Debt Education: Bad for the Young, Bad for America
Williams, Jeffrey J.
STUDENT LOANS, for more than half those attending college, are the new paradigm of college funding. Consequently, student debt is, or will soon be, the new paradigm of early to middle adult...
...Something is wrong with this picture...
...It inducts students into the realm of stress, worry, and pressure, reinforced with each monthly payment for the next fifteen years...
...THIS REPRESENTS another shift in the idea of higher education, from youthful exemption to market conscription, which is also a shift in our vision of the future and particularly in the hopes we share for our young...
...This is not because students no longer care about poetry or philosophy...
...Although it is difficult to measure these costs separately, paying for college no doubt forms part of the accelerating indebtedness of average American families...
...Consequently, student debt is, or will soon be, the new paradigm of early to middle adult life...
...The new funding paradigm, by contrast, views the young not as a special group to be exempted or protected from the market but as fair game in the market...
...At the most worldly end of the spectrum, a common rationale holds that higher education provides professional skills and training...
...This is presumably a good for the social whole, all the atoms adding up to a more prosperous economy, but it is based on the conception of society as a market driven by individual competition rather than social cooperation, and it defines the social good as that which fosters a profitable market...
...Each citizen is a private subscriber to public services and should pay his or her own way...
...It rules out culture industries such as publishing or theater or art gal56 DISSENT / Summer 2006 leries that pay notoriously little or nonprofits like community radio or a women's shelter...
...This program could extend to the Ph.D...
...Last, debt teaches a specific sensibility...
...Now higher education is, like most social services, a largely privatized venture, and loans are the chief way that a majority of individuals pay for it...
...but the steadiest way, one replenished each fall like the harvest, is through tuition...
...Nellie Mae, one of the major lenders, discounted the effect of loans on such choices, reporting that "Only 17 percent of borrowers said student loans had a significant impact on their career plans...
...Debt teaches that the social contract is an obligation to the institutions of capital, which in turn give you all of the products on the shelves...
...It would call for a set term of, say, two or three years of service in exchange for a fair if modest salary and forgiveness of a significant portion of education loans per year in service...
...The best evidence for this is the warp in majors toward business...
...Rather, they have learned the lesson of the world in front of them and chosen according to its, and their, constraints...
...We tend to think of it as a necessary evil attached to higher education but extraneous to the aims of higher education...
...The classical idea of the American university propounded by Thomas Jefferson holds that democratic participation requires education in democratic principles, so it is an obligation of a democracy to provide that education...
...First, debt teaches that higher education is a consumer service...
...now they are near $33,000...
...It offered its exemption not to abet the leisure of a new aristocracy (Conant's aim was to dislodge the entrenched aristocracy of Harvard...
...He estimates that free tuition at public institutions would cost $30 billion to $50 billion a year, only a small portion of the military budget...
...It teaches that it would be a poor choice to wait on tables while writing a novel or become an elementary school teacher at $24,000 or join the Peace Corps...
...These would help those in Generations X or Y who are already under the weight of debt...
...We should therefore advocate the abolition of student debt...
...Most likely, many students have already recognized the situation they face and adapted their career plans accordingly...
...Now it would be impossible to do that unless you have superhuman powers...
...Now, one would have to work fifty-two hours a week all year long...
...In 1980, states funded nearly half of tuition costs...
...Or, simply, students from less privileged classes will not go to college...
...federal loan programs provide a safety net for banks, not for students...
...AMORE FAR-RANGING Solution iS free tuition...
...On the more idealistic end of the spectrum, the traditional rationale is that we give students a broad grounding in humanistic knowledge— in the Arnoldian credo, "the best that has been known and thought...
...Bear in mind that this does not include other private loans or the debt that parents take on to send their children to college...
...Even if a person is in bankruptcy and absolved of all credit card and other loans, the one debt that cannot be forgone is student loans...
...The principle is that citizens should pay more directly for public services, and public services should be administered less through the state and more through private enterprise...
...If banks still process loans, the loans are funded by the federal government, and the banks take no risk, then they should only receive a 1 percent or 2 percent administrative surcharge, such as charge card companies extract from businesses when processing a payment...
...Such a proposal would also require federal funding, though it could be administered on the state or federal level...
...DEBT IS NOT just a mode of financing but a mode of pedagogy...
...It has become common for parents to finance college through home equity loans and home refinancing...
...Debt puts a sizable tariff on social hope...
