Indentured Student, or, We're gonna get you $allie Mae!!!, or, the Iceberg Tip of the Economics of Class at Wesleyan

(image credit)

Part I: Student Debt

As I am a college senior who is about to graduate, thoughts of post-college life float through my brain every so often, and one thing that is always there is my monthly student debt payment. I’m going to be graduating in May with about $18,000 in debt. Where do I fit in?

According to the National Project on Student Debt, in 2008, 72% of graduating college students at private non-profits (such as Wesleyan) were in debt—the average graduate owing $27, 650. The numbers for public schools are only slightly lower. AKA: It is the norm for college students to owe a nice, new, fully paid for car to either the Federal Treasury or a private loan corporation before even their first day as a full-time working adult (if they aren’t one already).

In 2008, 2/3^rds of all college graduates in the United States—1.4 million people--had debt, owing an average of $23,200 each. According to my calculations, that’s $32.5 billion total, and that’s just one year of college graduates. (Anyone ’08?) Imagine if we all decided to suddenly stop paying…? That’s where “community organizing” comes in. But I escape myself.

Here’s a bit of a framework I’ve learned recently to put the student loan/debt situation in context, and why it is an important part of the political and social movements of our day:

The media made us well aware that skyrocketing housing costs (what economists like to call a “bubble”) and inability of a critical mass of people to make their mortgage payments led the great economists of our time to realize that most of the money in our system isn’t actually real and that our entire economic machinery is dependent on everyone being in increasing levels of debt. (Take breath.) Yet it turns out that the crisis in the “housing market” was not unlike the crisis in the “student loan market,” though the latter got much less attention. Predatory, subprime loans? Let’s talk about the student loan industry!

(it's unsourced, but a helpful visual)

The cost of higher education has risen more than any other commodity in recent decades. According to Liza Featherstone, its inflation has been twice that of medical rates! Damn. This neoliberal era of tuition increase (like inflation overall) has been paid for not by rising wages--which have stagnated for most people since the 1970's--but by debt financing.

Tuition at private four year colleges has risen by 543% since 1980--from $5,600 to $30,400 per year! (And that's not even including room and board fees, which, at places like Wesleyan, are highly inflated and mandatory.) Household income has either stagnated or barely increased, depending on whom who ask. "Who makes up that difference?" asks Christine Kelly. "The student loan industry. That's why they're laughing all the way to the bank." While ever increasing tuition means either financial hardship or saying goodbye to a college education for most, it has meant nothing other than a killing for private loan corporations. (See here for some aesthetically pleasing Sally Mae hating.) While the (still highly profitable) federally guaranteed loans, such as the Stafford and Perkins loans, have interest rates at about 4-6% (which is quite good from a borrowers point of view), private loans can carry interest rates as high as 25%!! That's bad like credit card bad!

Furthermore, student loans are the only form of debt that CANNOT be discharged when declaring bankruptcy! This is just too good, right? When you declare bankruptcy on other types of debt (credit card, mortgage, etc) you can get some type of fresh start, though I'm sure it kills your credit ratings (You can check this hella confusing Wikipedia page about bankruptcy law if you really have free time). But according to StudentLoanJustice.org, a law was passed under President Clinton made college students one of the most lucrative exploits for modern lending corporations. Because of this, student loan companies have a profit incentive to make you F-up your payments or default on your loan because then they can peg you with fees while prohibiting you from refinancing, not to mention garnish your wages, social security, or sue you and force you to pay the court and lawyer fees. I mean like damnnnn! And this high school lesson planning website said indentured servants only lived between 1600 and 1700. Psht! Read student loan "victims" stories here.

Not only is Sallie Mae accused of racial discrimination in lending, they, along with the rest of their industry, disproportionately burden people of color. Hing at RaceWire writes,

"39 percent of undergrads graduate with unmanageable levels of debt, defined as monthly loan payment that exceeds 8 percent of their income. But 55 percent of Black students have unmanageable levels of student debt, and 58 percent of Latino students leave college with unmanageable debt. And because it's illegal to refinance private loans, many students get locked into their loans with exorbitant interest rates. In this economy, with so many other pressing bills to pay and so few jobs to be had, defaulting on student loans is not unheard of. Black and Latino graduates end up defaulting on their loans at five and two times the rate, respectively, of white students."

