The Student Loan Scam: A Debt-Driven Profit Center in a World out of Balance

The United States of America is not only in the unique position of having forty percent of the world’s guns held in private hands as it puzzles over how to control gun violence. Absurdity abounds. The US is also unique in requiring most students to go deeply into debt in order to obtain a college degree, despite the fact that an educated population is one of the strongest factors in sustaining a robust economy. Like most things, including gun ownership and economic success, the US political economy leaves education entirely up to the individual.

Who Benefits from Higher Education?

Everyone does. The college graduate typically earns $22,000 more per year than a high school graduate. All sorts of businesses benefit from an educated employment pool. I cannot count the times I have heard a business owner or corporate executive say that they simple cannot find qualified workers for the technical, semi-technical or knowledge-based jobs for which they seek to hire someone. Even so, inflation of the cost of living makes paying down college-loan debt very difficult.

The American work ethic has suffered from both the declining benefits of employment and an economic culture of consumer entitlement. Those two seem to go together. In the nineteen-fifties, the strength of unions was high and most people took the ethic of hard work for granted. By the nineteen-eighties, the specter of entitlement came to dominate young workers just out of college. I remember talking with an editor for a major publisher at a national conference in the late eighties. She remarked that every assistant she hired expected to be a vice president within a year or so. That expectation matched an attitude of entitlement rather than an ethic of hard work for achievement. Blame the parents, along with perverse consumer marketing.

Of course, it is not just the publishing business that has changed greatly in recent years. The opportunities for both advancement and high salaries available to educated workers have declined in most economic sectors, if not as severely as for those without a college education. Nevertheless, a healthy modern economy depends on having a strong educated workforce. The burden of debt experienced by young educated workers detracts from that health.

Who Should Pay for Higher Education?

If you accept the premise that it is in the interests of everyone—the whole society—for higher education to be accessible to all who desire to pursue it, then support for education should not rely only on the ability of the individual student to foot the bill. The student is only one among the many who benefit from her/his education. The US would appear to be ‘backward’ in this context.

Almost every industrially developed democratic nation provides free or nearly tuition-free higher education for its citizens. This not only supplies the economy with intellectually prepared workers and professionals; it also produces a more robust society because more citizens have the capabilities that result from a broad education, which allow them to contribute to the society’s wellbeing. Education is highly prized around the world, and with good reason.

Unfortunately, in the US, privilege, performance, and merit are entangled in problematic ways. Merit is too often confused with power. Too many very good students are deemed to not merit access to higher education because their parents have little or no economic power. They were not born into privilege.

Student Debt and Our Future

Access to higher education at private institutions—especially prestigious ones such as the Harvards, Princetons, Stanfords, and Yales of the world—has been impossible for all but the most privileged youth of the nation. Now, various scholarship opportunities for the poor and not-rich applicants have appeared, but are only available for a very small portion of incoming classes. The basic structure of privilege remains.

For a while, in the nineteen-sixties and seventies, state universities offered a significantly less expensive way to get a high quality degree. In the 1960s, I was able to work summers in construction at union scale wages and pay for tuition, books, and rent at the University of California. I was not forced to take out student loans. By the 1970s, that had begun to change.

Today, costs at state universities as well as private ones have skyrocketed out of range for all but students from very wealthy families. Previously a sort of cottage industry, the student loan business exploded in recent decades to a level at which, to gain an undergraduate degree, college graduates have become the equivalent of indentured servants.

What is all this fuss over President Biden’s proposal to reduce some student debt? While he can’t seem to make up his mind as to whether the forgiveness is to be “up to $10,000-“ or more than $10,000-, the fact is that hundreds of thousands of citizens are struggling due to large student debt—usually several tens of thousands of dollars. They experience far lower salaries than they would have expected in an economy where a living wage dominated. Outlandish executive bonuses (based on power, not merit), excessive corporate profits and stock buybacks are indicative of corporations awash in cash. Yet, corporate priorities exclude reasonable salaries for employees, who are being squeezed from both ends.

Public policy in the USA, just like our declining culture, does not value education as it once did. That is in part because it does not value people. It only values profit and economic growth, neither of which is sustainable in a society where wealth and income are increasingly concentrated within a very small power elite, while everyone else is left to partake of the empty promises of the illusions of American Individualism.

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