...by 2000, they contributed only 32 percent...
...In its first dozen years, the amounts borrowed were relatively small, in large part because a college education was comparatively inexpensive, especially at public universities...
...ALTHOUGH STATE legislators might flatter themselves on their belt-tightening, this is a shell game that slides the cost elsewhere —from the public tax roll to individual students and their parents...
...It concluded, "The effect of student loans on career plans remains small...
...There is a certain impermeability to the idea of the market: you can fault social arrangements, but whom do you fault for luck...
...It extracts more work—like workfare instead of welfare—from students, both in the hours they clock while in school as well as in the deferred work entailed by their loans...
...These proposals might seem far-fetched, but a few short years before they were enacted, programs like the Works Progress Administration, Social Security, the GI Bill, or the Peace Corps, also seemed far-fetched...
...The traditional idea of education is based on social hope, providing an exemption from work and expense for the younger members of society so that they can explore their interests, develop their talents, and receive useful training, as well as become versed in citizenship—all this in the belief that society will benefit in the future...
...In addition to the debt that students take on, there DISSENT / Summer 2006 53 are few statistics on how much parents pay and how they pay it...
...It adopted a modified socialism, like a vaccine assimilating a weaker strain of communism in order to immunize against it...
...Just as law-and-order political candidates promise more police on the streets, we should be pressuring political candidates for more teachers in our classrooms and thus smaller class sizes, from preschool to university...
...We should build a system of National Teaching Fellows who would teach and consult in areas where access to higher education has been limited...
...It more than doubled from 1992, when it was $9,200...
...Now the paradigm for university funding is no longer a public entitlement primarily offset by the state but a privatized service: citizens have to pay a substantial portion of their own way...
...In fact, it would save money by cutting out the middle stratum of banking...
...This increase has put a disproportionate burden on students and their families—hence loans...
...The average encompasses all institutions, from community colleges to Ivies...
...The lessons of debt diverge from these traditional rationales...
...There is a maxim, attributed to Dostoyevsky, that you can judge the state of a civilization from its prisons...
...Moreover, as currently instituted, they are more an entitlement for bankers than for students...
...although this sometimes seems to abet the "me culture" or "culture of narcissism" as opposed to the more stern idea of accumulating knowledge, it actually has its roots in Socrates's dictum to know oneself, and in many ways it was Cardinal John Henry Newman's primary aim in The Idea of a University...
...In the middle of the spectrum, another traditional rationale holds that higher education promotes a national culture...
...Tuition has increased in large part because there is significantly less federal funding to states for education, and the states fund a far smaller percentage of tuition costs...
...Opportunity for higher education is not equal...
...Federal student loans are a relatively new invention...
...The median household income for a family of four was about $24,300 in 1980, $41,400 in 1990, and $54,200 in 2000...
...According to one set of statistics, during the 1960s, a student could work fifteen hours a week at minimum wage during the school term and forty in the summer and pay his or her public university education...
...it presupposed the long-term social benefit of such an exemption, and indeed the GI Bill earned a return of seven to one for every dollar invested, a rate that would make any stockbroker turn green...
...It also teaches the relation of public and private...
...These rationales hold the university apart from the normal transactions of the world...
...Fifth, debt teaches the worth of a person...
...As a side effect, it would foster a better image of academe, through face-to-face contact...
...It should be the official policy of every university to forgo loans, except on an emergency basis...
...Education provides value-added to the individual so serviced, in a simple equation: you are how much you can make, minus how much you owe...
...Loans are a personal investment in one's market potential rather than a public investment in one's social potential...
...Or there should be a national, nonprofit education foundation that operates at margin and administers the loans without profit...
...All the entities making up the present university multiplex reinforce this lesson, from the Starbucks kiosk in the library and the Burger King counter in the dining hall, to the Barnes & Noble bookstore and the pseudo–Golds Gym rec center— as well as the banking kiosk (with the easy access Web page) so that they can pay for it all...
...its role is not to interfere with the market, except to catalyze it...
...This represents a shift in the idea of higher education from a public entitlement to a private service...
...As a side effect, it would likely foster a sense of solidarity, as the national service of the World War II generation did for soldiers from varied walks of life, or as required national service does in some European countries...
...Both rationales maintain an idealistic strain— educating citizens—but see the university as attached to the world rather than as a refuge from it...
...at an Ivy or similar private school, the figure would have been about twenty hours a week during term...
