Why is Student-Loan Debt So Misunderstood?

Did you know the student-loan debt crisis affects more than 43 million Americans, and together they owe a total of $1.9 trillion in federal and private student-loan debt?  It’s difficult to comprehend how large a sum of money this is. In 2018, Ryan Suppe, a USA Today columnist, put it this way: You can think of a trillion dollars as a million million. He went on to say, “For $1 million you could buy a very nice one-bedroom apartment in San Francisco. With $1 trillion, you could buy a very nice apartment for everybody in the city (San Francisco’s population is close to a million).” Suppe’s visualization is only 1 trillion (not 1.9 trillion)!

Another way to think about these numbers is to put them in the context of the COVID-19 pandemic.  At the time of this writing, about 86 million Americans have been diagnosed with COVID-19, so the “student debt pandemic” could be said to be affecting half as many citizens as have experienced COVID.  Unfortunately, since exposure to student debt is a lasting problem, the analogy to long COVID is probably better. Estimates of the number of Americans suffering from long COVID range from 7.7 million to 23 million, well less than half the number dealing with debilitating student debt.

The student-debt crisis is so misunderstood, which is one reason I have labeled it a “wicked problem” in my latest book, “Student Loan Debt as a Wicked Problem: Moving from Pessimism to Possibility and Hell to Hope.” It’s a national problem that involves complicated and competing features that make it entirely too difficult to understand. How can society solve problems it doesn’t fully understand? I would answer, it cannot.

Many in the United States falsely say it is students themselves who are to blame for becoming indebted. The true culprit for why so many collegians have become ensnared in the student debt trap is the cost of college, which has risen faster than inflation over the past two generations. Older individuals who say because they paid for their college education, this younger generation ought to do the same, misunderstand how the current costs for attending college are not in the same ball park as the costs they paid just a generation ago. In my 2018 book, “The Neoliberal Agenda and the Student Debt Crisis in U.S. Higher Education,” I pointed out that a generation ago, students commonly saved for tuition by working summer jobs. But the cost of college now makes that impossible. A student working full-time at the federal minimum wage would earn $15,080 annually before taxes. That isn’t enough to pay tuition for even a semester at many colleges, much less room, board and other expenses.

In today’s reality, “traditional” (full-time, 18-to-22-year-old) college students can work during the summer, but it won’t be enough money to finance their college education. It is because of the current inescapable reality that many college students must seek other funding sources for their education. Some choose to work typically between 15 to 40 hours per week while they are in school. Others rely on student loans to pay for their education—and many have to do both.

The need to use student loans to fund higher education has negatively impacted this generation. When an entire generation is impacted, there are important ripple effects. The debt burden not only impacts that generation, limiting their employment options and slowing their financial progress, but it also impacts future generations. A family will have a hard time saving up for college costs for their children if mom and dad are still paying off their loans. Ultimately, we are all affected.

In the United States, higher education has been treated as a privilege. Students and their families must finance their own education, and colleges and universities are, unfortunately, too costly for many to fund through their own resources.

As a subject-matter expert, I write books and articles and produce YouTube videos on student-loan debt. I get frequent responses from the general public. These correspondents may lack my research background, but that does not stop them from writing to me and telling me I have it all wrong. They say I am the one who misunderstands the student-loan debt problem. They tell me they don’t have student debt or that they paid off theirs, so why should others’ debt be forgiven?

What should we be doing about this $1.9 trillion dollar student-debt crisis? It probably won’t go away by itself.

Did you know there are many colleges and universities that could spend their endowments in ways that make access greater but choose to do otherwise? In 2013, there were 138 institutions, mostly private, that each had more than $500 million in endowment assets, and these institutions—roughly 3.6 percent of all colleges and universities—held 75 percent of all postsecondary endowment wealth. If you are reading this magazine, you probably know that Berea College is one of these 138 wealthy institutions.

Of these 138 institutions having more than $500 million in endowment assets, Berea College is the only one that focuses nearly all its opportunity on poor students. The percentage of Pell Grant recipients among first-year students in fall 2021 for Berea College was 96 percent. The closest college or university to Berea was Howard University, a historically Black institution, which admitted 46.9 percent.

The rapid increase in costs associated with attending postsecondary education in the United States is responsible for why many students have become indebted by student loans, the very same tools that allow them to access the college classroom. Wealthy institutions could spend their money in ways that make access more equitable, but they choose to cater to the affluent. This is sad, and why I am proud to work at Berea College, the first co-educational and interracial college in the South. Arm yourself with knowledge—knowledge is the key; the lock is moral outrage. Until our country becomes morally outraged, we will not address this problem, and another generation will be lost due to the pandemic of student debt.