The National Student Loan Crisis
So I normally (all 3 posts) prefer to keep my post focused on conversation around sustainability and green issues. Today though I had a conversation that I think is worth discussing on student loans. Student loan debt accounts for $1.2 Trillion in consumer debt falling only behind mortgages. With the economy being down since the fall of 2008 it has been harder for graduates to pay that debt back being either unemployed or underemployed. In my case, I have had phases of both since finishing grad school in 2009. I have pretty limited spending and track my finances and I do feel it’s a little hypocritical to say, “I can’t make my loan payments because I have to make my car payments too.” Maybe I didn’t pick the best point in time to get a new car, but the one I had was costing me more in repairs annually than a year worth of payments on a new car, and the car payments are at least spread out over a year. I don’t think there’s a worse feeling than having the engine light come on and having it amount to a $1,600 bill. Surprise! My car though is a means to get me to my job and to interviews and to get around, since as I’ve mentioned public transportation options are quite limited. Anyway, I’m getting a little off topic. The point is, I’m doing all I can to minimize my finances and expenses on a regular basis.
I’m not a political activist by any means and have about zero desire to ever be involved in politics. I tend to think of myself as an Independent voter, and have been listed undeclared for nearly 10 years. I like to look for candidates with merit rather than rely solely on party designations. Last fall sometime in a bout of frustration, I sent an email off to a New Hampshire representative, since that’s where I currently reside. I’m not sure exactly what I wrote, but I know it was to air some grievances with my healthcare, students loans, and general frustration with the economy. Much to my surprise, her office called me back last week. After several days of phone tag I finally got to talk with a staff member at their office. They basically wanted permission to use my email and experience with relevant campaign material. They’ll forward what I wrote to me (I filled out a form on her webpage and didn’t save a copy, whoops) and just make sure it’s what I want to say. While on the phone, I took the opportunity to just talk a little bit more about my frustration, one which I feel is shared by many students and former students; Sallie Mae.
I find it a terrible disservice to borrowers to have to put up with the quality (or lack thereof) of service that is given back. This company is in charge of keeping track of a substantial portion of your finances and essentially your credit rating for the next 20-30 years, but when you call them, it’s like talking to a brick wall that’s shrugging at you. Everyone’s situation is unique, and I want to pay them back, I really do, but my current financial situation does not allow me to make the full monthly payments of what I owe. If you have private loans, there’s no getting around paying them back in a more leisurely manner aside from interest only payments. When you call not only is there about 3-5 minutes of the automated system to deal with, (not to mention if you’re on hold after all of the prompts) but you’re asked twice to complete a survey regarding their “Excellent customer service” following the call before you even get to ask a question or tell anyone why you’re calling. When you finally speak to a representative, the problem solving and comprehension skills feels like it’s next to nothing. If you aren’t getting the United States call center, then the representative most likely picks up on an few key words and follows a script on how to address the problem. If it isn’t quite what you’re looking for, or if you want an alternative, that’s too bad. It feels like there’s no way to get through to someone in a way that will make both parties happy.
I don’t think all the blame can rest entirely on how the organization is run, though they certainly haven’t gone through any great lengths to improve it, despite the countless surveys I have responded to over the years. I think students have a responsibility to understand what they’re getting into as well. When you’re 18 and filling out FAFSA is your only option, it’s hard to know any better. Interest rates? Stafford Loans? Federal Unsubsidized? Sure, sign me up for those. I don’t even have a credit card, but by all means, loan me $25,000. Programs need to be in place at the high school level that requires you to learn about borrowing before going to college and how to get the most out your money.
Not only is the $1.2 Trillion debt an indicator of the high amount being borrowed and not being repaid right away, it’s an indication of the rising cost of college. My last year of grad school at LSU, I remember reading the school wide emails that not only indicated a higher than normal increase in tuition but a decrease in services due to economic and financial issues. My undergraduate school and a percent that tuition went up by annually. But this consistent increase in prices for college is being greeted by a poor job market and as I said, unemployment/underemployment. My plan for school certainly wasn’t to go for 9 years , earn 3 degrees and not be able to find a job in my field. That isn’t anybody’s plan. But the reality that graduates and 20 somethings are facing is that just your bachelor’s degree isn’t enough. I’m surprised by the number of people I know that have returned to school in some form for a Master’s degree, but that seems to be what it takes to be competitive these days. Architecture was also one of the hardest hit professions going into the recession. I’ve been told the amount of applications employers have received has been anywhere from 100-200. Can you imagine 200 job applications to sift through? Yikes.
Now I have no idea what my conversation with the staffer will amount to, if anything, though it seems some legislation relevant to what we discussed is in development. As I said, it’s not about not paying the money back, trust me, it’s something I want to do. I just think there needs to be a better business practice in place to handle it. New Hampshire is 2nd in the country for the percent of students graduating in debt and for the average amount owed, so it is a statewide problem, along with a national problem. I just find it amazing that an organization can leave every single customer they speak to feeling so frustrated and helpless. For many, borrowing is the only option to go to college, and rising costs will make that harder. We can’t place so much value and emphasis on education while simultaneously making it harder to access. There are free and lower priced options available online. My last degree was completed though online and distance programs, and I loved the format and not having to commit to moving and relocating for school. And you do have to evaluate if your chosen field will value education or experience more. I don’t know what the solution is, obviously, but the disconnect and communication issues between Sallie Mae and its borrowers needs to be addressed. So here’s hoping that my 15 minute phone call today is part of the effort to fix that gap. It may not feel like it when it comes to politicians, but sometimes you can find someone willing to listen, and it’s nice to know that there are some out there working for something, rather than against the other guy.
For more information on Student Loan debt broken down state by state, you can check out The Project on Student Loan Debt.
How The $1.2 Trillion College Debt Crisis Is Crippling Students, Parents And The Economy