...Added to this is charge card debt, which averaged $3,000 in 2002, boosting the average total debt to about $22,000...
...Now higher education is conceived almost entirely as a good for individuals: to get a better job and higher lifetime earnings...
...The post–World War II idea, forged by people like James Bryant Conant, the president of Harvard and a major policy maker, held that the university should be a meritocratic institution, not just to provide opportunity to its students but to take advantage of the best and the brightest to build America...
...One can reasonably expect, given still accelerating costs, that it is over $30,000 now...
...On the postgraduate level, there are similar programs designed to bring doctors to rural or impoverished areas that lack them by subsidizing medical school training in exchange for a term of service...
...Second, debt teaches career choices...
...Third, debt teaches a worldview...
...Even if this can only be enacted in the long term, a short-term solution should be to retain the basic structure of student loans but to shift to direct lending administered from the federal government to colleges (which university administrators preferred, but bank lobbies overrode several years ago) or to regulate and reduce the interest rates...
...In other words, banks bear no risk...
...Several existing programs could be expanded...
...Adolph Reed, as part of a campaign of the Labor Party for "Free Higher Ed," has made the seemingly utopian but actually practical proposal of free tuition for all qualified college students...
...Loans carry out the logic of the post–welfare state because they reconfigure college funding not as an entitlement or grant but as selfpayment (as with welfare, fostering "personal responsibility"), and not as a state service but a privatized service, administered by megabanks such as Citibank, as well as Sallie Mae and Nellie Mae, the original federal nonprofit lenders, although they have recently become independent for-profits...
...For lenders, the federal government insures the loans...
...You have to pull yourself up by your own bootstraps...
...The more salient figure of tuition, fees, room, and board (though not including other expenses, such as books or travel to and from home) has gone up from an average of $2,275 in 1976, $3,101 in 1980, and $6,562 in 1990, to $12,111 in 2002...
...The brilliance of this proposal is that it applies to anyone, rich or poor, so that it realizes the principle of equal opportunity but avoids "class warfare...
...The reasoning melds citizenship ideals and utilitarian purpose...
...It inculcates what Barbara Ehrenreich calls "the fear of falling," which she defines as the quintessential attitude of members of the professional middle class who attain their standing through educational credentials rather than wealth...
...What if we were to see it as central to people's actual experience of college...
...and it is fair because, like a casino, the rules are clear, and anyone—black, green, or white—can lay down chips...
...This is a dubious conclusion, as 17 percent on any statistical survey is not negligible...
...If Sallie Mae makes a 37 percent profit on a public service, then it is no better than war profiteers who drain money from public coffers for a necessary service, and it should pay it back...
...DISSENT / Summer 2006 59...
...There are a host of standard, if sometimes contradictory, rationales for higher education...
...IF YOU BELIEVE in the social hope of the young, the present system of student debt is wrong...
...The more rational choice is to work for a big corporation or go to law school...
...A related rationale is that the university is a place where students can conduct selfexploration...
...Finally, it is fundamentally skewed because it assumes that students decide on career plans tabula rasa...
...At private universities, the average jumped from $3,051 to $22,686...
...And the market is a good: it promotes better products through competition rather than aimless leisure...
...Neither does it account for "post-baccalaureate loans," which more than doubled in seven years, from $18,572 in 1992-1993 to $38,428 in 1999-2000, and have likely doubled again...
...Those who attend university are construed as atomized individuals making a personal choice in the marketplace of education to maximize their economic potential...
...According to current statistics, the bottom quarter of the wealthiest class of students is more likely to go to college than the top quarter of the least wealthy students...
...At the same rate, gasoline would now be about $6 a gallon and movies $30...
...The reason that debt has increased so much and so quickly is that tuition and fees have increased, at roughly three times the rate of inflation...
...But as a major and mandatory source of current funding (most colleges, in their financial aid calculations, stipulate a sizable portion in loans), they are excessive if not draconian...
...In 1976, the tuition and fees at Ivies were about $4,000...
...I call this the "post–welfare state university," because it carries out the policies and ethos of the neoconservative dismantling of the welfare state, from the "Reagan Revolution" through the Clinton "reform" up to the present draining of social services...
...We will not know the full effects of this system for at least twenty years, although one can reasonably predict it will not have the salutary effects that the GI Bill had...
...It teaches that the state's role is to augment commerce, abetting consuming, which spurs producing...
