'A dark cloud that hangs over a generation'

13 August 2014
Julia Jones

On a recent visit to the US, I mentioned to my friend Amy that she was looking worn and should come visit me in Australia. She looked at the ground and started to tear up. “I’d love to but I can’t”, she said. “I’m trapped here.”

Taking out government loans for her undergraduate and master’s degrees, Amy accumulated a staggering $92,000 debt. She cannot even keep up with the interest payments of $500 per month. A new scheme will wipe her debt if she works at a government or not-for-profit job for 10 years.

Her current government job was meant to be temporary. She’s overworked and underpaid in a crowded legal aid office. But because she is unable to pay off the debt, she decided to stay on for the remaining eight years.

Total outstanding student debt in the US is now more than $1 trillion – second only to mortgage debt. With skyrocketing tuition and even the cheapest degrees costing $15,000, most students cannot attend without some kind of loan.

Amy’s situation may seem extreme, but it’s not uncommon. One in 10 graduates have debts of between $50,000 and $99,000.

When we were growing up, we were told over and over how much better our lives would be with a university degree. US citizens with a degree will earn on average $17,000 more a year than those without. But rising costs, crippling debt and an unpromising job market make those figures less appealing.

Since the 1980s, US universities, both private and public, have been prioritising business over learning. They said that market competition would improve the quality of education. But the real result of the privatisation of services and even entire campuses is decreased public funding and ever-increasing tuition and fees.

As the price of higher education climbed, the number of students needing loans rose with it. Student loans became a lucrative business. By the late 1990s, predatory loan schemes and laws allowing draconian debt collection methods became the norm.

The crisis has now reached fever pitch, with students drowning under enormous debts that most cannot pay back. The stress of these loans is a prominent feature of the lives of most people under 35.

“It’s a sick joke”, says Madilyn, a recent graduate from Massachusetts. “Every time I’m in a big group of friends, someone gets a call from a debt collector to harass them about their payments. They’ll say ‘Uh oh, a 1-800 number from Florida. I’m not answering that one.’ We all just laugh because we understand. We don’t have the money to pay.”

Despite having four-year degrees, most of her friends are still working the jobs they had before they began study. The only difference is that now they have $30,000 debts. One friend even gave all her friends How to avoid paying your debt for dummies books for Christmas.

“You just feel so trapped … They get you in this loan, then it just keeps getting worse and worse and there’s no way you can ever catch up to it”, Madilyn tells me. “Student debt is a dark cloud that hangs over this generation.”

Entrenching the class divide

The most prominent feature of the US higher education system is how it maintains the gap between rich and poor.

Wealthy students go to the best schools, like Harvard and Yale, pay fees upfront, graduate debt-free and work in high paying jobs. Working class students have three choices: take on huge debt to go to a good school, choose a cheaper but low quality school or skip uni altogether.

Wealthy students are free to concentrate on their work; working class students must juggle study with work, typically working 20 hours or more to make ends meet.

Understandably, many students are wondering what the point is of attending university at all.

My friend Brian worked for a year after high school to save for uni. But in the end he decided not to go. “I know people with degrees earn more, but you end up having to spend your youth paying it back. That part doesn’t seem worth it, so I figured I should just skip it and work.”

The Australian government is right that we should learn from the US university system. But the lesson is that a deregulated education system is a nightmare for students.

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