What’s The Damage?
Fifteen years ago, half of college graduates had student debt. Today, two-thirds are indebted, and the amount they owe is higher than ever before. Now, once the diplomas are packed away and the resume is polished, grads are left to ask, “What’s the damage?”
In the late 1980's, the sitcom Perfect Strangers introduced America to Larry and Balki, two distant cousins, one a photographer from Chicago, the other a shepherd from a Greek island. Hijinks ensued, as they usually do on primetime TV sitcoms, as Balki did exaggerated dances and endlessly strived to find a place in his adopted country. In one episode, he proudly announced, "I'm in debt! I am a true American!"
The joke was funny then, and it's funny now, because it's true. The average household credit card debt of an American family is roughly $10,637. Prior to the Great Recession, Americans embraced the power of the purse, and thus embraced the debt that came later. Throughout boom and bust, easy access to credit, a social pressure to consume free of consequence, and the oft-unscrupulous behavior of lenders spelled out easy penury for any citizen who didn't keep a close eye on their bills.
Now, as a combination of poor personal decisions and reckless global investments hits home, Americans are slowly starting to repair their financial houses- sadly, often at the expense of their real ones. Unfortunately, for those of us who completed higher education and entered the working world during the Recession itself, it's becoming harder to get our own houses in order.
For most of us, our biggest handicap is yet another type of debt, one which starts early in our lives and stays late into our older years, and which we incurred doing what we were encouraged to do. You can call it "educational loan repayment" or "long-term higher education expense" but we'll just call it what it is: student debt.
Debt from a higher degree is sometimes called "good debt", although, increasingly, many financial advisors are questioning if that may be an oxymoron. Whether the loans we depend on to afford an average of $9000 annually for in-state public or $28,500 for private higher education are a necessary evil or a sad failing, the reality is that they are not going anywhere anytime soon. In fact, the situation seems to be worsening each year.
All of us here at Pluck wanted to explore this generation-defining issue further, and so we reached out to experts, dug into the statistics, and scoured for alternatives. We're proud to showcase “What’s The Damage?”, our student debt guide. In the pages below, we hope you'll find insight, encouragement, and possibilities for a debt-free future.
We’ve broken down the guide into three sections:
“Educate Yourself” explores the shifting finances of public and private higher education institutions, and the role that politics can play in determining your tuition. We also look into the popularity of for-profit colleges, and what happens when education becomes a profit-making enterprise. Lastly, we investigate the business of student loans, and their precarious position in American life.
After your exploration into the universe of financial decisions that go into higher education, we introduce you to the activists, advocates, and thinkers who are trying to change the system in “Take Action.” There, we talk with researchers and academics at some of the country’s premiere think tanks to understand the bubble economy that surrounds higher ed. We also speak with activists who are pushing to put education and advancement above profit, as well as future leaders in the debt debate who are trying to seek alternatives.
Of course, the ultimate goal of anyone with debt is to get rid of it. In “Pay It Off”, we'll walk through the opportunities you can find to dump your debt. Whether through grant-driven volunteer work or careers that forgive your student loans, we showcase the best ways forward for grads struggling with their bottom line.
The forecast sounds dire with graduates of the class of 2011 now saddled with an unprecedented $29,000 in average student debt. That’s why we were inspired to put together “What’s The Damage?”, and that’s why we urge you to take a moment to read on. With an understanding of how we got here, we can hopefully find a way out.
Yours in the ranks,
The Pluck Editors
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A Conversation with Chuck Knepfle
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My Exploitation of the American Student
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What's The Damage?
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