College and Homes are Only for Rich People

At least that is what the NY Times would have you believe if you read Ron Lieber’s piece “Placing the Blame as Students Fall Into Debt“. While the latter part of his article breaks down blame according to three parties:

  1. The student & the student’s family
  2. The Lender
  3. The University

The first half of the article draws parallels between seemingly clueless home buyers who the article implies may have lied about their incomes, “just like the mortgage lenders who didn’t ask borrowers to verify their incomes.”, and students who mortgaged their futures without anyway of predicting their actual incomes. In this version of the story, the borrowers are both ignorant and greedy.

  • Ignorant because they entered into loan agreements that they “should have known” were beyond their means.
  • Greedy because they were so focused on “keeping up with the Jones’ ” that they did not bother to think about the consequences of their choices.

The first supposition requires everyone to believe in the all knowing market in which actors, in this case students or home buyers, know exactly what the cost of their purchase will be and exactly how much work-salary they can command to pay for that purchase in the long term. Just like the outdated immigration model that argues that people move based on known economic and social opportunities abroad, the reality is much more complicated. In both cases, students and home buyers had no way of knowing that the United States would enter a recession to rival the Dust Bowl. They could not have predicted that job losses in the country would hover around the double digits nationally and be as high as 35-50% for specific ethnic groups + genders in certain parts of the country. And while home ownership is something that can come later in life, educational attainment is directly tied to employment and income potential in this country.

Both popular media and scientific research encouraged students to see college as a requirement. Every day for years advertisements ran on local channels and basic cable across the country telling high school students that they would be stuck working for minimum wage in dead end jobs without college degrees. While these ads are fewer now that the economic crisis has shifted the way we look at education, they still run today. These ads are backed up by data on:

  • income potential
  • average salaries for certain degrees and histories of placement in certain fields/ with certain companies by certain schools
  • barriers to success the longer one remains outside of school

All of this research over-determines the expectations of students about their economic success as college graduates rather than paints the bleak outlook that Lieber implies should be a given. In fact, Lieber went so far as to discount all of this research when he argued that “They [students] and their families made borrowing decisions based more on emotion than reason.” Again this quote assumes that complete information is available either as a given or by the assumption that the lack of complete information prevents “rational” people from engaging in market decisions. Worse, it’s underlining thesis that poor and working class people are emotional and ignorant results the erasure of all of the data underpinning their decisions and in doing so creates willful fools out of potential victims.

The ongoing willingness of journalists and pundits to blame the poor and the oppressed for their own poverty and oppression, even as all signs point to greed at the top, pales in comparison to Lieber’s assertion that poor parenting is to blame for the student debt crisis:

It is utterly depressing that there are so many people like her facing decades of payments, limited capacity to buy a home and a debt burden that can repel potential life partners. For starters, it’s a shared failure of parenting and loan underwriting. (emphasis mine)

This is where Lieber’s second supposition about “greedy people” comes into play. As he argues a few paragraphs later:

No one forces borrowers to take out these loans

While education maybe optional for some, I think we have already pointed to the reasons it is not for the majority of potential students in this country. Not only is employment and advancement somewhat based on educational attainment, but for some communities it represents needed social and economic capital denied through other avenues. Working class and subsistence level students who really are facing lives spent behind a food counter or department store without the leg up college promises them use education as their doorway out of poverty. The same can be said for people of color, and to a lesser extent rural white people, both of whom have been permanently cast as ignorant, shiftless, and criminal in this country. They use educational attainment to shift perception and gain moderate social capital in their own communities even as they remain shut out of economic capital in the nation as a whole. As the economy fell apart, these groups were at all the more risk for falling below the poverty line without education because they were the hardest hit by high risk lending practices proven to be racial in their application by banks as well as the hardest hit by downsizing. Even now, while the government talks of bounce back, unemployment amongst people of color, particularly African-American males, has reached catastrophic proportions. Rather than “bad parenting” then, the encouragement these groups receive from family to go to college is part of a cultural, gender, or locational struggle that has historically benefited the entire community.

While Lieber argues that lending agencies own some of the blame along with these supposedly bad parents, he writes:

Sallie Mae gets a pass here, in my view. A responsible grownup co-signed for its loans …

The nation’s largest private student loan company gets a pass. Let that sink in for a minute.

While Lieber is perfectly willing to vilify students and their families, he says that a loan agency that helped lock student borrowers into permanent debt even as they are paid by the Federal government for any defaults or costs they accrue is off the hook. Recent research into the student-loan industry shows seemingly unethical ties between certain loan companies and certain well-paid school officials to push specific lenders, loan terms, etc. Lenders have also been known to garnish social security and disability even when they know doing so will render the borrowers homeless or destitute rather than work on payment plans. These loans are binding even if borrowers have to leave school through no fault of their own because the goods and services cannot be returned even though the benefit from them cannot be reaped. Moreover, as I have argued elsewhere, these loans seem to violate basic laws governing contracts which requires the absence of coercion (in this case the threat that not taking out the loan means you cannot go to college and face all of the economic and social consequences of that option for the future) and the presence of complete information (ie a full disclosure of lending practices and consequences, which is impossible given that Congress can change rules governing student loans at any time and loan agencies can change policies governing your loan with a simple disclosure letter knowing there is no way for you to pay the entire outstanding amount to keep from having new policies kick in). One such policy Sallie Mae recently implemented erases the debt relief and on time payment bonuses for borrowers who have to take a deferment or forebearance unrelated to a return to school. THAT’S RIGHT – Sallie Mae is telling students in financial crisis during a massive recession that if they cannot pay their bill the only way to keep up their good credit history with the company is to go back to school, which will presumable result in the taking out of even more loans! Many of my returning students have also complained that none of the new legislation hoping to provide some kind of payment relief for students has been explained to them, or in some cases even provided to them, by their lender. In at least two cases this year, my former students reported losing their good credit status with Sallie Mae because when they called to ask about payment options while un or under employed, they were not told about the income based payment plan because that plan would result in losses for Sallie Mae unlike other plans in which extra money could be made off of each of them. But Lieber thinks Sallie Mae “gets a pass.”

