In 2006, just months after graduating from high school, I stood in line for an hour at my university’s financial aid department, waiting to digitally sign a promissory note, stating… well, I don’t actually remember that part, because I was 18 and I didn’t read it. Legally, I wasn’t able to drink alcohol, own a gun, gamble in a casino, or run for public office, but I was allowed to take out tens of thousands of dollars in student loan debt… per semester… and they just trusted that I’d read the fine print.
From 18-25, I went through the same annual process, spending approximately 45 minutes filling out paperwork, declaring that I understood what I was doing and the conditions thereof, in exchange for a direct deposit of thousands of dollars… wait for it… post-tuition. Despite the fact that “longitudinal neuroimaging studies demonstrate that the adolescent brain continues to mature well into the 20s,”* and the fact that it’s against federal law for a credit card company to give a card to anyone under 21, without steady income or a cosigner*, I was sixty thousand dollars in debt to the federal government, when I received my bachelor’s degree four years later. What was my desired career field, you might ask? Did I want to be a lawyer, a doctor, an engineer? Nope. I wanted to be a home-ec teacher.
Plenty of research has already proven that the human brain hasn’t fully matured until age 25, when the prefrontal cortex has fully developed.* This is not new information, either. The very fact that you must be 25, 30, and 35 to run for the House of Representatives, U.S. Senate, and the Presidency, defends the point that the federal government has long been fully and accurately aware of the immaturity found in most 18-25-year-olds. Recent neuroscience simply backs up that decision. The government is offering a terrible deal to college students… and judging by the articles in my Google feed, it’s become pretty common knowledge.
Just this week, I’ve read about how Maine will offset the cost of student loans, through tax cuts, in an attempt to entice a younger population to relocate to the aging state. Several articles report that saving for retirement, buying a home, and having children are just a few of the major milestones being delayed by thirty-somethings “drowning” in student loan debt. To add insult to injury, Twitter is apparently full of Millennials, pissed at Hasbro for Millennial Monopoly’s blatant failure to capture their plight… which should surprise absolutely no one, when the company itself is run by a baby boomer, who brings in $7,000,000 annually. It’s everywhere, y’all… this news that student loan debt is ruining our lives!
Except, if we’re discussing federal student loans… they shouldn’t be, because our student loan system is a dreadful model, not just for borrowers, but for the federal government and by extension, the tax payers. When I finished my bachelor’s degree, only to find there were no teaching jobs available, I was able to immediately enter graduate school, extending my borrowing period by another three years… still three more shy of the 10 year cap. As was the case four years earlier, my major and intended field had no bearing on how much I was able to borrow. I chose librarianship, a field rarely more lucrative than teaching and much harder to break into, and the payout was another sixty thousand dollars in debt.
Why did I borrow so much? Well, not only was I going to school, during all those years, I was also going through some pretty weighty personal crises. Married at 19, I suffered a house fire less than a year later, an eviction and a total of ten moves in the next two years, a sociopathic partner who refused to work, a miscarriage, the death of my best friend’s infant daughter, and finally, a divorce… just as I entered grad school. After all that, a good portion of it was spent consolidating my debt; because, I did start thinking about the long term financial implications of borrowing so much, when my life settled down a bit, at 23.. I worked two jobs and took online classes, but graduate hours were so much more expensive than my undergrad hours, that each year I told myself it would be the last time I accepted the max… and it never was, until my last semester, at 25… the age when modern science says my brain had finally matured.
Perhaps I’m fortunate to have been in school until the full development of my prefrontal cortex, because when I totaled my student loans and realized where I’d be after graduation, I started doing my research. For two years, I read up on debt consolidation and forgiveness programs like it was another course… which it should have been, because there was a lot of information out there. So, when I graduated at 25, I was prepared… fortunately, because the surprise semester that followed the failure of my graduate portfolio presentation ate up the six month grace period for repayment. I had approximately two months to send in all of my loan information for consolidation under an Income Based Repayment program, because they wouldn’t qualify if they were in default. Prior to consolidation, just two of my loans would’ve added up to $1,900 a month.
Once I was accepted for the IBR program, however, my monthly payments were $0. Working half time at the library and substitute teaching simply didn’t provide enough discretionary income to require a minimum payment. The following year, it only went up to $40. Only when I became a full time librarian was I expected to make a substantial payment, of about $300 a month… which went down when my family size increased with marriage and will go down again with each child we have. If I was drowning in anything, it was my private student loans, not my federal ones, which doesn’t seem to be the dominant complaint. Even so, my struggle with these was less about the monthly payment and more about the lack of impact, considering the interest rate. While my federal loans were also accumulating interest, I was able to sign up for Public Service Loan Forgiveness.
You see, because I’m working as a public librarian, a lower paying position than many in the private sector, providing much needed services to the community, the government has struck a deal with me. If I work in public service for 10 years and make 120 qualifying payments, I can apply to have the remainder of my debt forgiven, tax free. While there are plenty of fear mongers writing narratives about how this won’t actually happen, there’s no research to actually back that up. Even the current administration has only suggested closing the doors on the program, not pulling the rug out from everyone already enrolled. In fact, I’ve actually already been grandfathered into my repayment program, as it only considers my income and the current ones consider the income of the entire household.
While many of those who have applied for forgiveness report being denied, it’s simply because they didn’t do their research or were given the wrong information, having enrolled in the program early. There is a catch to PSLF, in addition to a lower paying job: annual paperwork. Every year, I recertify my income for the IBR and my employment for verification that it qualifies. In exchange, I get an update on the number of eligible payments I’ve made, all but canceling out any chance that I’ll make the aforementioned mistakes.