Because of these realities, it's projected that "3.2 million qualified students will pass up the opportunity to go to college" in the next ten years, and that doesn't include students who take alternating semesters off to work or make other types of sacrifices. Furthermore, Julianne Hing writes that "sixty-nine percent of Black students who don't graduate say they left because of high student loan debt, compared to 43 percent of white students."

It is time to stop this madness! What to do, what to do? Well, Alan Michael Collinge has written a book called The Student Loan Scam: The Most Oppressive Debt in U.S. History - and How We Can Fight Back. We could go read that. That sounds like a kinda good idea. Jesse Jackson has started a website called ReduceTheRate.org. We could go sign his petition to reduce all student loan interest rates to 1% (which is what banks pay when borrowing from each other or from the Federal Reserve.) The demands can definitely go much farther, but this would still be an awesome success if it came to fruition. We could eager wait for the release--and then watch and distribute--the new film called "Default: The Student Loan Documentary." The trailer seems a bit heavy on the white people (in the 100% kind of way--c'mon people) but perhaps it will get some points across. And a social movement? Do we still have those, or are those only virtual now?

Some minor political success have already occurred.

At the end of his term, President Bush (after assaulting regulations on student loan industry, the affects of which are only beginning to be felt) signed the College Cost Reduction Act, which allows income-based student loan payments--which limits the amount you pay as a percentage of your income and cancels all payments after 25 years--as well as some debt cancellation if you participate in some approved "public service" opportunities. That's cool. In the HEALTHCARE BILL President Obama recently signed, more student loan reform, known as the Student Aid and Financial Responsibility Act (SAFRA), was sneaked in. SAFRA includes increased Pell grant availability (federal financial aid grants) made possible by having the federal government directly lend what were previously federally-guaranteed private loans (Stafford, Perkins, etc.) That's also cool. It eliminates a lot of would-be unmanageable debt for millions of people. But this still doesn't address a fundamental restructuring of higher education accessibility. Pell grants remain well below their 1990 levels. College continues to require a "dizzying" amount of start-up capital. And Christine Kelly points out that governments (um, California?) continue to rely on the public's willingness to accept tuition increases" while they cut funding for higher education. Where's the legislation that doesn't just make student loans radically cheaper (no interest, for example) but makes college radically cheaper, which can (inadequately) be done through more grant-based aid, but most powerfully and practically be done through lowering tuition until it's....$0?

(Yo, CUNY was free up until 1976!)

How can we also locate this within a larger call for "an economic bill of rights for young Americans," as articulated by Christine Kelly. Where are college students located in our generation? Supposedly, 1/3 of (documented) 18 to 24 year-olds are enrolled in higher education, with 80% in public schools and 20% in private schools. The other 2/3 are largely in low-paying service sector jobs, the military, or prison. How would college access/student debt fit into a larger politics of economic rights for young people? How can alliances be built across the boundaries of these socioeconomic structures?

(photo via RaceWire via C. Elle)

Part II: Wesleyan

These are thoughts I might explore as a final paper for my anthropology class, "Critical Perspectives of the State." Most of the politics surrounding college access centers on the public school system because that's where most college students attend college, but I am also interested in a Wesleyan-specific context, for at private schools, debt and financial problems are especially private, individualized issues. Also, rich private schools like Wesleyan are traditionally more elitist, but, then again, have a pretty strong capacity to offer really solid grant-based financial aid. How does this fit into college access and class structure in the neoliberal era?

The short answer is that rich schools like Wesleyan are the exception--the exception that proves the rule, or perhaps, the candy that distracts the masses (or some Marxist shit* like that.) Yes, it is one of the few schools to have a large enough endowment to offer ridiculous amounts of financial aid. This school year it's supposedly paying $38 million to 44% of the student body at an average of $31,800 each. That's the free candy I'm talking about, and that's why it's proudly displayed on the Wesleyan website. I myself have received a fair amount of this free money from Wesleyan over my fours years here, so I'm not complaining. (Though I will say that when I wrote a University Relations-supplied thank you card and filled out a form about my interests and future plans so that my GREAT BENEFICENT SCHOLARSHIP DONOR could get to know me, they never returned my request of them--filled out in the "further comments" section of the form--to tell me a little bit about their-self.)

