The explosion of student loan debt in this country is becoming a big financial concern, so it comes as no surprise that pundits are eager to cast blame for this disaster in the making - “Placing the blame as students are buried in debt”. To humanize this tale, the writer picks one young woman to represent the woes of student debt laden Americans. Over the course of the article the author points fingers at everyone from parents to financial loan officers, but leaves out a critical detail about our heroine until the end.
Ms. Munna
The protagonist of this tale is young Ms Munna, 26 years old and currently living in San Francisco. She is in denial, via deferral, about her nearly $100,000 student loan debt. The total sounds impressively high, until you learn that comes from 4 years at NYU. It’s a pricey private school in the most expensive city in America, I’m amazed she didn’t emerge further in the red. But her choice of school only paints part of the picture, the reason why she has so much debt. It doesn’t explain her inability to repay the loan, those details are buried further in the story.
The Numbers are Frightening
The growing burden of student debt is a real problem, many young Americans are leaving school with mortgage sized loans to pay off. This debt is practically inescapable, it can’t be discharged via bankruptcy and can follow you into retirement. The weight of this debt will hold back young Americans trying to establish careers and families. This debt will limit their options for careers, their ability to take out loans for things like houses and cars and will crimp the consumer spending which drives the economy. But the amount of debt is only part of this story.
Maybe It’s Your Major
The field of study is relevant to any discussion of student loan debt, after all the ability to pay back that loan is dependent on the student’s future earnings. For example, doctors have been taking on enormous student loans for years without anyone being concerned. Their prospect of a high income and steady employment means taking on those loans is less of a gamble. But what about taking on med school sized loans for a degree with low earning potential?
Apparently for $100,000 Ms. Munna emerged with a degree in Interdisciplinary Studies, I have no idea what that even means. Her two focus subjects, religion and women’s studies, have value, but not one that translates into high earning power. With a degree like hers you can expect employment in social work or at a non-profit, where the average salary is rather low. It is unreasonable to expect to pay back $100,000 in student loans with her choice of majors. As a quick rule of thumb, you should never take on more debt than you expect to earn in your first year of employment. That means Ms. Munna should have limited herself to a more reasonable $30k-$40k of debt or switched to a more lucrative major like finance or engineering.
A Degree at Any Cost
Too many people have come to believe that a degree is worth any price and that it will ultimately pay for itself. But student loan debt isn’t that simple, you have to weigh the cost of the degree against the income potential of that degree. You still have the freedom to pursue whatever field of study interests you, as long as you are mindful of the cost. There are always cheaper options, like public schools, for careers that are more personally fulfilling than potentially lucrative. Unfortunately the choice to spotlight Ms. Munna, whose own choices created her precarious situation, detracts from the issue the author is trying to highlight. There are many people out there who are struggling with student loan debt despite making sensible choices. Ms. Munna’s is a cautionary tale, not an example of a systemic problem with our educational system.
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4 comments:
I believe at NYU you can actually create your own major by picking classes in a variety of subjects. While this might be personally fulfilling, it doesn't seem to be a great resume builder. The article said Ms. Munna is now earning more than she ever has since graduation - as a photographer's assistant. Even she admits she'd give back her education and avoid the loans if she could do it over again.
I resent the fact that we have to talk about choice of major though, when considering college, due to the high cost of attendance. The outrageous tuition is turning universities into glorified trade schools - graduates aren't emerging as well rounded educated deep thinking people. Many who might be described as practical (when it comes to investment and payoff) studying narrow specific trades - computer engineering, finance, architecture - and take maybe a semester or two of electives (usually the least challenging ones they can find) to fulful the "general" requirements.
It's sad to me. College used to be a place where people became educated in the humanities - literature, physics, theology, language, mathematics, history. Specialization was for graduate school, or you got it on the job. Fewer and fewer Americans are truly educated anymore. And because there's no direct measurable "payoff" we have to encourage them not to be.
It's probably unfair of me to say that people should go for the "practical" fields, since these are inevitably the ones with the highest barrier to entry/success: you have to actually be smart. Nowadays, almost everyone goes to college, and that has led to it's devaluation. As more schools open, more people can go, and they're no longer letting just the best people in.
It used to be that just the wealthy went to college, so most of the time they were able to study aimlessly, because it was stepping stone to joining Dad's law firm or going to medical school, or it was just something to do while you were too young to be trusted with the gobs of money you were going to be inheriting. Now, every office monkey has a degree.
I like that education is available to everyone, I just hate that it's becoming required of everyone.
I'm glad you tacked on that last bit about going to public school if you want to major in something "personally fulfilling." I don't think it's good advice to tell future college-goers to only major in something that will make them big bucks later, but it is important that they understand their student debt in relation to their major.
There are plenty of reasons for the increase in student debt. One of those is the longer time it's taking students to graduate. I'm in my sixth year at a public university because I was denied graduation because I "took a class out of order." After experiencing this myself, I spoke with no less than 10 other people who had attended this college and experienced the same thing. One of my friends even transferred to a community college because of something similar.
Last year, an article came out in our local newspaper. The article said that the average graduation of students in four-year public schools in our stater is six years. In some cases, it is a systemic problem.
You still have the freedom to pursue whatever field of study interests you, as long as you are mindful of the cost.
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