The Moral Conundrum behind the Student Loan Process
October 14, 2012
The question of what to do about college student loans in the US has long been debated, even before things started getting really ugly for college grads. There’s more urgency in the debate since the US reached the sad milestone of accruing over $1 trillion dollars in debt from student loans—surpassing the among of collective credit card debt held by people in country.
Some analysts say that potential college students need to be more educated about the brass tacks of the lending process. The idea is that students might make smarter financial choices if they’re better informed about types of loans, interest rates, payment plans, private vs. federal funding, and so forth. A smart college freshman might avoid repaying a $60,000 loan if they knew more about what’s at stake, right?
Maybe so, but many people aren’t convinced. While a crash course in student loans could certainly benefit many college kids, it doesn’t seem like improper education is what’s to blame for the mess that millions of college grads find themselves in. Student loans are an inevitability for millions of students who lack the financial resources to pay their way through an institution whose tuition costs the equivalent of a luxury car every semester, not to mention living expenses. The logic behind the loan education argument seems to be that no one in their right mind would agree to build up so much debt for a college education, especially if they enter a field that offers not much in the way of salary.
But the fact of the matter is that millions of college students are taking out their loans knowing full well about the repercussions and what’s at stake. Students who take out student loans essentially sign away their financial freedoms, understanding that repaying the loans will be a top financial priority for many, many years after graduation.
These difficult but unavoidable realities have caused people to question the validity of the entire student loan system. Take for example the recent article in The Daily Beast written by NYU professor of sociology Andrew Ross in which the professor asks if student loans are an immoral exercise. The thrust of the article addresses the deep distress that college loans have caused for the most recent generations of college students. Ross equates student loans to a form of indentured servitude, whereby well-meaning and intelligent but financially unequipped youths are stripped of a promising future simply because they had the audacity to enroll in the college of their dreams.
The article is worth reading in full no matter where you fall on the issue. It accounts for dimensions of the student debt experience that deserve more attention: the fact that many students work multiple jobs in order to keep payments at bay; the uncomfortably imbalanced and predatory dynamic between banks and college students who accept loans from them; the morality of debt in general. Calling student loan debt immoral certainly doesn’t solve the problem, but it does help form a conversation about what to do to prevent such a financial crises from befalling future generations.
What is your take on the issue of student loan debt?
Patricia Garza writes on higher education issues and American domestic policy in general for www.oedb.org. Patricia is particularly interested in the changing dynamics of higher education with regards to online technologies. Feel free to send her any comments or questions you might have!