It’s the first of the month, that means I pay a lot of bills. I hate paying bills. Money in and money out, all the time. I don’t need a lecture reminding me that that is in fact how the world works; I know this. I have accepted this. I just aggressively and stubbornly reserve my right to complain.
I find student loans to be one of the most tragic and significant problems of our era. I have recently been exposed to the idea that student loans are the new indentured servitude. Dissent Magazine published an article titled “Student Debt and The Spirit of Indenture” by Jeffrey J. Williams in their fall 2008 volume. In the article, Williams presents a persuasive arrangement of arguments that tie the experience of those currently bound to student loan debt to the historically significant experience of the indentured servant.
I’ll briefly recap the history of indentured servitude. As I recall, immigrants from Europe who could not afford the cost of the voyage to America would contract their labor for 3 to 7 years in exchange for the costs of the voyage. The logic is simple; the opportunity of what is to come after 7 years is calculated to be worth the sacrificed time and freedom. Doesn’t sound so bad?
“This is not to soft-peddle indentured servitude. Indentured servitude was a violent contract, with physical torture used to coerce labor. As economist DW Galenson noted, “The Company clearly felt that [beaten workers running away] threatened the continued survival of their enterprise, for they reacted forcefully to this crime. In 1612, the colony’s governor dealt firmly with some recaptured laborers: ‘Some he apointed to be hanged. Some burned. Some to be broken upon wheles, others to be staked and some to be shott to death.’” (The Atlantic)
Ok, so it’s not like it was in 1612…But with student loans–the only means of financing college for those of us whose parents are either not wealthy enough or willing enough to fund it for us–the contract is for much longer. Even with a debt of only $30,000 (I’m saddened that I can put the word only before that), it is a binding 15 year contract that dictates many of your life decisions. The sacrifice here is for labor; the reward is increased life-long pay (or in the way that I am justifying it- enlightenment, or a very expensive form of intellectual exploration). Surely, the loan recipient is likely to take up a lifetime of labor no matter what, and that is good; we all should work. But the immense amount of debt that some students take on deprives them of the freedom to work a job that might be fulfilling but pay less, requiring them to take on a job that is unfulfilling but pays enough to get by. It also severely limits an individual’s economic freedom and mobility. Most entry-level jobs don’t pay more than $3,000 a month. There are obvious exceptions to this, and I am only basing my observation my personal experience and the experience of my many entry-level peers. The bottom line is, we were told that our education would land us a job that would make repayment of this debt easy. The legend of the university education is, however, far from the reality.
If a person financed a four-year private education, they will have roughly $600-700 monthly payments. Rent in Minneapolis, for example, is probably $500 to $900 for the most basic of living situations. Taxes take at least $400/month. A decent diet, means of transportation, and having a little extra for yourself can range from $200 to $500 a month. Health insurance can be $100 to $300/month. Here we have an estimated $1,700 to $2,550 range for monthly costs. If your entry-level job pays only $2,000 a month (which is the case for me), that means living paycheck to paycheck. If you adjust the monthly income to account for the loan payments, the $2,000/month hypothetical is actually only making $1,400 a month, or 8.75/hour. After years of education, I expect more than that, especially considering that my first job at the age of 16 back in 2003 paid $8 assembling bicycles.
Back to the thesis: quite simply, it’s indentured servitude because it is a loan secured not by property but by personhood, with an incredibly long term and little legal escape. What’s worse is that they allow you to begin signing yourself over at a vulnerable age of 18, after telling you for years that if you don’t go to college, you won’t amount to much. For most of your young adult life, your decisions will be overshadowed by the presence of an overwhelmingly heavy debt. If you miss some payments at a young age you will be paying higher interest rates on every form of debt you take on in the future.
Then there is the uncertainty of labor. The Atlantic makes another astute observation comparing student loans to the older form of indentured servitude:
“people under indentured servitude had the job waiting for them. The clock was ticking for the firms who had set up the contract, and they needed to get their value. With student loans, they can sit there for decades, never dischargeable, always getting paid regardless of recession or job market.”
As this excerpt explains, there is another element beyond uncertainty that I mentioned before- lack of legal recourse. Unlike other debts, the consumer cannot resort to bankruptcy. Regardless of the economic conditions or the particulars of a situation- we are nearly unconditionally bound to out educational debt.
The solution offered is quite brilliant. The “FreeHigherEd” solution proposes that the federal government pay for higher education. This would cost 50 billion a year and “could be paid simply by repealing a portion of the Bush tax cuts or shifting a small portion of the military budget.” This is incredible. If anything deserves to be the populist movement of the middle class, this is it. Education financing has become the means of, not providing opportunity for advancement despite your family and class status and history, but of denying that opportunity and magnifying the stratification of class.
Another solution is income adjusted payments. This would cap your monthly payments to no more than 8% of your gross income. For me, this would be a nice improvement as I am currently paying about 27% of my gross monthly income. Basically, none of this is fair for anybody who is a recent graduate.
I don’t regret getting a BA, I am better off for it. I could have chosen a more affordable school, it’s true, but I didn’t. I take full responsibility for my current situation; holding nearly $100,000 in debt with interest rates ranging from 3% to 6%; I am living paycheck to paycheck.