Student Loans

NPR has been running a series on student loans.  Morning Edition had a story featuring an interview with 3 young women who have staggering amounts of student loans.  It made me reflect on how lucky I've been.

I went to Newberry College for my undergraduate degree.  Newberry is a small, Lutheran, liberal arts school.  At the time, it had a hefty price tag, especially compared to state schools.  But I got lots of scholarships, and so my family paid very little, and for 2 years, the price tag was zero.

I married a man with student loans, and his loans worried my grandmother, although she liked the man.  Now the amount of the loan seems laughably small:  roughly $2000.  We paid a little bit more than we owed each month, and it didn't seem onerous.  It wasn't.  It was a loan from the golden days of student loans:  it helped a struggling student, and the payback plan was fair.

We both went to grad school at the same time, and we were determined not to take out more loans.  We had great assistance from the school, so our tuition cost very little, with none of the fees that schools pack on now.  I paid $150 for tuition each semester, and that amount could be taken out of the pittance that I was paid for my teaching assistantship.  Yes, $150--that's just one zero at the end.

A few years later, my spouse returned to school, and we took out the maximum amount of student loans possible so that he could pay for tuition, fees, housing and living expenses in a different place 90 miles away from our home base.  We could have taken 15 years to pay off those loans, but we paid them early when my spouse sold a tech stock at just the right minute.

I used to joke that maybe we'd continue to take turns going to grad school and taking out student loans and deferring old ones.  I have since met people who have bumped against the upper level possible as they've taken out every student loan possible.  At the time I made my joke, I didn't realize there was an upper level, and I couldn't have foreseen how quickly one could take on loan amounts that would get people to the $225,000 limit for grad school student debt (my memory of the specific amount of the limit may be faulty).

I used to classify student debt in the same category as mortgages, debts that would be worth it, in terms of how much further ahead you'd be with them than without them.  Now, I'm just not sure.

Now I think in terms of a car--I first read Kelli Russell Agodon say this, in a post of hers I can't find right now.  She talked about her MFA costing the same amount as a Toyota sedan.  If you would feel comfortable taking out a car loan that costs that much, then taking out that much for a graduate degree could be similar.

I want to believe that an additional degree will open all sorts of doors that wouldn't have opened otherwise, but I'm old enough to know better.  Many of those doors can be opened in other ways, after all, ways that don't require any debt.

But to be honest, the student loans that worry me most are the ones who go to the students who never finish a degree.  If a student finishes an undergraduate degree with a bit more debt than society would like, that student will likely find better employment opportunities throughout life because of that degree--the loan will eventually pay for itself, if you look at labor statistics, although it may take a lifetime.

But the student who finishes a few years of college and then disappears?  Those are the ones carrying more loan debt than they can ever manage.  We hear about college drop outs like Steve Jobs, but most college drop outs these days will be lucky if they get jobs in fast food or retail.

In the coming months, I predict we'll be hearing a lot about remaking the student loan system.  Some will want us to look at graduation rates or at jobs at the end.  I would want us to set up a system that intervenes much earlier.

I'm all for giving people multiple chances, don't get me wrong.  I'd have a mostly open admissions policy, but I'd have a review at key points.  If you're entering with evidence that you've struggled in the past, we'd check your grades after a term or two.  If you're not doing well (doing well would be grades of C or better), you'd need to take some time off and come back when you're better able to focus on school.

Or maybe we should just do this for every student.  We don't let people take out mortgages if they can't make the monthly payments.  Maybe it's time to be more proactive when it comes to student loans.  As a taxpayer who is funding these loans, I want to set students up for success, and intervene if we have evidence that the money isn't being put to good use--and intervene before struggling students have been able to take out tens of thousands of dollars of loans.