Wednesday, October 26, 2011

Unregulated Consumerism and the Student Loan Mess


Among the issues raised by the Occupy protesters, towering student loan debt has recently been scrutinized. The matter is not a simplistic one. One first has to take into account how and why a four-year college education has considerably spiked in cost over time. One answer is that colleges and universities have consistently become more bureaucratic, adding specialized occupations and positions within individual departments. Many make 100K a year and have minimal responsibilities. They are often deadweight and redundant, but persist regardless. Colleges then cut cost through adjunct labor, whereby part-time instructors, usually in the process of attaining master’s degrees or doctorates, are paid less than minimum wage to teach students.

In terms of dollars and cents alone, the students these adjuncts teach have forked out enough more than enough money to pay a part-time instructor a reasonable salary. But this simply isn’t how the money is allocated. Colleges and universities often are more concerned with maintaining winning sports programs, most often the high-revenue producing men’s athletics like football or basketball. Following that in priority is a desire to build new facilities and grounds, often as a way of attracting new students, presumptive scholars, and research grant dollars. Grants subsidize many departments and programs, especially for public colleges and universities who do not have state funds otherwise available to fill the need. Outsides are often more important than insides. A newly designed student center has negligible appeal or even relevance to the classroom, but with so much competition for student dollars, institutions have embraced consumerism.

The presence of all these elements means that cost is regularly dumped onto students. A few students qualify for a full scholarship, but most do not. Some attain partial scholarships, though they must find ways to fund the rest of their expenses. The increased cost of higher education, of which the charge for courses is only one factor, quickly drains the college funds of many a parent. One must also factor in such essentials as the jaw-dropping cost of each term’s textbooks, a mandatory meal plan, and housing, be it a dorm or an off-campus apartment. Living at home is increasingly an option, but it is sometimes one simply not available. Some colleges charge exorbitant fees for student services, like dorms, and resourceful students regularly pool their money to live more cheaply off campus. Except for children of privilege or the very lucky, taking out student loans is often a necessity.

Those students fortunate enough to be accepted and enroll into an elite school can see their debt reach truly epic proportions. And until recently, no thought was given to predatory loan practices. Few schools gave their students basic loan counseling, which isn’t just irresponsible, it’s also extremely unfair. Eighteen-year-olds who have just left their parents’ house often have no clue about finance and the concept of borrowed money. For a time, one could borrow up a certain amount directly from the US government. These funds never accrued interest. Also available alongside were other sources of credit, though these began to build interest within nine months of graduation or leaving school. It is this debt that has proven the most problematic of all, especially if loans payments have to be deferred for financial hardship. The monthly payments may cease, but the compound interest does not.

In time, the amount borrowed can be overshadowed by the amount now due. Should $9,000 be borrowed at first, the amount to be repaid can quickly jump several thousand dollars to $14,000. Let the buyer beware is only a valid warning if one can safely assume the buyer is well-informed. Should this not be the case, then students should not be faulted for concluding their undergraduate career with several thousand dollars to be paid back. This debt will follow them over the course of many years and even declaring bankruptcy will not wipe them away. Complicating the problem is today’s topsy-turvy, frustrating job climate. Desperate to find employment, and hoping to re-tool to attain a job eventually, many people are re-enrolling in grad school. Tuition and books must be paid, at minimum, so new student loans must be taken out. This adds even more debt on top of the hefty sum left over from an undergraduate career. And even then, there is still no guarantee that a job will even be out there with so many other people looking.

Fixing the issue requires us to confront ourselves as Americans. Our values have been predicated upon profit and how we appear on the outside. We are beholden to foolish consistency and lazy methods to solve complicated problems. Money will always be important, but it can never be the sole measurement upon which we base our reliance. These days, how much we spend has become such an abstraction that we do not seriously contemplate it. Plastic cards automatically subtract money from checking accounts and bills are paid online without the need for paper money and coins. It is easy to be lulled into a false sense of security, but when we are rudely shaken awake, we recognize again why things have to change. Consumerism unchallenged explains how we got here, but now it’s time for a different strategy.

1 comment:

Chris Ryder said...

I gave up trying to understand the BCS system a long time ago. The fact is that it remains a popularity contest rather than a true reflection of performance.

What the programs mean to individual schools are way beyond my pay grade. One thing is obvious to me, though. It is all about money. Question is, who can benefit with an education in the process?

Post-season, I just get tickets to the bowl game that's convenient, and relax about it. This year I got Belk Bowl tickets. I'll have fun and fewer headaches that way.