Total student loan debt in America recently exceeded $1 trillion and is now higher than credit card debt. It’s a mind-boggling figure, and one which has led some economists and commentators to claim it’s simply the latest financial bubble waiting to burst. Others editorialize about what all that debt says about the state of higher education in contemporary America. Lost amid these discussions, however, is the impact this debt is having on the life decisions of an entire generation.They are mostly young twenty- and thirty-somethings who did everything they were told to do. They went to college. They worked part-time while studying. They graduated with good grades (not really that hard to do in many college majors given rampant grade inflation and soft subject matter, but never mind for now). And they got buried under an avalanche of debt it may take a lifetime to dig out of. The Wall Street Journal provides a deeply personal account of the terrifying financial situation faced by many recent grads. Take, for example, Jodi Romine:
Between the ages of 18 and 22, Jodi Romine took out $74,000 in student loans to help finance her business-management degree at Kent State University in Ohio. What seemed like a good investment will delay her career, her marriage and decision to have children.Romine’s $900-a-month loan payments eat up 60% of the paycheck she earns as a bank teller in Beaufort, S.C., the best job she could get after graduating in 2008. Her fiancé Dean Hawkins, 31, spends 40% of his paycheck on student loans. They each work more than 60 hours a week. He teaches as well as coaches high-school baseball and football teams, studies in a full-time master’s degree program, and moonlights weekends as a server at a restaurant. Romine, now 26, also works a second job, as a waitress. She is making all her loan payments on time.They can’t buy a house, visit their families in Ohio as often as they would like or spend money on dates. Plans to marry or have children are on hold, says Romine. “I’m just looking for some way to manage my finances.”
The delay of important adult milestones, like buying a house and starting a family, will have serious repercussions, not just for all the Jodi Romines out there, but for American society at large. Why, then, are student loans treated so differently from other loans?
Both private and government loans, however, lack “the most fundamental protections we take for granted with every other type of loan,” says Alan Collinge, founder of StudentLoanJustice.org, an advocacy group. When borrowers default, collection agencies can hound them for life, because unlike other kinds of debt, there is no statute of limitations on collections. And while other kinds of debt can be discharged in bankruptcy, student loans must still be paid barring “undue hardship,” a legal test that most courts have interpreted very narrowly.
The truly horrifying aspect is the realization that Jodi Romine might be one of the lucky ones. According to a recent study conducted for the Associated Press, “half of young college graduates [are] either jobless or underemployed in positions that don’t fully use their skills and knowledge.” The college degree that was supposed to be the ticket to a decent middle class job has instead led to a surfeit of Starbucks baristas. And what’s the most common piece of advice for these young job-seekers? Go to grad school (and rack up even more debt).Still, it is worth pointing out that American higher education is not stagnant. Colleges are beginning to provide improved loan counseling. Online education is evolving rapidly, and startups are proliferating as young entrepreneurs rush to meet the surging demand for affordable higher education. These developments may not help Jodi Romine very much, but hopefully they represent an inflection point from which future college students may begin to see benefits. After all, one generation of Jodi Romines is one too many.