It sits in the mailbox and taunts us: The thin sliver of an envelope, recognizable by the logo in the top-left corner, arrives every month. And my wife and I instantly react with a deep sigh.
It's the latest statement from the company servicing her nearly six-figure student loan debt, which hangs over our heads like a grand piano on a rope. The sheer size of the number is so daunting that we fear that we'll never be able to pay it off in full. And the psychological burden is so heavy that it haunts our relationship and our future.
We know that we're responsible for landing in this mess, and that knowledge consumes us with guilt -- for taking on the loans in the first place, for not making timely payments and for negligently consolidating them at an 8.5 percent interest rate.
But we wouldn't be crushed by the loan debt if tuition had been affordable, if financial counseling had been available, and if the interest rate was not so punitive. This is how tuition fees function in most parts of the western world -- except in America.
Our only paltry comfort is that we're not alone: Student loan debt totals nearly $1 trillion -- almost equal to the nation's collective credit card debt -- and the average debt owed by a college senior is over $25,000. Much of that is due to the astronomical rise in tuition and fees, which has risen over 400 percent since 1985, far outstripping the rate of inflation. To see it in perspective, tuition at most Ivy League schools used to be about half the median household income in the U.S. Now at over $50,000, it's higher than the $49,445 median household income.
Stories abound of new graduates who are unable to keep up their payments due to unemployment or low-salary jobs. This year, for the first time on record, the unemployment for four-year-college graduates rose above 4 percent. As a result, defaults on federal student loans have climbed from 7 percent to almost 9 percent in the most recent fiscal year -- and that only includes recent borrowers. Sometimes, it feels like my wife and I are just a month or two away from defaulting on her debt. And if we do, that will irreparably harm our credit rating, which would have serious consequences for our future plans.
That is why student loan debt is a recurring theme, alongside corporate greed and unemployment, at Occupy Wall Street and at hundreds of such protests around the country. Last week, college students at more than 70 campuses around the nation held teach-ins to express their frustration over tuition increases, rising student loan debt and unemployment.
But the turnout has been pretty weak. Many students are reportedly unaware of "Occupy Colleges," the offshoot movement for students to protest high tuition increases. Only 10 percent of students walked out of an introductory economics class at Harvard during a pro-Occupy protest last week. The spirit of protest on campuses seems muted, a far cry from the fiery student activists who occupied buildings in the fervor of the late '60s, directly challenging university officials to change their policies. In other countries, such as England and France, students have taken to the streets by the thousands to protest much smaller tuition increases.
Where is that spirit here in America? Why aren't students scaling the ivory towers and occupying registrars' offices, demanding that universities freeze or reduce tuitions and stop colluding with parasitic lenders?
Universities race to enroll students without seriously considering whether the students can afford tuitions above $40,000, in an eerie parallel to the subprime mortgage crisis. As the New York Times's Ron Lieber noted last year: "Then the colleges introduced the students to lenders who underwrote big loans without any idea of what the students might earn someday -- just like the mortgage lenders who didn't ask borrowers to verify their incomes."
To top it off, student loan debtors are in worse shape than underwater homeowners because they can't just walk away from their debts or declare bankruptcy. When student loan laws were written, bank lobbyists made sure to include that such debts were not "dischargable." So lenders can garnish your wages, take your tax refunds and even take a cut of your Social Security checks, if you make it to retirement. As the Atlantic's Andrew Hacker and Claudia Dreifus opined, "We can't think of any other statute with such sadistic provisions."
Tuition increases have grown so far out of line with reality, far exceeding the rate of inflation for no apparent reason, except that colleges can get away with it. In my freshman year of 1986, that disparity peaked, with tuition rates at five times the rate of inflation.
I was lucky and my parents paid my $20,000-a-year tuition at Pomona College, a small liberal arts school in southern California. But to this day, I return solicitations for donations with the box marked "$0." A few years ago, I wrote Pomona College President David Oxtoby to explain that I refuse to give any money until the school lowers its tuition and takes more out of its endowment to provide financial aid to needy students. Oxtoby's polite reply was replete with the usual platitudes about providing the best scholarly environment, the need to preserve the money for future generations and defending the school's paltry community-assistance efforts.
Universities typically justify these increases by citing the increasing value of a college education and the rise in their administrative expenses. Certainly, college-educated Americans land better jobs, but often those salaries are hardly enough to pay off the loans they took out to pay those exorbitant tuitions. And the increase in a college's expenses -- from staff salaries to building maintenance -- is but a fraction of the triple-digit growth in tuition and fees charged to students.
Economists also attribute the dramatic tuition increases to high demand for a limited supply of schools. And some scholars blame Pell grants and other forms of federal student aid for driving the inflation. But that doesn't mean they're required to raise prices so high -- they just do it because they can. And College Board analysts emphasize that there is no real evidence that Pell Grant increases feed tuition increases. In some years when grants remained flat, colleges still sharply raised their tuitions and fees.
U.S. Senator Chuck Grassley (R-Iowa) summed it up nicely in 2008: "Colleges that benefit from tax-exempt status have a social compact to uphold: to provide the best education to the most students at the lowest cost."
Protesters burdened by excessive student loan debt should target Wall Street for helping fuel this latest debt crisis and indulging in pure greed.
But I'd also like to see them march on campuses to demand that college officials rein in runaway tuition.