Read The Five-Year Party Online
Authors: Craig Brandon
The Five-Year Party (23 page)
“In other words, DOE—having lost repeatedly in court—is attempting by rulemaking to make FERPA say what it doesn’t,” said LoMonte. All fifty states have enacted laws requiring schools to make their documents open for public scrutiny. Because FERPA flies in the face of that overwhelming national consensus, it should be given the narrowest possible interpretation—exactly the opposite of the approach taken by DOE. “If the DOE does not voluntarily remedy the damage it has done, a harsh wake-up call will be coming from the courts.”
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6
When the Party Ends and the Tab Comes Due
I
n previous chapters we’ve seen how millions of unprepared, disengaged, and anti-intellectual high school graduates have chosen to attend party schools to enjoy five or even six years at adolescent playgrounds that have been designed for their enjoyment. Party school administrators who need to keep their classrooms filled to pay for bloated administrative salaries and a never-ending construction program have dumbed down their classes and inflated grades to retain as many students as possible, even if they don’t want to learn anything. The schools’ multi-million-dollar advertising and public relations campaigns are designed to attract as many students as possible and they directly target the kinds of students who want to purchase a degree but are not interesting in doing the work to earn one. Meanwhile, tuition increases at two or three times the inflation rate every year and parents pay it because they are uninformed about how dangerous college campuses are and how little education is actually taking place. They continue to pay the ever-increasing bills because they mistakenly think a college diploma is the key to success for their children.
n previous chapters we’ve seen how millions of unprepared, disengaged, and anti-intellectual high school graduates have chosen to attend party schools to enjoy five or even six years at adolescent playgrounds that have been designed for their enjoyment. Party school administrators who need to keep their classrooms filled to pay for bloated administrative salaries and a never-ending construction program have dumbed down their classes and inflated grades to retain as many students as possible, even if they don’t want to learn anything. The schools’ multi-million-dollar advertising and public relations campaigns are designed to attract as many students as possible and they directly target the kinds of students who want to purchase a degree but are not interesting in doing the work to earn one. Meanwhile, tuition increases at two or three times the inflation rate every year and parents pay it because they are uninformed about how dangerous college campuses are and how little education is actually taking place. They continue to pay the ever-increasing bills because they mistakenly think a college diploma is the key to success for their children.
Eventually, like all parties, the five-year party comes to an end. After five or even six years enjoying themselves at the country club campus, students don their black gowns, have their names called, and receive their diplomas. Parents breathe a sigh of relief that the days of paying all those expensive bills have come to an end. It is, parents think, liberation day and they get set for the fascinating and lucrative careers that their children were promised all those years ago when they took the golden walk. Within the next few weeks and months, however, they begin to suspect that something has gone very seriously wrong.
The final inconvenient truth about party schools is that, for the vast majority of students, the lucrative careers that party schools promised fail to materialize. It’s only in the months after graduation that parents begin to suspect that party school administrators sold them some very expensive snake oil. A serious case of buyer’s remorse sets in. Instead of a mailbox full of job offers for their children, they get the bills from predatory lenders and credit card companies demanding payment. It’s the final, cruel switch. Long after the five-year party ends, today’s young adults are suffering from the hangover of worthless diplomas and a job market flooded with poorly educated party school graduates forced to work at jobs that don’t require a diploma.
When America’s 1.2 million college graduates take off their caps and gowns each year, they face an average of $23,000 in student loan debt and $3,000 in credit card debt. This is the final bar tab for the five-year party. It means Junior has to pay the equivalent of a small mortgage payment each month. It’s the beginning of the painful “great awakening” from the college dream and it’s when parents finally understand how party schools took them for a very expensive ride. While the 2010 changes to the federal student loan program will help this problem by increasing Pell grants to low-income students and reducing the payments for student loans, the bloated costs of higher education will remain a significant problem until they are dealt with by college administrations.
In chapter two, we looked at the kickbacks that party school administrators were accepting from predatory lenders in exchange for allowing them to set up call centers where lenders pretended to be college employees. In addition, some colleges allowed lenders to put their names on the college’s “preferred lender” lists that implied they were endorsed by the college. Students who complained to administrators about financial problems were simply handed a predatory loan application, even though the government loan programs usually offer a much better deal. Students look out loans to pay their bar bills and spend spring break in Cancun. In the month after graduation, however, graduates and their parents finally discover how high those payments are going to be and the decades it will take to pay them off.
A popular T-shirt worn by recent college graduates proclaims in bold, black letters “Property of Sallie Mae.” It’s no joke. Student loans from predatory lenders like Sallie Mae are like carrying around a ball and chain. Although many hope to be freed from debt by the age of thirty or forty, it’s not uncommon to hear college grads say they will be paying into their fifties. And there is no escape. Miss a payment and you fall into default, which adds penalties and fees that can cripple you for life. Students can never escape from these loans, even if they declare bankruptcy.
“When you can’t find a job or pay your student loans, college can seem like the Big Rip-off,”
Fortune
magazine reported in 2002. “Twenty-eight percent of those surveyed by Nellie Mae [another student loan company, absorbed by Sallie Mae] had combined undergraduate and graduate student debt of more than $30,000, and for 22 percent, their loan payments ate up more than one-fifth of their monthly income.”
