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Student Loans and the Real Cost of Sending Our Kids to College

Taking on college debt to send your kid to college? Yeah, that's a middle class thing to do.

This year, the amount of student loan debt in the U.S. hit $1.5 trillion. Some 44 million people owe the government that much. The average person today graduates college with $30,000 in debt. At least one in three recent graduates of college have student loan debt. And while millennial and Gen Z students are particularly burdened, their parents, who shoulder the costs of college and take on additional loans, are burdened as well.

For her new book Indebted: How Families Make College Work At Any Cost, Caitlin Zaloom, a professor of social and cultural analysis at New York University, interviewed more than 160 families who have borrowed to send their kids to college about the stress of loans. Student debt, she argues, has changed the fabric of the middle class family — to the extent having student loan debt is the new marker of the middle class. Fatherly spoke to Zaloom about the crushing weight of student loan debt, what families need to know, and why she has hope for the future.

In your book, you argue that college debt is the new marker of what it means to be in the middle class. How did you come to that conclusion?

It’s very important to be thinking about student debt as central to what it means to be middle class today. Middle class lives have always been organized around creating opportunities for children. That is a closely held value of middle class Americans from as far back as the country goes, actually. 

Today, college is more important in realizing that goal than ever before. When we think about what it means to be middle class, college has to be central, and paying for college is at the heart of the middle class family. It’s a problem that all middle class families confront because they are organized around opportunities for young people. Today, that means being thrust into this situation where parents have to draw down their savings and draw in grandparents if they have the resources, and kids have to be in debt.

Being in debt for college is absolutely critical to any definition of what it means to be middle class today.

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Why did you come to this book and this book topic? I know you teach at NYU — an elite institution that is prohibitively expensive.

My students led me to this topic. I’m a cultural anthropologist; I have been studying the culture of finance for many, many years. When a student came to my office in tears because she was about to graduate in tens of thousands of dollars in debt, I realized that the most important project that I could pursue was already right in front of me.

Student debt represents one of the most important ways that the financial economy has shaped our everyday lives. It’s gotten inside our families. That’s what Kimberly, my student, taught me. Her upset about that debt — and the constraints it placed on her future — wasn’t only about where her own future might go. Her upset was also about way that it might disappoint her mother, whose dreams she had been carrying forward, as well.

I think NYU is a perfect microcosm for the idea that a lot of these 18-year-old kids who put their names on huge loans don’t really know what they’re getting into. When you spoke to these 160 families about student debt, did you see that sentiment reflected in the kids you talked to? 

I conducted a study of more than 160 interviews with parents and students, all of whom carry debt as a way to make college work. I talked to both parents and students about it. Many of the students don’t have a full grasp of what taking on that debt might mean for them at the age of 18. That’s only reasonable — no 18 year old really could.

I think that the real challenge for families is that our system of paying for college, and the high costs of college, puts them in a moral vise. 

What do you mean by a ‘moral vise’?

On the one hand, parents are supposed to be doing everything they can for their kids. Parents will do absolutely anything for their kids to open up opportunities for their children in the future.

For many parents today, that means confronting the high cost of college and trying to make it work no matter what. So, one of the most important pieces of my conversations with both parents and the young adults was about how they made their decisions to attend one school or another. The most important consideration for them was always the “fit.” 

They talked first and foremost about how that particular school would help the students realize their potential and their talent. That meant the specifics of what that university offered in the classroom, but also the kinds of peers they might meet, the environment they might be in, like the urban environment of NYU — all of those elements came into play.

So the families tried to get the “fit” right first, and then tried to reconcile the costs. For the overwhelming majority of the parents in my study, that meant that they made it work, no matter what.

The idea of this moral vise — that middle class parents would take on more than they can afford to help their kids go to college — also seems to be coupled with how hard it is to pay off student loans. So many reports have come out about student loan servicing programs and how impossible they are to work through. Did parents recognize that they were borrowing from a difficult system to pay back?

