Tyrone Hankerson, a graduating senior at Howard University, is in a particularly good position to see the impact of today’s student loan debt crisis firsthand – even though he has managed to head into graduation without student debt overhanging him personally.
That is because Hankerson has a work-study position in Howard’s Office of Financial Aid. There, he deals directly with students trying to pay for their college education, and prepare for the debt that they are taking on. What he hears is heartbreaking.
“For many of my classmates, their families simply do not have the financial resources to pay for college,” he said at a forum on student debt Monday convened by Massachusetts Sen. Elizabeth Warren and Maryland Rep. Elijah Cummings’ Middle Class Prosperity Project. “What I have witnessed in my role are determined students who try their hardest to find a way through.”
“They sometimes work nearly 40 hours a week with full course loads; their parents take on loan debt that they cannot truly afford to repay; they sometimes get denied for parents-plus loans and find aunts, and cousins and grandparents to co-sign,” he said. “They search high and low for scholarships, they take classes over the summer at cheaper rates so they can graduate on time, they take semesters off, and they come back, and sometimes, when all has failed them, they are left with no option but to give up.”
Warren and Cummings chose the historically black university as the site for their fourth in a series of panels on the decline of the middle class and the remedies needed to move toward more broadly shared prosperity. Of the four forums, two have been focused on student debt.
The two members of Congress were joined by current and former students, and two experts on the issue of student loans.
“Students at historically black colleges and universities like Howard face unique challenges. Because of entrenched racial disparities in wealth, African-American students are more likely to take on education debt than their white, Latino, or Asian-American peers,” said Cummings. “These trends have contributed to tuition at HBCUs rising at a higher rate than other schools, and this makes it more difficult for some of these schools to serve their students effectively.”
“For a larger and larger share of young people, getting a college education means going into debt to cover the basic costs. This exploding debt burden crushes opportunity,” Warren said, listing the costs to the economy of student debt. “Young people drowning in debt don’t consider graduate school. They can’t pay rent, buy a car, or save for their first house. They can’t start a small business, they have to think twice to see if they can risk going with a start-up. The world that should be opening up for those that are finishing college starts to close back up for those that are carrying huge debt burdens.”
Rohit Chopra, the Consumer Financial Protection Bureau’s Student Loan Ombudsman, said that though we focus on the cost of college for today’s students, we do not look at the cost of those millions of Americans who are currently paying off student debt.
“What about the 43 million people who already have student loan debt, who already owe over a trillion dollars; the eight million people in default, whose credit reports have been decimated?“ he asked. If we don’t stop the trend, he warned, “I think there may be a student debt domino effect, where it is impacting sectors from first-time homeownership to retirement security, to even whether people decide to attend medical school. All of these decisions are shaped by student debt, and we can’t forget that.”
A college education is supposed to be the key that opens doors to the middle class, not the albatross around one’s neck. That was the message conveyed by Latechia Mitchell, a second grade teacher in Maryland. After receiving a full undergraduate scholarship to Howard University, she went to Bowie State University to get her master’s in education. There, she accumulated $60,000 in debt, after deferring her initial $30,000 for four years.
“I was naive about how much debt I would accrue as a result of deferring my student loans,” she said. “Right now my family can only pay the interest on the debt, so the principal stays high.”
Mitchell and her husband, a federal government employee, pay about a third of their mortgage payment on their student loan debt. Slowly, their home is becoming too small for them and their two children.
“As a result of these student loan repayments, we live paycheck to paycheck to make ends meet,” she said. “We have not been able to save, pay for quality child care, or afford sports programs and summer camps for my children. At this time, we have postponed purchasing a more appropriately sized home for our family, because of our lack of available cash flow.”
Mitchell issued a strong warning to those looking to take out loan debt for future returns, “While my husband and I both took out financial loans to make our future more financially secure, these degrees have come at a steep cost. I’m not sure if I had known how difficult it would be to pay off student loans on a public school teacher’s salary, I would have chosen this career.“
Later, when asked if she thought students were not pursuing a teaching degree because of difficulty repaying student loans, she related that her own family had tried to dissuade her, on those grounds, to no avail.
Student debt is a crushing blow to borrowers, and it has dampened the economic prospects for not only themselves, but the American economy as a whole. While we hold up the idea of college being the stepping-stone to the middle class, a buoy against hard times, an effective hedge against a more competitive world economy, the truth is that for millions of Americans, they walk into a trap set by good intentions, that leave them more cautious in their years after graduation than they were before. This is not an America that invests in college students, but an America that preys on them. Almost everyone will tell you student debt is a problem, but few have a solution. The solution from the Campaign for America’s Future can be found here.
Another solution that would help millions of Americans who attended schools that engaged in unscrupulous practices (such as any of the Corinthian Colleges campuses) is to simply let them know their loans can be discharged. Senator Warren and Representative Cummings have asked for as much from the federal government Monday morning, in letters to the Department of Education and to student loan sevicers.
Student loan debt is a problem for past college students, such as Letechia Mitchell, current college students, like the friends of Tyrone Hankerson, and future college students, like any number of American high school seniors. Until we take measures to attack the problem head-on, it will continue to drag on the American economy, and we cannot stand for that.