Posted on September 16, 2018 by Yves
Smith
Yves here. This article
describes how the stigma of struggling to pay student debt is a burden in and
of itself. I wish this article had explained how little it take to trigger an
escalation into default interest rates and how punitive they are. The piece
also stresses the value of activism as a form of psychological relief, by
connecting stressed student debt borrowers with people similarly afflicted.
But the bigger issue is the
way indebtedness is demonized in a society that makes it pretty much impossible
to avoid borrowing. One reader recounted how many (as in how few) weeks of
after tax wages it took to buy a car in the 1960s versus now. Dealers don’t
want to talk to buyers who want to pay in full at the time of purchase. And if
you don’t have installment credit or a mortgage, the consumer credit agencies
ding you!
It goes without saying that
the sense of shame is harder to endure due to how shallow most people’s social
networks are, which is another product of neoliberalism.
In keeping, the New York Times
today ran an op-ed by one of its editors on how student debtors are also
victims of the crisis, reprinted from a longer piece in The Baffler (hat tip Dan K). Key sections:
Because of the loans’
disgracefully high interest rates, my family and I have paid more or less the
equivalent of my debt itself in the years since I graduated, making monthly
payments in good faith — even in times of unemployment and extreme duress — to
lenders like Citigroup, a bank that was among the largest recipients of federal
bailout money in 2008 and that eventually sold off my debt to other lenders.
This ruinous struggle has been essentially meaningless: I now owe more than
what I started out owing, not unlike my parents with their mortgage….
Many people have and will
continue to condemn me personally for my tremendous but unexceptional student
debt, and the ways in which it has made the recession’s effects linger for my
family. I’ve spent quite a lot of time in the past decade accepting this blame.
The recession may have compounded my family’s economic insecurity, but I also
made the conscious decision to take out loans for a college I couldn’t afford
in order to become a journalist, a profession with minimal financial returns.
The amount of debt I owe in student loans — about $100,000 — is more than I
make in a given year. I am ashamed and embarrassed by this, but as I grow
older, I think it is time that those profiting from this country’s broken
economic system share some of my guilt…
[At my commencement in 2009]
Mrs. Clinton then echoed a fantasy of boundless opportunity that had helped
guide the country into economic collapse, deceiving many of the parents in
attendance, including my own, into borrowing toward a future that they couldn’t
work hard enough to afford. “There is no problem we face here in America or around
the world that will not yield to human effort,” she said. “Our challenges are
ones that summon the best of us, and we will make the world better tomorrow
than it is today.” At the time, I wondered if this was accurate. I now know how
wrong she was.
By Daniela Senderowicz.
Originally published in Yes! Magazine
Activists are building
meaningful connections among borrowers to counter the taboo of admitting they
can’t pay their bills.
Gamblers and reality TV stars
can claim bankruptcy protections when in financial trouble, but 44 million
student loan borrowers can’t. Unemployed, underpaid, destitute, sick, or
struggling borrowers simply aren’t able to start anew.
With a default rate
approaching 40 percent, one would expect armies of distressed borrowers
marching in the streets demanding relief from a system that has singled out
their financial anguish. Distressed student debtors, however, seem to be
terror-struck about coming forward to a society that, they say, ostracizes them
for their inability to keep up with their finances.
When we spoke to several
student borrowers, almost none were willing to share their names. “I can’t tell
anyone how much I’m struggling,” says a 39-year-old Oregon physician who went
into student loan default after his wife’s illness drained their finances. He
is terrified of losing his patients and reputation if he speaks out about his
financial problems.
“If I shared this with anyone
they will look down upon me as some kind of fool,” explains a North Carolina
psychologist who is now beyond retirement age. He explains that his student
debt balance soared after losing a well-paying position during the financial
crisis, and that he is struggling to pay it back.
Financial shame alienates
struggling borrowers. Debtors blame themselves and self-loathe when they can’t
make their payments, explains Colette Simone, a Michigan psychologist. “There
is so much fear of sharing the reality of their financial situation and the
devastation it is causing in every facet of their lives,” she says. “The consequences
of coming forward can result in social pushback and possible job–related
complications, which only deepen their suffering.”
Debtors are isolated, anxious,
and in the worst cases have taken their own lives. Simone confirms that she has “worked
with debtors who were suicidal or had psychological breakdowns requiring
psychiatric hospitalization.”
With an average debt of just
over $37,000 per borrower for the class of 2016, and given that incomes have been flat since the 1970s, it’s not surprising that borrowers are
struggling to pay. Student loans have a squeaky-clean reputation, and society
tends to view them as a noble symbol of the taxpayers’ generosity to the working
poor. Fear of facing society’s ostracism for failure to pay them back has left
borrowers alienated and trapped in a lending system that is engulfing them in
debt bondage.
“Alienation impacts mental
health issues,” says New York mental health counselor Harriet Fraad. “As long
as they blame themselves within the system, they’re lost.”
Student debtors can counter
despair by fighting back through activism and political engagement, she says.
“Connection is the antidote to alienation, and engaging in activism, along with
therapy, is a way to recovery.”
Despite the fear of coming
forward, some activists are building a social movement in which meaningful
connections among borrowers can counter the taboo of openly admitting financial
ruin.
Student Loan Justice, a national
grassroots lobby group, is attempting to build this movement by pushing
for robust legislation to return bankruptcy protections to
borrowers. The group has active chapters in almost every state, with members
directly lobbying their local representatives to sign on as co-sponsors to HR
2366. Activists are building a supportive community for struggling borrowers
through political agitation, local engagement, storytelling, and by spreading a
courageous message of hope that may embolden traumatized borrowers to come
forward and unite.
Julie Margetaa
Morgan, a fellow at The Roosevelt Institute, recently noted that student
debt servicers like Navient have a powerful influence on lawmakers. “Student
loan borrowers may not have millions to spend on lobbying, but they have
something equally, if not more, powerful: millions of voices,” she says.
A recent manifesto by
activist and recent graduate Eli Campbell calls for radical unity among
borrowers. “Young people live in constant fear that they’ll never be able to
pay off their debt. We’re not buying houses or able to afford the hallmarks of
the American dream,” he explains.
In his call for a unified
national boycott of student loan payments, inevitably leading to a mass default
on this debt, Campbell hopes to expose this crisis and instigate radical
change. In a recent interview he explained that the conditions for
borrowers are so bad already that debtors may not join the boycott willingly.
Instead, participation may simply happen by default given the lack of proper
work opportunities that lead to borrowers’ inability to pay.
While a large-scale default
may not happen through willful and supportive collective action, ending the
secrecy of the crisis through massive national attention may destigmatize the
shame of financial defeat and finally bring debtors out of the isolation that
causes them so much despair.
Activists are calling for a
significant conversation about the commodification of educating our youth,
shifting our focus toward investing into the promise of the young and able,
rather than the guarantee of their perpetual debt bondage. In calling for
collective action they soothe the hurt of so many alienated debtors, breaking
the taboos that allow them to say, “Me, too” and admit openly that in this
financial climate we all need each other to move forward.
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