy League. It added the student loan bubble is “already losing air.”