...The state encourages participation in the market of higher education by subsidizing interest, like a startup business loan, but eschews dependence, as it leaves the principal to each citizen...
...Students used to say, "I'm working my way through college...
...In the postwar years, higher education was conceived as a massive national mobilization, in part as a carryover from the war ethos, in part as a legacy of the New Deal, and in part as a 54 DISSENT / Summer 2006 response to the cold war...
...Following up on the way that advertising indoctrinates children into the market, as Juliet Schor shows in Born to Buy, student loans directly conscript college students...
...Thus the need for loans as a supplement, even if a student is working and parents have saved...
...Another idea that I have proposed is for programs oriented toward loan abatements or forgiveness...
...Fourth, debt teaches civic lessons...
...and, given current spending on loan programs, it is not out of reach...
...There is no similar safety net for students...
...social entitlements such as welfare promote laziness rather than the proper competitive spirit...
...You can also judge the state of a civilization from its schools—or, more generally, from how it treats its young as they enter the full franchise of adult life...
...It also aimed to create a strong civic culture...
...The utilitarian idea, propounded by Charles Eliot Norton in the late nineteenth century and James Conant in the mid-twentieth, holds that society should provide the advanced training necessary in an industrially and technologically sophisticated world...
...Despite Nellie Mae's bruiting the high rate of satisfaction, a number of universities, including Princeton and UNC-Chapel Hill, have recognized the untenable prospect DISSENT / Summer 2006 57 of student debt and now stipulate aid without loans...
...Because more than half the students attending university receive, along with their bachelor's degree, a sizable loan payment book, we need to deal with student debt...
...My proposal takes a few pages from European models of national service, programs such as AmeriCorps (but expanded and better funded), and throwbacks such as the Works Progress Administration...
...in literature or history, for instance, could be sent to community colleges or high schools to consult on programs and teach upgrade courses for vet58 DISSENT / Summer 2006 eran teachers on recent developments in scholarship or special courses to students...
...It requires that students teach in less privileged school districts, often rural or sometimes inner city, for a term of three or four years after graduation...
...The welfare state university promulgated both ideal and utilitarian goals, providing inexpensive tuition and generous aid while undergoing a massive expansion of physical campuses...
...He teaches at Carnegie Mellon University...
...Worth is measured not according to a humanistic conception of character, cultivation of intellect and taste, or knowledge of the liberal arts, but according to one's financial potential...
...A corollary is that they explore liberally across the band of disciplines (hence "liberal education" in a nonpolitical sense...
...As a result of these policies, the banks have profited stunningly...
...level, helping to remedy graduate indebtedness as well as the academic job crisis in which there are too few decent jobs for graduates...
...Although there was a liberal belief in the sanctity of the individual, the unifying aim was the social good: to produce the engineers, scientists, and even humanists who would strengthen the country...
...To that end, the designers of the postwar university kept tuitions low, opening the gates to record numbers of students, particularly from classes previously excluded...
...The program would put academic expertise to a wider public use, reaching those in remote or impoverished areas...
...From 1965 to 1978, the program was a modest one, issuing about $12 billion in total, or less than $1 billion a year...
...A more progressive rationale might reject the nationalism of that aim and posit instead that higher education should teach a more expansive and inclusive world culture but still maintain the principle of liberal learning...
...ideas, knowledge, and even sex (which is a significant part of the social education of college students) simply form sub-markets...
...at an Ivy League college, you would have to work 136 hours a week all year...
...Many bemoan the fact that the liberal arts have faded as undergraduate majors, while business majors have nearly tripled, from about 8 percent before the Second World War to 22 percent now...
...This obviously applies to elementary and secondary education (although given the voucher movement, it is no longer assured there, either), and it was extended to the university, particularly in the industrial era...
...There is no realm of human life anterior to the market...
...This also represents a shift in the idea of higher education from a social to an individual good...
...we teach the profundity of American or, more generally, Western, culture...
...The premise of money DISSENT / Summer 2006 55 lending and investment, say for a home mortgage, is that interest is assessed and earned in proportion to risk...
...Debt teaches that the primary ordering principle of the world is the capitalist market, and that the market is natural, inevitable, and implacable...
...Like a business, each individual is a store of human capital, and higher education provides value-added...
...The survey is flawed because it assessed students' responses at graduation, before they actually had to get jobs and pay the loans, or simply when they saw things optimistically...
