Thinking About Student Loans

As I watch a couple of congresswomen pushing for student loan forgiveness – one owes “over $70,000” and complains about it being “mostly interest”, while the other owes $17,000 and wants her loans forgiven.  Congresscritters are paid $174,000 annually.  Now I don’t have any experience at being paid $174,000 per year.  Despite that lack of experience, I’m pretty sure I could live frugally on a mere $100,000 each year until I had paid off my own loans.  I may be wrong – but the evidence I have makes me believe that I could.

I’ve had a career in the academy, and financial aid has always been on the fringes of my world, beginning with the first competitive scholarship.  I can make a pretty good argument that the Basic Educational Opportunity Grants (renamed Pell Grants in 1980) and the Guaranteed Student Loans have driven the increased costs of tuition and fees – heck, even dormitories – in the past 50 years.  As I recall, my first year of college saw $1304 go through my checkbook – tuition, books, dorm, pizzas – total cost.  At 18, I was paid $2.50/hour for a summer job – $100/week for 12 weeks.  It could be done.  You can dig out your own college cost estimates – the universities all have them – and contrast them with 12 weeks pay.  College costs have increased far faster than wages.  It isn’t easy – but signature loans are available.

A few years back, I was assigned an advisee who was hanging in with a 1 point something GPA on probation.  Lacked any academic strengths, but explained that she needed to be enrolled to keep the student loan that was paying the rent on the apartment she shared with her boyfriend.  Earlier that week I had listened to a new Ph.D. telling how her student loans – a bit over $40,000 were her boyfriend’s reason for not marrying her.  The Guaranteed Student Loan had become a bride price he was unwilling to pay.  She was employable.  My new advisee was not nearly as employable as she had been the day she graduated high school. After two years of college, she had added transcripts with a D average to her resume.  I’m pretty sure she flipped me off with both hands as she walked down the hall after I suggested she evaluate things and come back later.

Glancing at UM’s page on the costs for an undergrad, I see $22,258 per year.  Tuition and fees are $7,412 for Montana resident students.  If we figure 16 credits per semester, 32 credits per year, that amounts to about $230 per credit.  College is not an inexpensive place to find yourself.

I’ve known students who graduated from a land-grant who had $140,000 in student debt.  Unusual, yes – but Congresswoman Tlaib talked about graduating with almost $200,000 in student debt. I’m used to students getting by on the cheap – but the world has changed.  It’s easy to have a Bachelor’s diploma that includes half the cost of a house purchase as existing debt.

As a demographer, I’m kind of used to working with numbers about jobs.  There are unyielding equations – one is that it takes a population of about 30,000 to provide a job for one Ph.D.  sociologist.  There’s roughly one position in Congress for every 750,000 people – it does give perspective.  Those simple numbers should be available to anyone who is enrolling in college.  The principle of compound interest should be a required class.  I recall another student – bright woman who had started school in her 40’s.  She was ABD – all but dissertation.  At 52.  When we worked the math on her student loans the unyielding equations said that she would not be able to make more than minimum payments.  When we looked at the life expectancy charts, she could anticipate her funeral before the debt was paid off.  And it is a lot easier to get a student loan than a car loan or home loan.

A table from shows 1.71 trillion dollars total in student loans.  Loans owed to the government are:

Direct Loans$1.32 Trillion35.9 Million Borrowers
FFEL Loans$245.9 billion11.0 million borrowers
Perkins Loans$5.2 billion1.7 million borrowers
Total (All Federal)$1.57 trillion42.9 million borrowers

I can still (barely) handle the math.  My calculator can’t handle all the zeroes.  A trillion is a thousand billion.  A billion is a thousand million.  Just for the record, there are a few less than 330 million people living in the United states.  Basically one out of eight Americans has student loan obligations.  Go ahead.  Work the math.

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