David Dulberg
September 2018

Colleges and Loan Servicers Need to Answer Questions

Students entering college are forced to make a lot of decisions. What school to go to? Which classes? Where to live? Buy or rent textbooks?

But, one of the biggest, for many, isn’t even much of a decision. If you go to school and you don’t have the approximately $100,000 it takes to go to a four-year college, you’re going to have to get a loan. Loans usually cover what grants, scholarships, and family financial support cannot. Colleges generally offer them without much explanation as to the long term impacts. And, even if they did, would it matter? If you don’t have a hundred grand in resources and you want to go to school, you’re going to have to borrow.

Ramen or Mac and Cheese?

Of course, once students get to college, they have even more decisions to make. What major to pursue? Study or go out? Ramen or mac and cheese? Should you actually talk to that someone you have been checking out?

Students hopefully maintain their priorities and focus to answer these questions well enough to come out of college with a degree and a career path. Because they will need it to pay off $40,000, which is the average amount of student loan debt current graduates have.

And it may take years before they begin to ask some questions that should have been asked earlier. How long will it take to pay off? How to come up with money that just isn’t there? Was it worth it?

Students, though, are not the only ones who have to make some decisions regarding higher education and student loan debt. More than 44 million borrowers have taken out over $1.5 trillion in student loan debt. And the cost and loan totals are only going up. Students spend decades paying off their student loans, delaying major milestones such as marriage, having children, or buying a house. Wasn’t that ramen or mac and cheese choice supposed to be mostly a college question?

What is America going to do?

President Lyndon Johnson signed the Higher Education Act into law in 1965. He saw this as an act of public faith, and an investment in the future. “When you look into the faces of your students and your children and your grandchildren,” Johnson said, “tell them that the leadership of your country believes it is the obligation of your nation to provide and permit and assist every child born in these borders to receive all the education that he can take.”

Though colleges have thrived in the half century since the legislation was signed, higher education loans have branched and spun into something Johnson would have trouble recognizing today. Decades of compromises and deals have made players out of a few elite and powerful student loan servicers. As private institutions, their loyalty is not to students borrowers, but to their stockholders. Students have invested in their futures on credit, while stockholders have invested in companies that pay dividends off of these student borrowers.

Though Johnson would be pleased that millions are flocking to college, he would not be happy that it is students, not colleges or the government, that are bearing the brunt of this heavy financial burden.

With all of the questions that students need to ask themselves about higher education, the very least that America can do is ask itself two questions:

Is the servicing of student loans a private program meant to be profit-based? Or, a public program focused on public goals and the public good?


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David Dulberg

David Dulberg lives with his wife in the coastal hills above a narrow creek, mid-canopy in a redwood forest. He has been writing for non-profits for many years, and volunteers as a pilot on the Baum Squad, a tandem bike riding program for the Earle Baum Center for the Blind. He does not have a pet. This does not make him a bad person.

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