But this free money/free candy business is problematic in a couple of ways. First, we have the "middle class squeeze" (a situation I am interested in exploring further, once I get over the fact that the very phrase kinda implies that "the middle class" has it harder than "the poor"). In the neoliberal era of gifts rather than entitlements, grant aid is inherently scarce; it will only ever cover a small percentage of everyone who needs it. Wesleyan's grant aid, for example, is great, but to actually get it you have to be able to get into Wesleyan (which is becoming increasingly harder) and also financially qualify for it. Wesleyan students' families overall are still paying ridiculously huge amounts of money. According to the Wesleyan statistics above, 56% of the student body are paying full tuition at what is now $54,000 per year. (!!!!!!) And the other 44% are still paying an average of $22,300 per year. (!!!!!) Um, that second figure is still a shit ton. Time to take out those loans--or can that many families really afford it? This is where I wish Wesleyan published more stats. (For example, how many Wesleyan students are paying less than they would have at a public school in their home state?) The point remains that financial aid systems at rich schools are great for those who it really helps, but let's not let that mask increasingly unaffordable college expenses all over higher education for the vast majority of both the working and middle classes.

[[THOUGHTS: How true is this "increasing affordability" in a Wesleyan-specific context? I'd like to know more about this. What kind of sacrifices are families making to afford here? How many families have little or no trouble paying Wesleyan tuition? I also want to note that in this post I'm not even engaging with the culture shock and lack of institutional support that students from lower class backgrounds experience when being immersed in such a moneyed student body and college environment.]]

[[THOUGHTS: This nifty website, CollegeInsight.org, says that only 6% of Wesleyan students have family incomes under $30,000/year, and only 17% have family incomes below $60,000/year. (Where is this info from????) AKA It SUPER not representative of income demographics in the United States. Of course, this is nothing shocking, but it does beg the question: Is Wesleyan becoming less class diverse? A somewhat recent alum thought that perhaps this is true. Yes, Questbridge is touted for partnering with Wesleyan to give a full ride to 13 "high achieving, low income" admits in the incoming class and Wesleyan is set to increase it's financial aid by 11%, but this also acts to legitimize tuition increase, as it's expected to "inflate" by another 5% for next year. As Liza Featherstone writes, "at many schools the prevalence of financial aid artificially inflates tuition, undermining the aid sources in the long run." And this is not to mention other trends, such as hidden costs continuing to rise, Wesleyan getting more competitive, increasing financial hardships for families, and the ever present specter of the "corporatization" of the university. How do President Roth's (very welcome) financial aid initiatives fit into a larger narrative?]]

Furthermore, the idea of "free money" is only a construct that can make sense in a neoliberal context. (Which is why I'm a bit...um...impertinent when speaking about writing a thank you note to the donor who "made my education possible.") This free money is only a gift once we accept the exorbitant costs of a college education--and the extreme inequality in our society--as normal. If we frame college costs as an injustice and college education as a right and entitlement to all residents of this soil, then an affordable (free?) college education is everyone's birthright. Let's try to change our reality until that is normal.

Christine Kelly reminds us that the social-economic rupture at the current moment is an opportunity to push through a new social compact on the question of higher education. If that doesn’t occur, she warns, banks and corporations will continue to control the situation for many years to come...

So don't let that happen, okay!

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This post was largely inspired by and drawn from a talk given by Christine Kelly and Liza Featherstone (who has a really good article about all of this in the Nation) at the Young Democratic Socialists conference in NYC a couple of weeks ago.

If you feel like it, leave those comment$$$$$$$$$$$$$$$$$$$$$$$$$$. Or send me an email (lguilkey@wesleyan.edu). Whether you're on financial aid or not, everyone's affected in some way. If I write a final paper on this stuff, does anyone wanna dialogue with me about their own thoughts/perspectives on the whole situation, especially at Wesleyan, which I am still obviously trying to wrap my mind around.

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"We are in danger of producing an educated proletariat. That's dynamite! We have to be selective on who we allow to go through higher education."

--Roger Freeman, a key educational adviser to Nixon then working for the reelection of California Governor Ronald
Reagan, 1970