October 29, 2012
The Damned Don’t Cry (But They Ought To)
by James McGirk
After four debates and with a tsunami of political advertising inundating the United States, it is clear that neither presidential candidate is willing to act decisively on what should be the most pressing issue of our day: student loan debt.
Democrats offer crumbs. Republicans even can’t be bothered to pander to young voters. Yet no other issue so neatly encapsulates the miseries of contemporary American existence. An entire generation of smart, educated people are being crippled with debt. Without some sort of relief, upward mobility will vanish, the gap between rich and poor will yawn wider, our economy will be left in ruins, and what’s left of our once vaunted ability to innovate will die. The parasite is killing the host.
The time has come for decisive action. Student loan debt must be forgiven completely. The federal government should not be lending money to students. All it does is drive up prices and push us deeper in debt. Offer amnesty, get rid of the program, and let colleges pare down tuition until it makes sense for a family to save up or borrow money privately for their children to go. At the very least, let these loans be dischargeable in bankruptcy. This may seem like a drastic thing to do, but the situation is out of control. Something has to be done.
Student loan debt now accounts for 18 percent of American consumer debt. Unlike a mortgage there is no way to discharge a student loan (short of total medical disability). The interest is painful: 3.4 percent for a loan taken out as an undergraduate, and a usurious 6.8 percent for a graduate student. The interest capitalizes. Not only is it charged on the principal, but on any unpaid interest as well, meaning that a loan balloons while student is in school, or during the increasingly frequent forbearances necessary during periods of unemployment. There is no risk of default to the lender. The government guarantees all student loans. Nor is there any risk to universities. It is a trough of free money and these swine have gorged themselves, shamelessly raising tuition year after year, at a rate far outpacing inflation.
The class of 2011 graduated with $26,600 worth of debt each. That’s just for a bachelor’s degree. And those numbers include the lucky third that graduated with no debt at all. For a shot at a job that might offer entrée into a white-collar career you need a graduate degree and a year or two of unpaid internships. Lawyers and doctors, the traditionally secure gateways into America’s upper middle class can easily amass hundreds of thousands of dollars worth of debt. A year of unemployment could wipe them out completely. Very few people who graduate with six-figures of un-dischargable debt will take risks. Every wonder why so many math and science PhDs are taking jobs on Wall Street? Wonder no more.
An entire generation of students has been snarled in debt. And for what? Why do we allow ourselves to be sucked into this disgusting situation? The truth is that in contemporary America, college has become a proxy for status. This torrent of debt, the millions of lives now locked in indentured servitude have gone to pay for little more than a signaling mechanism. A token that guarantees a modicum of basic reading and writing skills that ought to have been learned in high school. Education is no better now than it was twenty years ago when college tuition cost a tenth of what it does today. What college really is for, is to signal to one another that we are belong to a certain social class or rank.
Going to an elite private school tells someone that you were born into an upper-middle class family that knew enough to care about education and had the resources to pay for it. Smart in the United States really means belonging to the professional class. America’s supposed anti-intellectualism is really just subterranean class warfare. There is a reason why there are Supreme Court cases about something as seemingly so banal as college admission. The difference between going to University of Texas at Austin and Louisiana State University may not seem like much to an outsider but to an American, who doesn’t have an aristocratic title, or much of a family history, his or her college is the only tribal affiliation he or she has. And not getting into the one he or she thinks she deserves to get into feels like exile. It’s a social death. And this is why people are willing to borrow themselves into penury to go to college.
For-profit schools deservedly receive the most criticism but the non-profits and state schools deserve a heap of blame too. Useless masters degrees created for the sole purpose of sucking up student loan money. Enormous loans are recklessly dispersed to heavily indebted students and families. The so-called elite schools are as bad as any other. They exploit students just as much, the only difference is that their students can usually scrape together enough to eventually pay their loans back. But that isn’t because the content of what they are teaching is any better.
Our money has been spent on the most trivial things: foolish expansions overseas, stadiums, state-of-the-art gyms, dorms and centers, and above all the rapidly metastasizing administrations. Unnecessary deans, overlapping bailiwicks, admissions teams, compliance crews, lawyers, webmasters, layer after layer of bloat, almost all of it unnecessary, cushy and highly paid. The typical officer at a University earns more than an adjunct professor, and often receives the same package of benefits. Cadillac health insurance (subsidized by the student body), free tuition, scholarships for their children and a generous pension. A department director or assistant dean can easily command six figures and will leach off the system for years, even after they retire. The cruelest indignity may be that these parasites are eligible to have their own debts forgiven after ten years of “public service.”
Their snouts drip from feasting at the trough of our collective futures. Yet who could blame them? Universities act rationally. It’s the tragedy of the commons. They see a public good being devoured. Why not cram their faces in and glut themselves with it? Everybody else is doing it. Never mind their purported missions, which commit them to service for the public good. Besides, where is the outcry from parents and pupils?
Without decisive action, without amnesty, the parasite will kill the host. Our university system has been a sacred cow for too long. The system needs to be shocked. Let state schools consolidate if they have to, let the brilliant minds at our elite private schools dream up a cost-cutting solution. In Britain there barely are any administrators. Just professors and classrooms. Tuition must go down. Student loans must end. Demand this of whomever you vote on November 6th. And readers outside of the United States: Don’t ever let an abomination like this happen to your country.
Posted by James McGirk at 01:20 AM | Permalink