Students must learn from loans


Last Monday marked the one-year anniversary of the Occupy protests, a movement that reinvigorated the collegiate political landscape by putting student debt at the forefront of campus and national conversations.

Xingzhou Zhu | Daily Trojan

It’s no secret that student debt has skyrocketed in recent years, surpassing total credit card debt as the largest collective sum of money owed by Americans. And with tuition costs rising at an average rate of 7.5 percent each year, it is unlikely that this number will decrease anytime soon.

As America witnessed in the Occupy protests, society increasingly frames student debt as an impediment to post-graduate success. Last year, thousands of students camped out in Zuccotti Park in New York City to call for the immediate absolution of all past and current student loans and a plan to eliminate student debt in the future.

Building off the expectations of peers, families and society itself, students use loans as scapegoats for failure after college. Many students complain that loans inhibit them from post-college success and claim that education is a universal right.

In reality, student loans are manifestations of the adult responsibilities that graduates should and will face after college.

The financial implications of graduating lend a sense of importance, significance and truth to a degree. Because of this, reducing tuition costs to an easily affordable level would result in a drastic decline in student effort, academic maturity and independent responsibility after graduation.

For most students, college is the first time that they are on their own. This freedom entails more than just living away from their parents and guardians — for many students, it means being cut off from continuous financial support.

Leasing apartments for the first time, balancing academics with outside work and recreational activities and learning through internship opportunities are key components of the college experience. These experiences aim to prepare students to be self-sustaining adults after graduation. Paying for tuition is a critical aspect of this framework, setting students up for an independent life by lending a sense of responsibility to school work.

When students have a vested financial interest in their education, they make smarter choices in college. Impetuous decisions become more significant — skipping a night of studying to go to The Row, neglecting to attend office hours or overspending on meals at Lemonade.

Americans — students or otherwise — who call for eliminating students’ financial responsibilities in college are ignoring the detrimental effect of the continuous dependency that would plague graduates. Besides, what would be used as the qualifier for ending student tuition aid? No two students’ academic paths are the same, and appropriating a fixed amount of financing per capita is not only fiscally irresponsible, but also unfair. The free market, in conjunction with college tuition rates, forces students to focus on their futures.

Medical school students rack up hundreds of thousands of dollars in tuition fees to finance close to a decade of education. The free market encourages these students to persevere by promising large salaries for academically strong and medically proficient students. Imagine what would happen if a medical student decided to drop out of school and travel the world, leaving a massive investment by the government behind. Americans would be stuck with a gigantic bill for the development of talent that could potentially go unutilized.

Underlying the entire student debt issue is the misguided premise that collegiate education is a universal human right. In truth, education is a responsibility and privilege. University and national scholarships and financial assistance help make college something realistically attainable, but financial aid must not reach the point where students lose nothing because of their decisions in college. The pressure that loans and debt place on students is beneficial to both their studies and their futures; it forces them to take their commitments seriously.

All Trojans worked hard to get into USC and know what is expected of them in order to succeed. An inability to view education as something for which students must take financial responsibility is detrimental to society and to students themselves.

 

Ryan Townsend is a sophomore majoring in business administration. His column “The Blame Game” runs every Tuesday.


  • Joe Doakes

    Ryan,

    I, for one, applaud your article and the message it is trying to get across. Dear all liberals arts students who have 0 intention to go to law or medical school: Your degree WONT make you money. It grinds my gears to listen to these students majoring in philosophy or underwater basket weaving complain about the lack of job prospects. Earth to these majors: You have 0 marketable skills, and nothing to offer companies.
    Debt is a great tool which focuses students on taking responsibility for their role in society, and ensures that the decisions they make take into account the need to save, and continue to invest in themselves. Debt teaches valuable life lessons. And to all those haters out there: Yes, I have exactly $20k in debt and am proud of it; I’d rather have a stake in my education than be going completely off of other people’s money. Because if I failed because of poor decision making, I’d have myself to blame and a mountain of debt. More than enough motivation to do what’s right.

    Fight on Ryan. You have support

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  • Mike

    While it does seem that expecting personal responsibility from college students over their finances should be part of the maturation process, the reality is in the last decade the economic pressures on students has increased dramatically and has caused many students to take on more debt than they would or should assume. These economic pressures are why we are seeing the issues of student loans as a presidential campaign issue.
    I think we need a fundamental shift in how society and the business of education before we see a huge sector of educated individuals paying a significant portion of their income for many years to pay off the debts from college. There are some attempts in the private sector to reduce the dependence on loans, such as the community funding sites like comoinis.com, but these are really just band-aids until we all sit down and re-think how we should educate people.