To believe Lieber and others like him, you have to believe that students are ignorant and greedy while banks and the loan industry who set off the multiple economic crisis facing this nation are responsible, unbiased, free agents of an equal open and equal market system. For people who have succeeded through hard work + education + social capital + luck to remain afloat in the economic crisis, victim-blaming has become a mantra, often offset with “times are tough everywhere”, that allows them to sleep with less anxiety at night. It is however a mantra that does very little for the average N. American struggling to survive. While education and housing may seem like privileges to those who have them, they are not special rights afforded to the rich and have not been for 100+ years in this country (give or take). As long as this is how we look at the debt crisis and the people who are free falling as a result of it, we will never reform lending practices in this country let alone address critical inequalities built into that system. Rather than justifying one’s own success or ability to remain somewhat afloat by judging those who cannot, we need to be having ongoing conversations about the cost of college, the lending industry and banking system, and the ongoing decision to penalize mothers, youth, people of color, queer people, etc. for “market decisions” both in terms of lending decisions and blame when those backfire. Anything else is just a poor excuse for why people like Lieber have access to white male incomes at the New York Times while hardworking students wait on the welfare line.

5 thoughts on “College and Homes are Only for Rich People

  1. Thanks for writing this! I just got my REQUIRED ID card for my university and it is a combination credit card-bank account-loan disbursement ID which means the university pre-approved me for credit I did not ask for, opened a bank account for me w/out my knowledge or permission, and then packaged it all with a veiled threat “you may not get your financial aid on time to pay for books or essentials if you don’t authorize us to deposit it into your new bank account and start using your credit card today.” What they don’t tell you is that authorizing a direct deposit of the financial aid into the account also authorizes them to finalize that bank account and credit card you never asked for. And when I tried to turn it down by saying I already had both credit and a bank account, all these warnings about not being able to pay my tuition or my tuition being late popped up on the ID verification screen. Then it narrowed the options for paying my tuition down to huge lump sums that will find me paying fees if my financial aid is delayed for any reason; of course, at the bottom it offered to “get more options” if I’d just authorize that credit card already.

    There is no reason on earth that a college and/or lender should be able to open credit cards or bank accounts in your name let alone make it nearly impossible to refuse them. I doubt my school is the only one who is passing off a giant credit card scheme as a required ID card either.

    Imagine what people would say if they were honest:

    In order to get into the library or the gym, or access student health or parking, you will need to take out a credit card and open a new bank account. You will not be given information about your bank account because that will be held by the school and the lender who both stand to benefit from you charging items with interest thinking your financial aid is covering it. We will groom you to shop without consequences for the next 4 years without providing you any interest payments on the loans (we’re taking those as the primary holders of that bank account we are forcing you to deposit the money in) and then when you graduate you’ll be primed for bad financial decisions that will make us all even more money. Should you refuse, we will likely intentionally lose your financial aid, hold up your enrollment, and sit back and collect money on the penalties anyway. Why? B/c we own you and America thinks you are stupid and greedy.

    SMH

  2. @LTL I feel the same way! My school switched to the same ID card this year and when I said no, they sent me a reminder to activate my card … I went to the site and all the prompts were to get me to say yes to the credit card and bank account not to turn my ID on. When I said no again, they sent me an email warning me that my financial aid may be late, I wouldn’t be able to buy my books on time, and might not be able to pay my rent with the options I chose. And of course they offered to switch it to the credit card/bank account option “to help me out.”

    My “bad parents” told me not to take out credit I don’t need and to avid credit card offers at school; My “responsible lender” and college on the other hand are shoving credit and accounts down my throat! I didn’t even think about the interest the college would make if I left the money with them instead of moving it to my bank until I read Prof’s post!!!!

    I don’t even know if my ID is going to work when I go to classes in the Fall …

  3. I guess I am of two minds with respect to the referenced article:

    1. The cost of college is way beyond ridiculous, and there needs to be a cap placed at some point. Are the excessive costs really necessary Does a Harvard prof need to earn a 6-figure income?

    2. Having said the aforementioned, I do believe that students/families need to be realistic re: what they can truly afford. A good education can be gotten at most schools. But, I think that, like most things in American society, we need a re-socialization process re: the cost of school vs. name cache. Too much importance is placed on the brand name. But, it would take college counselors to lead the way on this one.

    • I agree that costs need to be capped or regulated. I also think if they were then similar education would be available to people regardless of income, eliminating the second issue.

      I teach at a poorly funded uni and the tuition has gone steadily up over the years. It isn’t just Harvard whose price tage is cost prohibitive, more and more state schools, “feeder schools”, and even some community colleges are becoming too expensive for the average student. The article ignores these facts as much as it ignores everything else I pointed out and I think it is part of the assumptions that blame the working class students for what is a top down problem.

      I’d also agree that many schools are great schools and some lesser rated schools maybe even better fits for what you want to learn and from whom than some big names. At the same time, underfunding an institution or certain politics or foci at an institution really does lead to subpar education and I don’t think students should have to attend those institutions because they can’t afford better ones somewhere else. I’m not saying those things correlate to the cost of tuition but that the Ivy League vs. everybody else paradigm set up by the article is a false one that assumes debt only accrues in the former, that students are chasing a name (which some are & when they are, I think u are right to say they need to rethink), and that the system does not disproportionately reward those who obtain entrance to those names over others.

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