Tag Archives: debt

What is the TRUE cost of education? A look at Debt and Jeffery Williams’ “The Pedagogy of Debt”

It’s very apparent that the cost of education is getting a bit out of control. Not only is the actual monetary commitment too high, but our current system of financing education through mega-banks creates serious opportunity costs as well; students have to cater their educational experiences to the reality that they will be paying for their education long after they graduate. In that sense, a holistic approach to education- education catered towards the human development and skills acquisition- is fundamentally being forced into obsolescence. Education as a meritocracy has waned and shifted to a zone where students feel they must accumulate a degree in fairly specific areas of study- such as law or business- to feel they will have the financial stability to pay for their education.

In his engaging and insightful essay The Pedagogy of Debt, Jeffrey Williams argues that the several decades long shift from education being truly state-subsidized service to a privatized service administered by mega-banks has changed our cultural understanding of higher education. No longer is higher-ed a social good but it is now understood as an individual good. He writes, “those who attend university are construed as atomized individuals making a personal choice in the marketplace of education to maximize their economic power.” While ostensibly good for American society as a whole (all the constituent parts, or atoms, adding up to a more prosperous economy), the reality is that it “is based on the conception of society as a market driven by individual competition rather than social cooperation, and it defines social good as that which fosters a profitable market.” Debt, it would seem, has come to dictate our educational processes and decisions, and in that sense, debt is the paradigm around which education, on an individual level, is designed. Debt is the new American pedagogy. Williams points out that initially, higher education was meant to provide a sort of ‘safe-zone’ for young adults, preventing them from being forced into the marketplace prematurely. “The traditional idea of education is based on social hope, providing an exemption from work and expense for the younger members of society to explore their interests, develop their talents, and receive useful training, as well as to become versed in citizenship, in the belief that it will benefit society in the future…the reasoning melds citizenship ideals and utilitarian purpose.” The reality now, though, is that loans from mega-banks are the major source of funding for education and they are designed so that banks are the beneficiaries and not students. According to Williams, “the new paradigm of funding sees the young not as a special group to be exempted or protected from the market, but as already fair game in the market, before they have developed skills and a purchase in the [marketplace]. It extracts more work, like workfare instead of welfare, from students, both in the hours they might clock while in school as well as in loans, which are finally a deferred form of work. Debt puts a sizeable tariff on social hope.” The reality is that the current mode of funding, the structure of federal lending, provides little safety net for students; what should be consumer protections are, in reality, a safety net for banks. Williams cites that despite the bearish state of the market (his paper was written in 2006, so the housing bubble hadn’t yet burst) Sallie Mae had returned an incredible profit rate of 37%.  This all while graduates are struggling to find work and pay off their loans really just trying to stay afloat. There is obviously a huge imbalance in the way higher education is being funded. It would seem that debt has come to supersede an individualized and holistic education and, doing so, that debt becomes the omnipresent pedagogue of our generation. Where education used to be about development and the well-being of the student, it is now more about economic positioning than growth and pursuit of passion. The current system of funding has skewed the scales of opportunity; instead of closing the educational gap and progressing educational meritocracy, it has in fact widened the educational gap. No level of financial literacy education can bridge that gap; the reality is that a fundamental rework of educational financing is the only way we can return to the post WWII ideals of citizenship training and purpose driven approach to education.

