Schroder: Students not alone on loans

Why are student loan default rates at a 20-year high?


payneschroederOne of the hardest things for me to grapple with after learning that I would not be graduating in the spring semester of my senior year is the fact that I will have to take out more loans. My first three years at the university cost me about $35,000 of personal debt, not to mention what I had to borrow from the federal government.

The only comfort I have is in knowing I won’t be leaping into the spiraling dark abyss that is the job market alone. According to the Department of Education, the student loan default rate has reached an all-time high, with one in 10 borrowers having defaulted within their first two years of repayment.

According to an article in Time by Joel Stein entitled “Millenials: The Me Me Me Generation,” my fellow student borrowers and I brought this on ourselves.

“I am about to do what old people have done throughout history: call those younger than me lazy, entitled, selfish and shallow,” Stein said. “But I have studies! I have statistics! I have quotes from respected academics!”

Stein cited statistics from the National Institutes of Health, a report by the National Study of Youth and Religion, a professor from Emory University and the CEO of Vice. Their consensus is the following: We are a generation of entitled young people who had everything given to us. We spend way too much time watching reality TV on our parents’ couches and using social media. We’re lazy, so our expectations for a self-fulfilling job are delusional and irrational.

The problem with this assessment of our generation — which I, as a full-time student with a 3.8 GPA who interns and works on and off campus, find incredibly insulting — is that it ignores the changes of the county’s economic landscape since the heyday of the baby boomers.

“I think what is maybe the elephant in the room here is the economic collapse of 2008 and 2009, which has understandably made it more difficult for young Americans to pay back their loans,” James Rogers, a political science professor at Temple, said.

Rogers, whose research concerns public policy and has discussed the student loan phenomenon in his classes, said the last 10 to 15 years have seen a substantial rise in the price of higher education as state funding for it has decreased. Thus, more students borrow and in larger amounts, increasing the likelihood of default.

Virginia Commonwealth University’s School of Mass Communications reported in 2011 that the average undergraduate student exits college with about $25,000 in loan debt, while the typical Temple student graduates with $31,123 in debt. This may be because our university is what CBS Money Watch classified as a “high-debt public university,” because many Temple students aren’t graduating in four years.

However, Joe Schwartz, a political philosophy professor at Temple and vice chair of the Democratic Socialists of America, said Temple’s four-year graduation rate has actually increased. Nevertheless, he said only around 40 percent of Owls will meet the four-year graduation date because they average 20 working hours a week or more, making it difficult to handle their course load.

Schwartz said the student default rate in 1995 was high because the labor market was still recovering from the 1990-91 recession, and from the Reagan years, which were the beginning of a decline in federal and state funding for higher education and subsequent tuition increases.

A key example of this paradigm, Schwartz said, was when Pennsylvania funded 75 percent of Temple’s operating costs in 1975. Today it’s only 17 percent, with 65 percent of Temple’s operating costs covered by our tuition.

“You don’t need a weatherman to know which way the wind blow,” Schwartz said in an email. “That’s what happens with [cuts] in taxes on corporations and the rich, with the massive increases in prison costs and in Medicaid … [it] leads to defunding of public higher education.”

In terms of potential alleviations, Rogers said the series of changes in student loan programs have failed to deflate the student loan balloon. Measures have been punitive in nature, and there has been no genuine attempt to increase funding for higher education.

Schwartz said President Obama’s student loan income-based repayment plan only covers federal loans since 2007, which are only 40 percent of total student loans. Like Rogers, he said he believes funding for higher education must increase, but that it also must be asserted as just as much of a right as free K-12 public education.

To insinuate that Generation Y is to blame for its precarious post-graduation situation ignores the larger political and socioeconomic picture. We were caught in the wake of a global financial crisis caused by the same neoliberal policies that defunded education in order to subsidize the 1 percent. Students must indebt themselves in order to achieve a level of education that is now required for even low-paying work.

The the government funding of higher education must increase at both the state and federal level, and President Obama’s short-term solution of an income-based repayment option doesn’t go far enough. Washington must reaffirm the value of an educated citizenry, and students must assert our right to an accessible higher education, which is more necessary than ever for the pursuit of happiness.

 E. Payne Schroeder can be reached at

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