...A Ph.D...
...By the early 1990s, the program grew immodestly, jumping to $15 billion to $20 billion a year, and now it is over $50 billion a year, accounting for 59 percent of higher educational aid that the federal government provides, surpassing all grants and scholarships...
...One is a very successful undergraduate program—the North Carolina Teaching Fellows Program—which carries a generous scholarship as well as other "enrichments" designed to recruit some of the better but usually less wealthy high school students into teaching...
...Almost every college and university in the United States announces these goals in its mission statement, stitching together idealistic, civic, and utilitarian purposes in a sometimes clashing but conjoined quilt...
...And if you look at the productivity statistics of the college-educated World War II generation, it is counterproductive...
...The average undergraduate student loan debt in 2002 was $18,900...
...JEFFREY J. WILLIAMS'S most recent book is Critics at Work: Interviews 1992-2003 (New York University Press, 2004...
...Over the past decade, there has been an avalanche of criticism of the "corporatization" of the university...
...Although this utilitarian purpose opposes Newman's classic idea, it shares the fundamental premise that higher education exists to provide students with an exemption from the world of work and a head start before entering adult life...
...Even by the standards of the most doctrinaire market believer, this is bad capitalism...
...We might tell students that the foremost purpose of higher education is self-searching or liberal learning, but their experience tells them differently...
...it produced great benefits, financial as well as civic, under the GI Bill (see his "A GI Bill for Everyone," Dissent, Fall 2001...
...freedom is the ability to make choices from all the shelves...
...The argument relates to the concept of franchise: just as you should not have to pay a poll tax to vote, you should not have to pay to become a properly educated citizen capable of participating in democracy...
...Loans to provide emergency or supplemental aid are not necessarily a bad arrangement...
...Gone are the days when the state university was as cheap as a laptop and was considered a right, like secondary education...
...Such a program would have obvious benefits for students, giving them a way to shed the draconian weight of debt, as well as giving them experience beyond school and, more intangibly, a sense of pride in public service...
...Sometimes politicians blame it on the inefficiency of academe, but most universities, especially state universities, have undergone retrenchment if not austerity measures for the past twenty years...
...It is a pay-as-you-go transaction, like any other consumer enterprise, subject to the business franchises attached to education...
...This has created what the journalists David Lipsky and Alexander Abrams have called a generation of "indentured students...
...Debt teaches that the disparities of wealth are an issue of the individual, rather than society...
...The reason tuition has increased so precipitously is more complicated...
...Student debt impedes a full franchise in American life, so we must begin the debate about how to restore the democratic promise of education...
...Society pays it forward...
...Debt teaches that democracy is a market...
...Universities have turned to a number of alternative sources to replace the lost funds, such as "technology transfers" and other "partnerships" with business and seemingly endless campaigns for donations...
...The Guaranteed Student Loan (GSL) program only began in 1965, a branch of Lyndon B. Johnson's Great Society programs intended to provide supplemental aid to students who otherwise could not attend college or would have to work excessively while in school...
...Encumbering our young with mortgages on their futures augurs a return of debtors' prisons...
...It is unfortunate if you don't have many chips to lay down, but the house will spot you some, and having chips is a matter of the luck of the social draw...
...The way they work for students is that the federal government pays the interest while the student is enrolled in college and for a short grace period after graduation, providing a modest "start-up" subsidy, as with a business loan, but no aid toward the actual principal or "investment...
...Debt is the civic version of tough love...
...And it should be the policy of the federal government to convert all loan funds— more than $50 billion!—to direct aid, such as Pell Grants...
...What do we teach students when we usher them into the post– welfare state university...
...Sallie Mae, the largest lender, returned the phenomenal profit rate of 37 percent in 2004...
...I have called this "the welfare state university" because it instantiated the policies and ethos of the postwar, liberal welfare state...
...This is a step in the right direction...
...debt is your free choice...
...The state's role is not to provide an alternative realm apart from the market but to grease the wheels of the market, subsidizing citizens to participate in it and businesses to provide social services...
...Tuition and fees have gone up from an average of $924 in 1976, when I first went to college, to $6,067 in 2002...
...Most of it focuses on the impact of corporate protocols on research, the reconfiguration of the relative power of administration and faculty, and the transformation of academic into casual labor, but little of it has addressed student debt...
...If education is a social good, he reasons, then we should support it...
Vol. 53 • July 2006 • No. 3
