A couple of days ago, Beckie Supiano wrote an article for Chronicle of Higher Education, entitled “What Does $1-Trillion in Student Debt
Really Mean? Maybe Not That Much,” which suggested that the nation's
massive student-loan debt is no big deal. Some of the people cited in
Supiano’s article apparently believe that student-loan indebtedness is
fundamentally different from the home-mortgage crisis because education, unlike
a mortgaged home, has intrinsic value that does not diminish over time.
For example, Anthony P. Carnevale, director of Georgetown University's
Center on Education and the Workforce, described student-loan debt as
"good debt". In fact, Carnevale maintained, “This is exactly the kind
of debt a society wants.”
Mr. Carnevale’s perspective on student loans would be correct if all
students received good value when they borrowed money to obtain a college
education. But, as everyone knows, millions of people have borrowed money to
pursue post-secondary education and did not see their lives improve in any
meaningful way. A person who borrows $100,000 to obtain a degree in
religious studies, winds up working as a waitress, and defaults on her student
loans does not have the kind of debt society wants. That kind of debt is not “good
debt”.
Furthermore, contrary to some of the views expressed in the Supiano
article, the student-loan crisis is very similar to the home-mortgage crisis.
In fact, student loans have probably caused more human suffering than the
home-mortgage meltdown. People who own homes
worth less than their mortgages are certainly under stress. But at least these
people have roofs over their heads, and they own tangible assets. Furthermore, home-mortgage
holders who are financially unable to pay their monthly mortgage payments can
discharge their mortgages in bankruptcy.
In contrast, people who took out student loans to obtain a college
education did not obtain anything tangible except their diplomas, and many did not receive
the skills or training from their experience that would enable them to obtain good-paying
jobs or otherwise improve their lives. Many people who borrowed substantial amounts
of money to obtain degrees in such fields as art history, religious studies, sociology
and anthropology are in real financial trouble because they can’t find employment
that compensates them enough to pay off their student loans.
Furthermore, unlike homeowners who have unmanageable mortgages, most
overburdened student-loan debtors cannot discharge their loans in bankruptcy. Although they can obtain deferments on their
loan payments if they can show economic hardship, interest on their loans will
continue to accrue in most instances, increasing the size of their debt
In short, to suggest that the nation’s $1 trillion in accumulated
student-loan debt is not a serious problem shows a profound lack of
understanding about the tremendous suffering that millions of student-loan
debtors are experiencing. There are lots of things we can do to get the student-loan
crisis under control, but we should begin by providing meaningful relief to
overburdened student-loan debtors who have no reasonable prospect of ever
paying off their student loans.
References
Supiano, B. (2012, May 16). What Does $1-Trillion in
Student Debt Really Mean? Maybe Not That Much. Chronicle of Higher Education. http://chronicle.com/article/What-Does-1-Trillion-Mean-/131900/?key=TWwidAI8byUVbHBhYDpAbj4AaH0%2BMUp2YydBPX4rblpXGQ%3D%3D.
