Stan Geiger

The Student Loan Crisis

I watched an episode of 'Now' on PBS this evening. I believe it was an encore performance. The story focused in on what will probably be the next shoe to fall in our ongoing problems with credit in this country: student loans.

I was wondering when this story would break. I mean if people can't make mortgage payments, can't make car payments and have to turn to the government for food, they can't make student loan payments.

The show reported there are 70 million borrowers out there owing a combined $700 billion in student debt. Those are staggering numbers, but not unbelievable at all.

The story featured the mother of a young daughter, a young woman that made the mistake of buying into the scam of borrowing tons of money in an attempt to better her station in life.

She said she borrowed $50,000 in pursuit of both a bachelor's and a master's degree in social work. She got out of school and got a job. The report said her $1,000-a-month student loan payment ate a third of her monthly income.

This part of the story goes to a point I made in an earlier piece concerning cost-benefit analysis and the decision to seek higher education. The woman's master's-level education got her a job that paid $36k a year. In and of itself, that's not too impressive. But net of the loan payment, her income was $24k. A person can make more than that managing a Quik Trip.

The tragic tale, of course, got worse. She lost her job, and couldn't make payments at all. She says $20k in interest has now been added to her bill; she now owes $70k. She's also been evicted from her residence because, one month, she made a student loan payment instead of paying her rent and got too deep into the hole relative to her landlord.

Granted, that last part didn't seem like a bright move. But she owes three different types of loans to more than one lender. She owes the government directly; she owes government-backed private lenders; she owes purely-private lenders. Collectors were hounding and pounding. And she bit on some very bad advice given by one of them.

I've been making noise about the constant and ridiculous increases in the cost of seeking higher education---and the associated growing debt load directly tied to it---for 15 years. Most of that noise fell on deaf ears. Perhaps now that things have reached the crisis stage more people will be willing to listen.

The young woman in the story said she had always expected to live better than her parents, but she feels she has no hope of that now. At the end of the story, the host mentioned people had been invited to share their student loan horror stories online. He said the website received a "record response."

We have created an entire generation of Americans that is up to its butt in student debt. Many will never get out from under that pile. Bankruptcy doesn't work on student debt. The only two ways to clear a student loan are to pay it off or die.

The saddest part is, this has all been by design. Greedy educators have pushed and pushed and pushed the cost of going to college to the point where most can't afford it while greedy money lenders have been more than happy to step in and loan and loan and loan.

Well, you got what you wanted, douche bags. Where do we go from here?

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