Now, plenty of Millenials, with outstanding student loan debt, work in positions that don’t qualify for PSLF. The ones with smaller totals are paying them off as quickly as they can, to avoid interest charges and that’s undoubtedly the best approach. The rest, however, have their own option under an IBR, which is to apply for forgiveness after 20/25 years of payments, depending on when they signed up and under which program. This, however, is not tax free. That’s the only catch, beyond paying on these loans for so long.
Is this good for the federal government, for tax payers? Fuck no. This is a wretched, absolutely unsustainable model. Canceling PSLF seems like an obvious choice to some, but the core reasons are still valid. If there’s no incentive to do so, few lawyers and doctors will work in low paying public service jobs. Rural and poor urban areas won’t have teachers or librarians, the latter of which requires a master’s degree. Few will even enter into careers as police officers and EMT’s. Should all of these positions require advanced degrees? Absolutely not. Higher education, in many ways, is a total scam… but it’s a scam we’re still supporting in this country. While I hope to see more emphasis placed on technical degrees and apprenticeships and on-the-job training, more companies demanding applicants show them what they can do, as opposed to who taught them, we’re not there yet. I had to have my degree to do my job, a job I not only love and am lucky to be well-compensated for in my field, but one that makes a huge difference in the community.
I didn’t break any rules taking out my loans to get my degree and I’m not breaking any rules with my plans to receive loan forgiveness for working in my position. That doesn’t mean we don’t need to change the rules and prevent people from getting into these situations in the first place. We shouldn’t be giving teenagers tens of thousands of dollars to major in journalism or literature or education. We shouldn’t be letting people borrow for 10 years, if they’re not going into fields that can repay the debt. We shouldn’t be giving out thousands in direct deposits, after paying the schools, because my personal crises shouldn’t have been covered by the federal government. Some would say the government shouldn’t even be involved and private banks should have to compete for borrowers and choose what fields they invest their funds. Whatever the solution, students, the government, and tax payers are all getting screwed under this system, unquestionably. The only entity coming out on top is the universities, because as many economists agree, the reason tuition costs have risen so much is that colleges know their students can secure the funds through the federal government. Hopefully, future generations will boycott these institutions.
In the meantime, though, no one should be “drowning” in federal student loan debt. If it’s that bad, follow these links, get out of default, do the paperwork to consolidate and get into an Income Based Repayment plan. Don’t be more the victim of this terrible system than you already have to be as an American tax payer. Take advantage of the fact that our truly fucking awful student loan system does favor the borrower, in some ways… while it still does.
PSLF – https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/public-service
PSLF application – https://studentaid.ed.gov/sa/sites/default/files/public-service-application-for-forgiveness.pdf
Income Driven Plan information – https://studentloans.gov/myDirectLoan/ibrInstructions.action
Yep, my loans won’t qualify for forgiveness, and my field (accounting and finance) you’d *think* could pay the bills but alas, it doesn’t. So I’m on IBR and just starting the 20/25 year haul. Unfortunately, the interest alone (they are all federal, so 7-8%) is increasing much faster than what I can pay, so after 20/25 years of payments, my loan will be much larger than it is now, unless I can manage to drastically increase my income in that time. (I think it will at least somewhat, once I can finish my time at the accounting firm and get out – an underpaid but many say necessary start for a decent long-term career.) Not sure if it will be enough to offset the huge interest costs though. I should add that I’m not a frivolous spender, and I work my rear-end off. It does feel like drowning.
Is there any public service job you can do? Are the loans low enough to actually pay off?
No, and not unless $100k is low, lol (note that includes a buildup of interest – they were smaller before the interest compounded)
I’ve looked into refinancing to try and get a lower interest rate, but unfortunately it’s incredibly difficult to qualify for, so is also not an option at the moment. As soon as I can, I might start taking out lower-interest loans of maybe $10k at a time (using them to pay off chunks of it) just in order to get *some* relief from the interest. Still not sure if that’s going to solve it – and it’s a long road, but it’s the only other thing I can think of short of defaulting entirely. Which I don’t want to do.
Yeah, mine are about $150,000 now, with interest. If it helps the thought process and feeling of drowning, I always think of it as getting to do the job I love and just getting paid $300 less a month for it. 20-25 years may seem like forever, but if you put a little aside along the way, the taxes shouldn’t be too bad. I’m just glad that’s even an option and the cap on an IBR isn’t lower. Defaulting is a terrible idea, of course, since they’ll just garnish wages and you won’t qualify for the IBR.
And it would wreck my credit, too. But yeah, that’s a good way to think about it. Putting a little aside where possible is a great idea too for dealing with the taxes when the time comes. Now let’s just hope none of the politicians wipe the plan away in the next 20-25 years! Maybe they’ll even come up with something better, but for now I’m happy to work towards this.
Everything I’ve read says PSLF is likely safe, but I’m not sure about the 20-25 year loan forgiveness. If they don’t want people to just say screw it, I imagine they’ll uphold it.
Yeah a lot can change in 20 years. I’m obviously going to do what I can for as long as I can, but yeah if it changes and becomes impossible then I don’t know what else could be done. Hopefully it will not come to that. Hoping you’re right and they can see that!
I would really like to see the interest lowered on federal loans, perhaps as an incentive for paying them on time. For example, you pay on time for one year, it goes down 1%, until it gets to 2% or 3%, and you get one late payment grace, annually.
That is such a good idea. Can you run for president and implement this change please? XD