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Real lives are impacted by large student debt burdens, yet our government and universities do little to change things
Amy Diede homeschools her two children – Caleb, 9, and Ashley, 8 – and is married to a devoted husband and father, Christian. Even though Amy has a master's in psychology, and until recently was a professional herself, Christian is now the breadwinner for the family, working as a cardiovascular nurse on short-term contracts across the country.
At the moment, the Diede family lives in California. Christian wants to own a home again, but for now they are a roaming family whose home is a 400-square-foot RV. A big part of the problem is Amy's student loan debt. It does not merely affect their bank statement, it has found its way into their daily thoughts and life. Together, Amy and Christian owe over $82,000 in student loans.
"It's like carrying a big backpack filled with bricks all over the place, and I can't ever let it go. It's always there. I may get rid of a few bricks, but there's always going to be more. I don't see the student loans going away."
Amy signed up for the Income Based Repayment Program (IBR) in the summer of 2012, which means after she pays a modest amount every month for the next 20 years on her federal student loans, her debt will be forgiven. Yet in Amy's mind, it will never go away.
What's interesting is that Amy's younger brother did not go to college, yet his life is financially far better off. "I used to do my work before I went out to play. But he would just take off and, you know, do whatever. He was a gangster wannabe!" Amy's brother has no college degree, no student loan debt, and earns far more than Christian. He also has a huge home in the Midwest and frequently takes expensive vacations.
Here's a painful reality: student loans put millions of Americans in a precarious situation – if they lose their jobs, become sick, or have a sudden emergency that leads to time off work, any of these things can lead to total financial ruin.
While Amy feels she fell flat (unlike her brother), due to having a large chunk of student loan debt and wound up for a time on food stamps after receiving her master's, the importance of education has not been forgotten. But the importance of education has become clouded by deep feelings of regret and anger. Furthermore, more individuals are finding themselves in Amy's situation; they have advanced degrees and are winding up on food stamps. For the time being, the Diedes are not on food stamps, but they worry constantly about whether they will make it.
About a month after I returned from California last spring, Amy reached out to me. She had just learned that the tumors that she had removed from her jawbone a few years ago were back. Surgery was absolutely necessary. Because of their financial situation, she would have to endure the first of many invasive surgeries while fully conscious, as they could only afford local anesthetic. Amy wrote to me:
"This means more debt. Sometimes, I wish I could just end this life and have a new start, a new life, I swear."
She confessed feeling suicidal (indeed some have killed themselves).
Unfortunately, stories like that of the Diedes have become the norm with each passing year. Higher education, whose PR machine aggressively markets itself on huge billboards along major US highways and in advertisements plastered in subways and train stations promises a ticket to future success for lower income and middle class Americans. The images of smiling graduates belie the real story, that higher education, in all of its forms now leads the majority of people down a path to permanent indebtedness.
No longer regarded as part of the public good, this new incarnation – Higher Ed Inc – has become big business, fraught with scandals and lawsuits too numerous to note here. The mantra of going to school to better one's self has been bought for generations, but now the cost is solely on the borrower and the parents. Instead of considering higher education as a sound "investment" that will help you earn higher wages on the labor market, the current way in which it is financed should be considered a regressive tax.
The entire system has been largely unregulated, and the Department of Education has a stronger relationship with lenders and collectors, then students. Tuition has also skyrocketed over the past few decades, surpassing the cost of medical care in this country. For the first time in history, credit card debt was surpassed by student loan debt.
Since journalists like eye popping numbers, the $1tn figure is now mentioned in nearly every article about the cost of higher education. When there are crises of this magnitude, reformers are quick to emerge, offering silver bullet solutions, such as loan forgiveness and restoring bankruptcy protection rights. While more Americans are becoming aware of the problem, either through a direct experience or from afar, policymakers overall in Washington DC are doing little to provide distressed and defaulted borrowers with immediate solutions.
These experts and politicians, nestled inside "the beltway", fail to hear the millions of voices pleading for relief in the rest of America. Using anachronistic rhetoric more appropriate to the 1980s, policy wonks continue to insist that higher education is a "good investment" and "good debt. .They conveniently omit or downplay the fact that students and families carry the burden when "investing" in college degrees. With one false "move" – a death, a health problem, a lost job – borrowers and co-signers find themselves in an economic tailspin towards financial ruin.
Instead of devising sound legislation that could help millions of educated Americans handle the burden of student loan debt, individuals have been left to their own devices to try and survive and make ends meet. To make matters worse, more graduates are moving home or doubling up with other indebted roommates. Younger graduates are delaying marriage and settling down. The chance of buying a home, a car, or starting a family, for a larger majority of these debtors, is entirely out of the question.
If college grads are lucky enough to find full-time employment, starting wages often don't even make a dent in the loans they owe. Even worse, those who have created this debt crisis have failed to consider the dangers of turning the educated into the precariat.
• This story was produced by the Economic Hardship Reporting Project, co-edited by Barbara Ehrenreich and Gary Rivlin.