What I call “the student finance complex” is vast. It includes private lenders, the colleges and universities whose aid funds are essential for students, and most importantly, it involves the federal government. For most students, the Department of Education is their primary lender. On average, students graduate with about $30,000 in debt. The federal government plays an outsized role in the student finance complex because most students take those federal loans first, and for most students, that ends up covering their portion of the cost of attending college.

It doesn’t cover what their parents are required to pay. But neither the students nor their parents that I interviewed talked about the problems with the student finance complex. They, most often, took on the problem of paying for college as a personal matter.

So they didn’t really grapple with the flaws in the system of the student finance complex.

This is an important part of the moral vise that they struggle with. On the one hand, their responsibility as parents is to get the best education possible for their kids no matter the cost. On the other hand, they are also supposed to be financing their way out of this problem with their own prudence. 

Now, we all know that the cost of college today is too high, and that there’s basically no amount of prudence that will allow families to manage that cost. So that is the other dimension of the moral vise — that the federal lending system, the private lending system, and even colleges and universities are telling families that they should be facing down the costs of college through their own personal resources and on their own books. That’s impossible for most people.

Do you think that families perceive how difficult it is to pay off debt as a personal and moral failure because of the way that universities, the government, and private lenders talk to them about that debt? Or is there a sense of shame associated with debt, which makes people not talk about how hard it is to repay it?

It’s not only debts. The costs of college are even more than the debt. It’s the debt plus. We need to first make sure that the conversation with parents and students is about all of it: what parents are responsible to pay and what students are responsible to pay, the second of which often gets paid through loans. 

Parents, on the other hand, have to pay through whatever means possible — they take on second jobs, they pull money out of their mortgages if they have equity in their homes. They take on Parent PLUS Loans, which are the riskiest in the federal portfolio, and most importantly, they draw down their retirement savings. On top of that, their children take on debt to go to school. So it’s that whole complex of things that weighs on families, altogether.

Given that parents often take on second jobs, refinance their mortgages, and go into debt themselves, is elite college a meanwhile investment for parents?

We know that a college education pays off for most students who graduate. If you don’t graduate, you are really in trouble, because you have loans and no degree. 

But I think that the situation we are currently putting families in is unfair. First of all, the state universities in this country have been facing budget cuts for decades and decades. They’ve been squeezed to the point where it is not always the case that, say, a private education costs much more than a public one. We tend to have this sort of very siloed idea of public and private [and that they have wildly different costs], but for many students, these exist on the same plane, because the costs of public education have gone up significantly. 

Another issue is that many families have children in both: they have one kid who goes to Buffalo State and another who goes to NYU. Again, from the family budgetary perspective, these are just two different items, but they obviously represent very different kinds of education, that they try to fit to their individual kid. 

We know that about one third of people aged 18 to 29 have student loan debt. Candidates like Senator Elizabeth Warren and Senator Bernie Sanders have released student debt cancellation plans. Will something change? Is there a future where the student financing system makes more sense or college could be free for families?

There are several things that clearly need to be done. We need to strengthen the public university systems across the country that have faced draconian budget cuts. That is clear.

We need to make public colleges less expensive so that those are a strong option. We also need to give universities a stake in the outcomes of their students education. So, for schools like NYU, they would be doing fine. But for other kinds of schools — like the for-profits — we need to really restrain those schools that are taking kids money and offering them dubious degrees with little leverage in the labor market. 

Given that Betsy DeVos rolled back a lot of penalties and regulations on the for-profit college business, I’m not sure that’s so likely unless a Democrat wins 2020.

I think that it’s very encouraging to see student debt and the high cost of college on the political agenda with such force and backing. I saw a poll today that said that more young people were intending to vote in the 2020 election than ever before and that student debt was the reason [they wanted to.]

For students and their families, they clearly understand this issue and live it every day. But the political discussion needs to be much more capacious. We need to understand what [the student finance complex is] doing to relationships between parents and kids, by changing their sense of what’s possible in the future, and to take that seriously.