Student debt has become a national crisis. Here’s why we should care.
Total outstanding student loan debt is quickly approaching $1.6 trillion. I am one of 45 million American students, alumni, parents, and grandparents that need help today to tackle this crisis.
In 2010 I took out my first student loan and, now, 9 years later, I still have a lot more to pay off — $36,621.62 to be exact.
I have no regrets today about my prior decision to seek out an ambitious higher education. At the age of 21, I became a first-generation 4-year college graduate. I was proud to finish it in just 3.5 years. I loved being a student. I was proud of the internships I’d completed, the grants I’d received, the honors I’d been awarded, and especially the intellectual rigor that my — uniquely interdisciplinary — liberal arts program gave me. Looking back, I wouldn’t trade those years for anything. I graduated determined to use my passion to change our world for the better.
And I did. I worked for a number of non-profits early in my career. I didn’t question volunteering my time for good causes, and I accepted lower salaries, resolving myself to the reality of paycheck to paycheck living. I chose a life in the non-profit world which unfortunately granted me little room to save money, let alone pay off my loans. Just over a year and a half after graduation, I learned that my loan servicer had defaulted my federal loans.
As a result of a new email and mailing address mix up, my family was not receiving critical information about the status of my loans and…truthfully, I was blissfully ignorant. Unaware of how I could cover monthly payments, I had accepted advice that deferring my payments was the best option for me at that point in my career. I did not truly comprehend the amount of interest that had compounded over time.
It dawned on me that a decision I had made as a teenager was going to impact me for the rest of my life.
Stunned, I called my best friend asking to borrow $50 so that I could start the “rehabilitation” process. In the loan servicer’s own terms, I had become “delinquent.”
At nearly $1.6 trillion, the student debt crisis has moved to the forefront of the national conversation, and for good reason.
Today, student debt is greater than total credit card debt, total auto loan debt, and even the GDP of Australia ($1.41T in 2018).
It is a crisis that is crippling the possibility of an entire generation.
While bold policy proposals from presidential candidates for complete or partial loan forgiveness make headlines alongside a sweepingly generous donation by billionaire Robert Smith to Morehouse graduates, the reality is that the landscape of the student debt system is deeply political and complex.
The majority of the 45 million borrowers, myself included, can’t rely on an unclear policy change happening in 2020. And we certainly cannot rely on the good-will of generous philanthropists. On a daily basis, exorbitant interest rates, sometimes as high as 10–15%, pile up.
Between 2006 and 2017, prices for undergraduate tuition, fees, room, and board at public institutions rose 31%, and prices at private institutions rose 24%, after adjustment for inflation. This, coupled with a recession and stagnant wage growth, has led to a radical shift in debt over the past decade. It has left millions of Americans — young adults, parents, and grandparents — forced to rethink how they can participate in the workplace, economy, and society. It has forced them to rethink how they live their lives.
While prices for commodity goods like televisions continued to become more affordable for families, college expenses — particularly tuition — have skyrocketed. To put salt on the wound, the issue disproportionately impacts women and other minority groups.
Women hold two-thirds of all student debt, nearly 85% of Black bachelor’s degree recipients are carrying debt and paying it off at a slower rate than their white peers, and only 25% of young LGBTQ+ borrowers are receiving any family assistance toward their student loan payments, with the percentage decreasing further to 20% for LGBTQ+ borrowers of color.
It took me over six years after receiving my college degree to emotionally recognize that looking at my finances and creating a plan were actions that could actually be empowering, not scary. Despite the small payments I was able to make towards my loans since it was out of default, I was still only chipping away at interest exclusively. Finding a role with a higher salary made me feel that I could make larger contributions, but I knew I needed to take action swiftly to get to my principal balance, and I had absolutely no idea where to start.
Then I met the co-founders of Summer. They were among the highly selective group of entrepreneurs chosen for the 2019 Startup-in-Residence program at Grand Central Tech, where I was Director of Partnerships. In my role, I learned about over 150 start-ups’ purpose and often beta-tested their products to become a champion of their work.
Summer has a meaningful purpose: to untangle the student loan maze and put borrowers first by helping them enroll in loan savings and forgiveness programs.
It wasn’t until I used their product this past March with Vincent, Summer’s Chief Product Officer, that I felt it was possible to tackle my own debt. Until that moment, I had never been able to figure out how much I had already paid off on my loan’s interest — over $13,000.
I couldn’t hold back tears seeing that number for the first time. It was shocking that I had no idea where my money was going, and a gutting reminder that my principal balance still hadn’t budged. Vincent, one of the co-founders of Summer, reached out to me after that meeting with an email outlining a recommended plan of action. He signed off with something I’d never heard before:
“Hang in there! We’ll help you get through this.”
While I knew that I wasn’t alone in the system, navigating my own student debt plan was painfully isolating. Before I met the team at Summer, I had already spent countless hours trying to understand my options. Representatives on the other side of the phone, contracted by a loan servicer I didn’t choose, would remind me that the 7.9% interest rate was compounded daily on the principal balance. I had to navigate paperwork, sometimes on the hunt for a fax machine, to immediately start making monthly payments in order for the damage to not get worse.
I wasn’t told that defaulting on student loans was common; in fact, every 28 seconds another borrower defaults on a loan and 8 million borrowers are already in default. Millions of Americans are a victim to routine mismanagement of student loans that hurts their chances of climbing to a level playing field with peers. And that’s where Summer comes in…
Summer is taking the onus off of the borrower to tackle debt alone by surfacing over 120 sponsored programs to help borrowers reduce their debt load. The programs amount to more than $300 billion dollars of untapped dollars available to help lower monthly payments and access forgiveness benefits.
Summer partners with employers, financial institutions, unions, and universities to guide their members through student loan repayment with premium tools, phone consultations, and application assistance. In fact, Yale University was the founding partner.
This isn’t just about me, or anyone else struggling to pay down their student debt. It’s in all of our best interest to solve this issue. Whether you have debt or not, everyone is buying into this system that is not serving the needs of our citizens. In an America with less crippling student debt, students and graduates could dream bigger about their futures and their own ability to make a positive impact on the world.
We are at a critical moment to rethink how we should prioritize supporting and empowering the next generation to strive toward their goals and taking steps to help our generation become less crippled by debt is a critical piece of the puzzle.
With the possibility of less student debt for future generations, millions would be more likely to pursue careers as nurses, teachers, climate scientists, social workers, neurosurgeons, cybersecurity experts, entrepreneurs, cancer researchers, architectural engineers, policy writers, civil rights lawyers, and so much more.
With less crippling debt and higher savings, students are no longer intimidated by the possibility of limiting their potential but inspired by their own ability to contribute to a greater world and a thriving economy. They’re no longer held back from investing in their retirement security or supporting their loved ones with elderly caregiving. They’re wildly optimistic to follow their passions and focus on what matters most.
As Head of Partner Success at Summer, I work with organizations spanning from universities to enterprises to unions to provide them with the tools and resources they need to best equip their communities with student loan guidance. Together, we’ll empower borrowers around America to feel less shameful, to understand that they are not in this alone, and to equip them with an action plan to tackle their debt head-on.
I know first-hand the impact of financial instability and the role that student debt can play. I don’t take any day of financial health for granted. Today, as I pay monthly loans off my tiny fraction of our collective $1.6 trillion debt load, I’m proud to be part of a team that’s committed to helping other borrowers find their way out of the student loan maze.
If this moved you to act: learn more about Summer’s work, partner with us, join our team (we’re hiring!), apply for early access or reach out and stay in touch: ella@meetsummer.org
