During an official trip to Nevada late last week, President Obama addressed the issue of college loan affordability. His remarks are the latest installment in a debate that has gathered momentum with the news that student-loan debt has surpassed credit-card debt. Undoubtedly, there are those who argue that such indebtedness as an investment, and therefore, good.
“When you think about what’s good debt and what’s bad debt, student loans fall into the realm of good debt, like mortgages,” says Professor of education and public policy Susan Dynarski “It’s an investment that pays off over the whole life cycle.”
It is this benign perception of college debt that has led to bi-partisan support for maintaining a 3.4 percent interest rate on government subsidized Stafford loans for students. The rate was lowered from 6.8 five years ago, and is expected to return to that rate on July 1. While both parties support the lower rate, they disagree on how to finance the lower interest rate.
While it’s politically difficult to argue for higher interest rates for college students, there are those who can make a compelling (economic) argument that “market distortions by the federal government have created this latest bubble,” meaning student-loan debt is just as dangerous of a problem as the credit bubble.
Basically, while some manageable student loan debt is innocuous and perhaps even beneficial, cheap government loans, rising tuition costs, and lack of borrower foresight have led to unmanageable, even crippling debt.
Put in succinct terms: When you owe $75,000, the difference between good debt and bad debt goes out the window.
The problem, it appears, is more acute for minority students, who, with fewer resources, must incur more debt and who, oftentimes lacking professional connections and industry access, are less likely to be hired after graduating.
Despite its financial sobriety, I believe the economic argument for the dangers of college indebtedness is unfair to minority students, even if they are at greater risk for unmanageable debt.
What often seems to escape those who would reproach students who take on borderline irresponsible amounts of debt is that some students face different stakes. Oftentimes a cost-benefit analysis that examines both the cost of a degree and the likely earning derived from that degree is not obvious, or even objective.
Not all costs can be quantified and analyzed against potential earnings.
For some of us, a college degree did not just represent a paycheck. It represented an opportunity to understand why the world worked how it did. It represented a map of society and a “you are here” arrow. Neither of these life tools are part of the equation for students who have already obtained them from their families, mentors, or peers.
Without a college education, many minority students may never be exposed to these perspectives. Many will continue to live day by day, waiting for, rather than pursuing opportunities. Education is not just about a career.
Whereas some of us can characterize our childhood as a precarious stability sustained by overworked parents in the face of seemingly arbitrary events, a college degree represents a measure of understanding, of control, of self-determination. And maybe massive indebtedness is worth the ability to make meaningful decision in your life, not just reacting to consequences of decisions made the better off.
But maybe some concrete scenarios can help get my point across.
Scenario one. You are the Caucasian male son of college educated parents who don’t roll in it, but can afford occasional leisure and moderate luxury. Your father has warned you that certain majors are more lucrative than others. A philosophy major himself, he regrets not having pursued a degree in engineering, though he has found fulfillment in his career.
Your mother explains to you that you don’t have to apply to, or attend the most expensive university to gain a great education. Her co-worker has some contacts with a marketing firm. A communications degree tickles your fancy. Internship opportunities are likely. You still need the seal of approval from an accredited university though, now it’s just a matter of finding the most efficient (most cost-effective) way of obtaining that degree.
You think in terms of cost effectiveness, career path, you research mean salaries for marketing consultants in the geographic area you intend to live in. Why would you want to burden your post-graduation pursuits with any unnecessary debt?
You are the daughter of first-generation immigrants to the United States. It’s been several years since your parents took a single day of vacation, but that’s typical for people with limited formal education and sparse English skills. In the few hours you actually get to interact with your folks they remind you (for the umpteenth time), that if you want to escape their fate, if you want to work with your mind rather than with your hands, that if you want vacations, and things, and respect and fulfillment, you better hit those books like your life depended on it. Because it does.
So you do. You have no idea how to apply to college, what you do in college, what kind of work you would like to do, or where you would like to live. All you know is that your golden ticket out of a life that seems dead ended comes in the form of an acceptance letter. You do all those impressive things students do when they are betting it all on academic success: Impressive enough to catch the attention of a couple of universities.
You can afford neither, but the most unaffordable school has one of those names even your parents have heard about. You find yourself dreaming. Either choice will require decades of indebtedness, but only one of them will fill you with a sense of unfathomable accomplishment when as you are writing those repayment checks.
Yes. You have suddenly accepted to bear a financial burden for the rest of your life. Big deal. You have also, in a single generation, changed the course of your family history. You will bring justice to your parents, who sacrificed decades of their own lives to detach you from the circumstances of your birth.
You will be able to provide your children with a life based on objectives not improvisation. But more importantly, you will give them a fair chance at life, and an excellent example of dreaming big.
Cost-benefit analysis be damned. For many minority students, a college degree is not a job requirement; it’s the culmination of sacrifice, and a chance to take control of their future. A college education at an excellent (read expensive) school does not merely provide employable skills, it cultivates intellectual pursuits, social awareness, strategic and critical thinking, a network of outstanding individuals, access to career opportunities, and, something that people who spend their entire lives struggling for opportunities value immensely, a sense of pride and accomplishment.
If, to you, college represents a requirement to be fulfilled on your career path then, by all means, minimize the cost. If, on the other hand, all you’ve ever had going for you is some smarts, and a shot at a fancy school, maybe an extra decade of payments, in the larger scheme of things, is meaningless.
Call me financially irresponsible, but maybe debt is worth it if the American Dream is at stake.
If you want to help minorities afford college, instead of assailing us with a litany of “curb your enthusiasm,” “moderate your expectations,” “understand your finances,” borderline patronizing arguments, help us advocate for more affordable federal aid.
I’ll let you in on a little secret:
Many of us first generation, minority college students understand the stakes perfectly, many of us will refuse to curb our expectations, and you know what? Many of us have already lived our entire lives with financial burdens that would reduce monthly college indebtedness payments to the realm of inconvenience.
So, what exactly do we have to lose?