  • Jay

    Has the author ever taken out a student loan? If not, legitimacyin speaking on the subject is diminished.

  • Colin

    There are two separate issues in play here, of which it appears that the author has blurred together into one “anti-Occupy” Romney-esque argument. Perhaps more research into higher education in California would do this article some good.

    First, when it comes to loans and debt: Sure, people should take more personal responsibility when it comes to knowing their financial and legal obligations when they take on debt, whether that’s with student loans, houses, cars, etc. Fair point.

    However, your argument that without high costs and loan debt, students wouldn’t take college seriously is absolutely false and has been repeatedly proven so since 1960 and the creation of California’s Master Plan for Higher Education.

    In California, up until very recently, our heavily-subsidized higher education system (UCs, CSUs) was the gem of the world. The Master Plan for Higher Education made a promise to California students that if they wanted to go to school, they could do so and not take on serious debt in the process. This innovative plan lead directly to the tech and biomedical boom in the 1980s and 1990s and to countless innovations and industries over the last 50 years, due to the students that came from the UC/CSU system.

    Also, when you talk about the possibility of students just quitting school because they didn’t feel “invested” because they weren’t 100k in debt, you failed to cite any graduation statistics to back up your claim. I implore you to look at the graduation rates of UCs/CSUs between 1960 and 2000, when tuition/fees were very low.

    It wasn’t the “free market” alone that forced students to focus on their futures, with debt being the ball-and-chain keeping them in school. It was the taxpayers and state of California, choosing to invest and subsidize education and allow students to pursue higher degrees without the burden of debt.

    By keeping tuition/fees low and allowing students to flourish without the ominous cloud of debt over their heads, we were able to create a Top 10 world economy.

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  • Ryan:

    Were you aware that nearly every standard consumer protection was stripped from student loans, yet the students were (and are) rarely told before borrowing that such basic elements as bankruptcy rights, Statutes of limitations, Truth in Lending Laws, refinancing rights, state usury laws, and other protections were uniquely gone from student loans?

    Did you know that the big lenders, guarantors, and even the federal government have been making money (yes, I said making) on defaulted student loans, and in fact making more money on defaults than loans that remain healthy?

    Were you aware that 5 years ago, a state AG investigation found widespread examples of blatantly corrupt relationships between the lenders and schools…examples that led to the abrupt firing of Financial Aid Directors across the country, including Ivy league institutions like U Penn, Columbia, and even our alma mater (it pains me to report)?

    Have you noticed the Salaries of college presidents, administrators, etc. going through the root, as the price of college rose at double, or more recently triple the rate of inflation.

    Forget about the last two questions. Just the first two should compel you to rethink your piece. Recasting the university income streams as learning tools, when in fact they are predatory instruments that now threaten a large segment of the population in a very real way, strikes me as a learning opportunity for you in understanding the danger of mindlessly towing idealogical lines without doing honest research into the topic.

    No offense, buddy, but the Occupy thing wasn’t about nothing, unfortunately, and you dishonor yourself with this kind of piece by trying to turn it around on the students like that. Particulary given that (I am guessing) you, yourself have never taken, and will never take a student loan.

    Fight on. You’ll get what I’m saying with a little diligent research.

    -Alan

    • Ryan

      Alan,
      It would be nice if you presented some facts to back up your assertions.

      • Happy to. See the following:

        1) Consumer protections removed without warning the students:

        That the protections I mention were removed is accepted fact. See the 1998 amendments to the Higher Education Act. Ask any of your classmates with loans if they were explicitly informed that they did not exist for student loans prior to borrowing. The schools are getting a bit better about making it known that bankruptcy is gone, I’ve been told, but I suspect this is still a minority of schools, USC probably included in this omission. For historical evidence, ask Edfund (the California Guarantor) to provide loan counseling forms that they have used over the past decade or so. Nowhere on them will you see bankruptcy mentioned.

        2) All lending elements making more money on defaults than loans that remain in good stead:

        See http://www.studentloanjustice.org/defaults-making-money.html

        See also: http://www.beacon.org/productdetails.cfm?PC=2014

        There is also a report from the New America Foundation showing that the guarantors make fully 60% of their income from penalties and fees attached to student loans. Bug me, and I can dig up a link for you.

        3) College/Lender corruption

        http://education.newamerica.net/special_report_student_loan_scandal

        Ask anyone in the Financial Aid office as well…they’ll grudgingly acknowledge the claim wrt USC.

        4)Leadership/Administration Salaries. This should be self evident, but google “skyrocketing”, and “college president”, and “salaries” or “compensation”, and the magnitude of this claim will present itself as claimed.

        Hope this helps.