The Common Good
July-August 1997

Gambling on an Education

by Jen Kilps | July-August 1997

The opportunities and limitations of student loans

Once a month I have a day of reckoning—with my past, certainly my present, and unfortunately my future. That day is "bill day." When it rolls around, I set aside an entire evening, gather my "bill box" and any loose statements, my checkbook, stamps and envelopes, and scrap paper for adding. I usually put on relaxing music or some mindless television, and turn off the phone.

I am a thorough and meticulous money manager. I have to be. You see, in addition to my fixed bills (rent, gas, insurance, phone) and essential needs (food and transportation), I pay 21 percent of my income toward student loan debt.

Simplicity of lifestyle is a value choice I’ve made. I am thankful I can live out that choice on my budget. I’m grateful I have been able to find a job that reflects my values, a luxury in today’s marketplace. I realize I could find work that would provide greater financial security—at least a bigger paycheck—but my job provides me with opportunities to live out my values, my ideals, and my faith. I choose to work with an organization I love, doing work I care about and things I am good at.

But on bill day I question my choices—not for long, but I question. And this makes me angry, mostly about the 21 percent that makes everything just that much more difficult. My small amount of disposable income, in the present and for a long time into the future, limits my options concerning proper health care and unanticipated emergency expenses. I didn’t realize the consequences in my life of taking out school loans when I cashed that first check nine years ago.

TODAY’S STUDENTS ARE no strangers to loans. According to The Economist, students who borrow to pay for college graduate with an average of more than $7,500 in debts for a public education and nearly $11,000 for private colleges. For many this debt is compounded by the necessity of postgraduate or specialized degrees in order to compete for jobs in their fields or for sustainable, living-wage salaries. As many social service fields are "professionalized," the need for advanced degrees for the most basic jobs is amplified.

An annual survey of freshman by the UCLA Higher Education Research Institute (HERI), reported by the Chronicle of Higher Education, found that students are worried about having enough money to complete their education, with 51 percent reporting some concern about financing college and an additional 18 percent not sure if they will have enough funds to complete college. "Obviously the cost of college has become a factor in students’ college choice process," says Dr. Linda Sax, associate director of HERI. Students are choosing colleges that offer more attractive financial aid packages with hopes of avoiding later debt.

Not only can the fear of indebtedness affect which college one chooses to attend, but whether one pursues a college education at all. According to Thomas Mortenson, policy analyst and author of the newsletter Postsecondary Education Opportunity, the United States has moved aggressively from a financial aid system consisting primarily of need-based grants to one that is loan-based. "That works fairly well for middle-income people," Mortenson says. "It does not work at all well for low-income people. Loans are more properly viewed as barriers to educational opportunities than vehicles to educational opportunities."

For lower-income people "college is a relatively risky investment decision," says Mortenson. "If my estimates are correct, only about one in five that starts college is going to graduate, or at least have a bachelor’s degree, by age 24. That means four out of five, when they look at that debt, are not likely to get the degree and gain access to the jobs that will enable them to repay the debt."

Indeed, for some, college is simply not a choice at all; it is viewed as a luxury. For others, college is not part of their career plan; their vocational goals are not furthered by a four-year degree.

College has become a gamble, an investment without guarantees. If pursued, it can be a race to stay on top of mounting debt. In October 1995, Rolling Stone reported, "If a college degree is still a ticket to the American Dream, the cost of that ticket continues to rise at more than twice the rate of inflation. Today’s college students work harder for their degrees than their parents did."

According to the U.S. Bureau of Labor Statistics, the average full-time college student works 25 hours a week to pay for tuition, room, and board. HERI’s survey reveals that 41 percent of college freshman expect to work to pay for college expenses, and that 6.4 percent expect to work full-time. And the unwritten story is the impact on career "tracks" this system imposes on those students who must balance individual goals with visions for the common good.

When we examine how student loan indebtedness limits career and lifestyle choices, we begin to realize the real cost to society of an educational system that necessitates such debt. It is when the "cost" becomes the sacrifice of ideals and values of the individual that society as a whole suffers.

STACY ROSEVEAR attended Western Washington University, a state school in Bellingham, Washington. She worked 20 to 30 hours per week, and graduated after five years with $15,000 in student loans and substantial credit card debt. That debt, and the fear of acquiring more, has affected nearly all of her choices since she first considered college.

Stacy was accepted by several public and private schools, some with academic- and skill-based scholarships, but felt financial pressure to choose the last school on her list. The grants offered by the other schools were "a drop in the bucket" compared with the overall cost of Western Washington.

After graduating, Stacy volunteered for a year with the Lutheran Volunteer Corps. This required a commitment to LVC’s three tenets of working for social justice, living in intentional spiritual community, and living simply. Stacy chose this program for its mission statement and spiritual component.

Even for those college graduates with desires to serve the needs of poor and marginalized people, options are limited by the debt accrued for the education necessary to provide the service. Decisions not to volunteer, or to work with a government-sponsored agency that will help with loans (such as AmeriCorps), are more financially attractive, and thus overriding, when compared with faith-based or community-oriented social justice programs that do not receive governmental funding.

Stacy plans on working for two to five years toward her loan repayment before going back to school. "I plan on going to seminary, and I would love to do that right now but there is no way that I can with the loans I have."

LISA TODD AND Stuart Iseminger both have master’s degrees in social work. Both attended smaller, faith-based, liberal arts colleges in the Midwest. They now work for non-profit social service agencies in Chicago, and are committed to a non-consumptive, justice-oriented lifestyle. They pay more than $500 a month in various student loan payments. The birth of their son, Levi Casmir, has prompted substantial changes, and has brought home the effects of some of their financial decisions.