Debt is not a ‘necessary evil’ associated with, but extrinsic to, the goal of higher education; debt dictates a host of the lessons actually learned in college. Debt teaches that higher education is a transaction and that students- should i say consumers?- are subject to the market franchises associated with, even intrinsic to, education. Debt informs students’ career choices: students are shying away from careers or passions that don’t provide a certain level of monetary compensation. It doesn’t make financial sense to work a menial part-time job in order to scrape by while working on your creative masterpiece, be it novel, film, collection of poetry, etc. Williams directs attention towards the evidence, “the warp in majors toward business…liberal arts have faded, in real terms, whereas business has grown by more than double, from about 8% before WWII to 22% now. This is not because students have become more venial or no longer care about poetry or philosophy; rather, they have learned the lesson of the world in front of them and chosen according to its, and their, constraints.” Debt has also come to inform our generation’s major worldview; that is, debt teaches that the capitalist market is the primary organizational structure of our time, indeed it teaches that democracy is a market and that there is no reality alternate to that market, “ideas, knowledge and even sex (which is a significant part of the social education of college students) simply form sub-markets.” Civics are now taught by debt as well; if the public sphere operates as a market, then what better way to administer it than as a privatized service? Students are educated to understand that success is predicated on an appropriately capitalist competitive spirit; if you’re not maximizing your economic productivity, you’re engaged pursuits that aren’t worthwhile, even lazy. Furthermore, if a student has to spend a decade (or 2) indentured to the banks, why should that student believe in social entitlements? Taking that a step further, you can draw the conclusion that debt even informs a persons value; there is little distinction between intrinsic qualities and extrinsic qualities when value is measured in financial potential (remember, debt dictates path of study often towards earning potential) and so education is value-added for a student. Williams argues that, in defining people, debt dictates that “you are how much you can make, minus how much you owe. Debt thus teaches the intractability of class. The disparities of wealth are an issue of the individual, rather than society; debt is your own problem, or failing, so you should not complain about it but get a job with a salary to pay it off.”

Now the commentary has no value without suggesting solutions, otherwise it is just a lot of complaining. Williams does provide solutions or at least ideas that may be the start of potential solutions. I feel that for the purposes of this blog post, though, the value exists in discussion about his argument and whether or not the outlook is so bleak as he presents it to be. I do believe that the way higher ed is currently funded is ultimately destructive and self-defeating. However, while the lessons debt forces on students may decidedly inform socio-cultural understandings, I do not believe that extrinsic and intrinsic valuations of an individual are melded to the point that ‘quality’ in a person is derived only from their economic potential, or economic performance. The truth is, though, while that may not yet be the case, if we don’t rework our current system of educational financing, there will be generations of students learning the decidedly harsh lessons discussed above, and who knows, a few generations down the line we may not be looking at things through the same rose-colored lenses. Stay tuned for a discussion of ways in which we can begin to influence change in educational financing….
-Mike

Sign up for a one on one session today!

The purpose of the UMF Financial Literacy Outreach Program is to provide you with the tools to help strengthen your knowledge of your student loans and the financial world we live in. Whether you are a first-year student or a senior graduating in the spring, we have the tools to aid your specific situation. If you are interested in a one-on-one informational meeting, here is what we will cover!

In exchange for ONE HOUR (or less!) of your time we provide a personalized, holistic money management strategy:

  • Determine what amount of debt you will be looking at when you graduate
  • Discuss your options for repaying and lowering this debt
  • A rundown of all the available tools to help reduce your financial burden
  • We can tell you if you qualify to have loans forgiven! (Free money!)
  • Set you up to take control of your financial situation NOW
  • Help you develop a comprehensive budget and savings plan to help direct your financial decisions, and reach your financial goals!
  • Help you ‘find money’ that is being wasted frivolously
  • Provide tools for your financial future
  • This includes online banking, Mint.com, NSLDS.ed.gov, and more!

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The BIG Question

How Much Should I Borrow?

What is the appropriate amount of debt to take on for my education? In our economic climate, this is a question that gets asked considerably more often than it did before the Great Recession. It used to be that students would take out gobs and gobs of money with the full confidence that with our economy growing they would land a job that pays well and the loans would be a non-issue. Not so anymore. Financial planning is essential and student loan debt should be a calculated peice of those plans. To answer the question of how much to borrow, consider several factors:

What is my major? How much can i expect to earn in my first year of work after graduation?

The rule of thumb is based on your major; depending on what you are in school for you should be able to figure out the answer to the second question of what you can safely estimate your first year’s salary will be out of college. Based on that figure, you can form an answer to the question of how much to borrow. Generally speaking, Liberal Arts majors should try to avoid borrowing more than $27,000- $35,000 and Math/Science types or Computer Programmers can plan to borrow near double that. Mark Kantrowitz, who runs FinAid.org (a great resource for student loan and indebtedness information) says that if you’re borrowing more than $10,000 a year you need to cut down on loans or, if that’s not possible, transfer to a cheaper institution.