Although once perceived as a ticket to a successful future and to financial security, a four-year university degree in America has become a ticket to years of debt slavery. Approximately 37 million American students are holding an estimated $867 million to $1 trillion in unresolved educational debt according to statistics compiled by the Federal Reserve Bank of New York.
Disturbingly, however, in 2012, for the first time, the majority of people who were unemployed were also college educated. The U.S. Congress reached an agreement to continue federal subsidies for these loans at 3.4 percent on June 26, 2012, preventing an interest hike to 6.8 percent. The majority of students who responded to a Yahoo News call for commentary, however, described their education as a burden and saw few avenues to resolve its effect on their lives.
Indebted Graduates Tell Loan Horror Stories
Tanya Carter, a 2008 graduate of the University of Toledo, drew on all the federal loans she could access and used private loan funding to finish her degree. She now says the decision ruined her life. She does not believe she will ever have the financial stability to marry and have a family, much less buy a home or even a car.
Fordham University graduate Lauren Dollard was more frank in her description of deferred life plans due to a $157,000 student loan debt. “My boyfriend won’t marry me because of my debt,” she told Yahoo. “He doesn’t want it attached to his name.” While Dollard added that his reasoning “could also be an excuse,” she said she’d trade her education “in a heartbeat” to live “as an independent adult.”
Private Loans Complicate Educational Debt Pain
Sentiments like these are common among hard-pressed graduates, especially those who have a mix of both federal and private loans. While federal loans have mechanisms to tie payment levels to existing income, and some venues for loan consolidation and forgiveness, there are almost no “outs” with private loans, and educational debt cannot be erased by bankruptcy.
A recent report by the Consumer Financial Protection Bureau cited borrower ignorance as a contributing factor to what many analysts call the impending student loan “bubble.” Salvatore Aiello, a 2009 University of South Carolina graduate told Yahoo that he does blame his own ignorance for his $68,000 debt.
“My high school did a terrible job explaining our options when it came to financial aid,” he said. “They made it seem that if I wasn’t rich or beyond poverty I would not be able to go to college.” Others, like Logan Canale, a 2009 graduate of Queens University in Charlotte, N.C. see no value in their education.
“My private college was way too expensive for what it was worth,” wrote Canale. “I just feel like I have been beaten by the system and taken advantage of. Who is making money off my education? Because it’s not me.”
Educational Debt Effects Parents’ Retirement
As an added complication to the educational debt crisis, many parents have felt compelled to cosign private loans for their children. In the recession, many of these same people saw their 401k and other retirement savings wiped out. They, too, are now increasingly enslaved to a burden of educational debt that will imperil the safety of their retirement.
Given the sluggish nature of the American economic recovering, the ongoing and contentious debate in the nation about escalating healthcare costs, and continued high unemployment, many young people are making the decision to skip college altogether. What this portends for the future talent and potential of the American workforce is frightening, but the truth is painfully clear. As it stands today, a college education in the U.S. is far more akin to a nightmare than the dream of a lifetime.