Student Loans: What we don’t know is (still) killing us

This is the longer, uncut version of a piece that was published on The Conversation at the Chronicle of Higher Ed a while back.

The phone rings. I answer. Credit card collector — again. A pleasant voice on the other end of the line: “Can you please verify the last four digits of your social security number?” I verify. The voice then asks me if I consent to letting them use my phone number to contact me about my credit card debt. I say no, I do not consent. “Well, how would you like us to contact you to give you updates about your account?” You can send the updates in the mail, I tell the voice. “Very well, please hold on while I transfer you.” I hold.

Another pleasant voice comes on the line: “We’re calling about the status of your account. According to our records, you have not made the current minimum payment. We would be glad to process an electronic check for $92.55 to bring your account current.” No, I say, I can’t do that. “Well, is there a reason why you can’t make your payment at this time?” the new voice asks. My answer jumps out of me: “I can’t make the payment because I am deep in student loan debt, trying to finish graduate school, looking for work, there is no work, the higher education market is completely devastated, I’m raising a kid, and I happened to go to graduate school right in the middle of a massive global economic implosion. Sorry.”

Silence.

Then the voice says: “I’m in graduate school too.” She’s just working this job because she has three kids and she’s trying to make ends meet, she explains. She tells me she’s going to finish in a year and she’s looking into PhD programs. We end up having a ten minute conversation about graduate school and debt. Surreal.

I offer one piece of advice: don’t pay a dime for a PhD. I end the conversation by warning her about student loans because they have been stripped of almost every meaningful consumer protection, including the ability to discharge in bankruptcy. She tells me she had no idea and thanks me for the advice. We hang up.

Yes, that really happened. What a strange, ironic, and incredibly revealing conversation. Ironic because the young woman — who works in the debt collection industry — did not know that consumer protections have been so thoroughly stripped from student loans. That in and of itself is telling: say what you will about the credit card industry…at least consumers that get into trouble still have basic legal protections. When it comes to student loans (especially private loans), that’s definitely not the case. Far too many people sign up for student loans without knowing just how badly the balance of power is tipped in favor of lenders and collection companies. This has to change. The realities of the student loan industry need to be made common knowledge.

But that conversation also revealed something of the wider structure of the student debt problem. It’s happening to people across a broad social spectrum, and while many individuals know this is a widespread problem, they do not always have knowledge about others who might be in the same predicament. In other words, many people assume they are outliers or alone. Based upon my experiences in academia over the past decade, part of the issue here is that many people don’t talk about their student debt. Many feel shame and embarrassment, and keep quiet so as not to be seen as a complainer. They keep their heads down. The result, however, is a case in which there are legions of people in the same situation who don’t know that so many others share similar concerns and face similar hardships. This lack of mutually shared knowledge helps perpetuate student debt, especially as new generations of students sign up for student loans without access to the knowledge or experience of those who came before them.

My debt collector and I actually share a lot of common ground. But due to the dehumanization of our large bureaucracy, combined with that pervasive lack of shared knowledge I just mentioned, we don’t actually know about that common ground — unless we break away from the usual script. Yet that’s exactly what many of us do not do — for whatever reason. People just do not want to talk about debt. While the conversation has been growing in recent years, it’s still largely a taboo subject. Many people remain silent, suffering as if they are alone in this problem. As the folks from Strike Debt so aptly put it, “you are not a loan.” We are not alone in this. It’s time to break the script, which includes far too much silence, reticence, and, yes, complicity. Far too many of us stand by and watch this whole situation unfold. This also has to change.

That nice person on the other end of the phone may have been clueless about the problems with student loans, but I was no different before I started graduate school. I was just as naïve, if not more so. As Alan Michael Collinge says in his book The Student Loan Scam, “confusion and a lack of knowledge play directly into the hands of student loan companies.” This also plays into the hands of the government, which, along with all of those student loan companies, profits tremendously from student debt. What we don’t know about the realities of our own student debt is killing us, and what we don’t know about the debt of those around us is killing us as well.

In this case, ignorance is definitely not bliss. It is time for more people to stand up and learn just how bad this problem has become. William Quirk eloquently described what has become the new normal in Higher Ed:

As the industry attached a giant siphon to students’ lifetime earnings, the nation began an experiment not in illuminating young minds or upholding the Jeffersonian educational ideal but in finding out what would happen if our college graduates started their working lives with a large negative net worth.

Welcome to the giant siphon: it’s fueled by the hopes and dreams of our students and leaves a long social trail of toxic byproduct known as “negative self worth.” And yet we keep participating in and believing in the system. We make the dangerous (and false) assumption that taking out government-backed or even private student loans is a safe risk. We make this choice because we’re betting on our own futures, hoping that going to college will pay off in the end.

It may actually pay off — but not for the students. One of the biggest issues is that lenders and collection companies exert so much control over the borrowers. As Quirk explained, lenders have a “lifetime lien on students’ earnings,” because it’s nearly impossible for debtors to free themselves from their loans. This effectively imprisons borrowers, forcing them to service their student debt above all else. This is the new debtor’s prison. In the ironic 21st century version of Dickens’ Marshalsea, graduates from our higher education system work endlessly in low-paying jobs in a desperate attempt to get ahead of capitalization, late fees, and the unparalleled collection powers of today’s student loan companies. They often end up far worse off economically than when they started college. This destroys the whole point of higher education. After all, what’s the use of going to college only to end up a slave to your own debt upon graduation? How does that push society forward?

It doesn’t.

At this point you might be asking “Ok, this is all very terrible and deplorable and pernicious, but what can be done about the situation?” Change begins with a deeper knowledge of the workings of the student loan industry itself, and how this system is affecting scores of indebted students. It is time for borrowers to know exactly what they’re getting into. We need to know, as Collinge explains in his book, that by 2006, “student loans had fewer consumer protections than any other type of loan instrument in the nation’s history.”

We need to realize that there are strong connections between the out of control student loan industry and rising tuition costs. Beyond that, it’s time to shed light on the alleged collusion between colleges and banks, which is the corrupting fuel that makes the fires of debt burn all the more out of control. We all need to realize that higher education is very much a business these days — but we don’t have to accept the idea that this is its ultimate fate. More than anything, though, those of us who are mired in debt because of student loans need to realize that we’re not alone. The possibilities for meaningful change rest upon that powerful bit of shared knowledge.

But knowledge is just the first step. Next we have to actually do something about this problem. Action is the next step. As the late Edward Abbey once said, “Sentiment without action is the ruin of the soul.”