Lisa’s interest in her future alma mater was first piqued while reading an undergraduate brochure. "The paragraph that jumped out at me, in the midst of my family’s financial situation, was, ‘No student will be turned down because of ability to pay tuition,’" remembers Lisa. "I saw that and wondered if they were serious. Can this really be true? In my mind, naive as I was, I really thought they cared that everyone got the college education they deserved and that they were going to be looking out for me."

Loan indebtedness has affected Lisa’s and Stuart’s choices but hasn’t altered their basic commitments, including the decision to have children. "We’ve just gotten used to living a very budget-friendly lifestyle."

Lisa and Stuart have thought about Levi’s college financing already, should he choose to attend, even though there is no way to anticipate how expensive it will be when Levi is college-age. Whereas Lisa’s family was not able to help her with college costs, she hopes to be able to help Levi with some of the cost of his education.

Long-term debt forces parents to make monumental choices such as when and if to have children. Loan debt produces a ripple or domino effect touching almost all aspects of a parent’s life and the life of the child, including his or her education and upbringing. An additional guilt exists for those earning a lower income—in order to do justice and bring healing to communities in need—that their choices will affect their children’s future.

JACKIE AND BOB are working with their son, Peter, to plan for his entrance into college next year. At first their situation sounds typical. Peter is a high school senior. With his parents he is comparing financial aid packages, looking at what different universities have to offer, doing the research.

Peter is looking at colleges in the $15,000 a year range. Bob and Jackie have determined that with grants, a modest sum Peter’s great-grandmother put aside in a trust for his education, and scholarships, Peter would need to come up with around $2,000 a year for his education. That would leave him with a debt of approximately $10,000 upon graduation.

According to their calculations, Jackie and Bob would be responsible for $6,000 a year for his tuition. Bob says, "If I can help it, I certainly don’t want Peter to come out heavily indebted."

This sounds fairly reasonable and somewhat typical of two fully employed, middle-class parents who want to help their child with his education. But Jackie is herself returning to school for Imago therapy licensing and Bob is taking a job with a significant pay cut.

Bob and Jackie are following their hearts. "I could not delay anymore something that had been growing for more than five years," says Bob. "Wanting to align my work with things that are important to me, I needed to take the plunge and try, even though I don’t see how everything is going to work out.

"It does feel a bit scary and uncertain. Not a very opportune time for my wife to go back to school and for me to take a pay cut." They’re worried, but the alternative if they wait for Peter’s sister, Catherine, to finish college, according to Bob, is, "My heart might be dead."

WHAT IS THE cost of education to society? Often it is our hearts. We are trapped by a system that allows and encourages the exploration of our individual potential. We are taught that with a college education our options are limitless. But upon graduation the payments of hundreds of dollars a month becomes a reality. And that vision of everything we could be eludes us, remaining just out of grasp. We become slaves to debt.

There are alternatives to the system we currently have in place. Income-contingency loans, which adjust repayment depending on a student’s ability to pay, were first implemented in 1993. Hopes that this type of loan would lessen the burden of debt and decrease the rate of default are theoretically sound. Unfortunately, the manner in which this loan program is administered makes it ineffective and renders it nearly inaccessible to most students.

Some medical, law, and education programs offer loan repayment or tuition breaks to students who commit to work in the public sector for a set amount of time after graduation. Perhaps this program could be expanded to include other work for the common good.

In many countries education is treated as a truly public opportunity. Students are required to pay little or nothing out of pocket for undergraduate and postgraduate degrees. In Australia, students receive what is, in effect, a direct student loan. They can choose to defer repayment until their income reaches the minimum salary threshold, when the tax office will deduct payments at approximately 3 percent per year until the debt is paid.

Mark Schwehn, Dean of Valparaiso University’s Christ College, an alternative honor’s program, teaches a class to seniors titled "Love and Vocation." He says, "What I’ve seen repeatedly is that students will enter, let’s say, law school because they have a longing to change the world in areas like environment or poverty law or family law. Along the way they wind up adding to their undergraduate debt and decide that they really need to go corporate, to go to a fast-track firm so they can earn enough money to meet these loan obligations."

Former Sen. Paul Simon (D-Ill.) has taken an avid interest in postsecondary education funding for years. He is a supporter of income-contingency loan programs and of heart-conscious career choices. He says, "You don’t have to have great imagination to understand that if you become a lawyer, you’re going to be able to pay that loan back much more rapidly. We need teachers, we need social workers, we need people who are not just looking at how they can get into a profession that allows them to pay back their loans."

What is the senator’s concern for those affected by loan debt? "When students come in here and tell me, ‘I would really like to do this, but I have a job that offers me more money doing something else,’ I say, Do what you enjoy. Don’t go for the money. But if that situation is compounded by heavy debt, people are shifted in the wrong direction."

Schwehn shared a saying with me: "There are two ways you can be equally filled. One is to get everything your appetite would ask and the other is to reduce your appetite." The reduction of appetite is, in truth, a spiritual discipline, learned in practice by the choices we make to live simply, serve others, be present parents, be responsible educators, live faithfully.

Someone who succeeds in this discipline, according to Schwehn, "is just as filled as someone with larger appetites and freer to choose work they find fulfilling and that they can really take as a calling–rather than being compelled to take whatever they can get that is high paying, even if it is not something they love and fully uses their gifts."

What can we do as a nation dedicated to the equal opportunity of education for all its citizens? We can seek an investment path that leads to the future, not only to the bank.

JEN KILPS is the Twin Cities staff person for Lutheran Volunteer Corps and lives in Minneapolis.

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