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Fortune
magazine reported in 2002. “Twenty-eight percent of those surveyed by Nellie Mae [another student loan company, absorbed by Sallie Mae] had combined undergraduate and graduate student debt of more than $30,000, and for 22 percent, their loan payments ate up more than one-fifth of their monthly income.”
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Taking out huge student loans and counting on large postgraduate salaries to pay them off, which is exactly the sales pitch that party school administrators deliver to unsuspecting students and their parents, used to make sense but increasingly does not work any longer, said economist Edward Wolff of New York University. “Whereas their parents experienced rising wages over their lifetime,” he said, that is no longer the case for today’s graduates. “So college may have been a bad investment.”
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Millennial authors like Tamara Draut, Michael Collinge, and Anya Kamenetz have written entire books about recent college graduates who struggle to pay off their student loans and face a future with crippling levels of debt. Anyone who still doubts that going to college can ruin your life should take the time to read one of their books.
“Shaney,” a graduate of the University of Arkansas interviewed by Draut, had $25,000 in student loans, just a little above average, but was unable to find a job two years after graduation. “She’s begun to question the value of going to college and finds herself wondering whether it wasn’t all a waste of time,” Draut wrote.
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Even though she is generally in favor of students going to four-year colleges despite the heavy cost, Draut said that after three years of paying loans, some young adults are less likely to agree that the benefits of college make the debt worthwhile.
“Borrowing for college is a lot like buying a new car,” she wrote. “By the time that great ‘new car smell’ wears off, so does the joy of owning the car.”
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Alan Michael Collinge, founder of the political action committee Student Loan Justice and author of
The Student Loan Scam
, has shown how predatory lenders teamed with Congress and party school administrators to set up one of the largest loan sharking operations in American history, worth $90 billion as of 2008.
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Instead of encouraging graduates to pay off their loans as soon as possible, as credit counselors advise, predatory lenders encourage graduates to default so they can load on fees and penalties that can double or even triple the amount to be paid back. Ralph Nader, commenting on the problem in 2006, said, “the corporate lawyers who conceived this self-enriching system ought to get the nation’s top prize for shameless perversity.”
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The Student Loan Scam
, has shown how predatory lenders teamed with Congress and party school administrators to set up one of the largest loan sharking operations in American history, worth $90 billion as of 2008.
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Instead of encouraging graduates to pay off their loans as soon as possible, as credit counselors advise, predatory lenders encourage graduates to default so they can load on fees and penalties that can double or even triple the amount to be paid back. Ralph Nader, commenting on the problem in 2006, said, “the corporate lawyers who conceived this self-enriching system ought to get the nation’s top prize for shameless perversity.”
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Collinge’s website has drawn student loan horror stories from all over the country. Britt Napoli, for example, originally borrowed $30,000 to attend graduate school. Nearing age fifty, he has so far paid the bank $33,000 but still owes $70,000 and is worried that the bank will garnish his Social Security benefits after he retires. Another student, “Elizabeth” of Illinois, whose loan payments amount to $1,100 a month, wrote to him, “I feel like this is a form of loan sharking, where financial aid offices and higher education institutes are pushing students into a life of debt, while the student is under the assumption that they are bettering their quality of life by obtaining a degree, which, in my particular case, I will never be able to use.”
“I’m going to die with these student loans,” said “Lori,” a thirty-three-year-old woman who took on $40,000 in student loans and works as a social worker in Manhattan, earning just $16,000 a year. Her $250 payments cover just the interest, not any of the principal on her loans.
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With the diminished job market brought on with the economic recession that began in 2008, graduates are finding it even harder to make their loan payments and are increasingly calling on Mom and Dad to bail them out before they go into default. Robert Shireman, director of the nonprofit Project on Student Debt, said an increasing number of recent grads won’t be able to find any jobs at all but will have to continue to make their loan payments. Because college loans cannot be forgiven, even if the graduate declares bankruptcy, a default can mean doubling or tripling of the graduate’s debt, ruined credit, wage garnishment, and a lifetime of harassment by loan processors.
“Children are coming out into one of the worst job markets God ever made and lugging with them all this debt,” said Robert Allen, a father of three children in their twenties from Downington, Pennsylvania, who has co-signed his children’s loans and is therefore responsible for paying them off if his children cannot. “The minute they start taking water on their credit, you’re coming up in the gun-sights of creditors.”
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Student loans are specifically excluded from bankruptcy protection, so even if graduates declare bankruptcy, their student loans are immortal and will follow them to the grave, no matter what happens to them. The constant harassing phone calls from collection agencies and the garnishment of their salaries and tax returns has led many debt-burdened graduates to consider suicide or moving out of the country. Collinge describes one student who moved to Southeast Asia to live his life productively without the huge cloud of debt hanging over his head.
Harvard professor Elizabeth Warren said Congress had given to the loan companies “powers that would make a mobster envious,” including the ability to garnish, without court orders, salaries, Social Security, and even disability payments. They also included tax refund seizure, suspension of professional licenses, and termination of public employment. Many of these draconian measures, of course, make it impossible for students to make payments. What can you use to pay them back once you have lost your job?
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Many parents had not even considered the problem of paying back student loans when their children signed up for them. They simply assumed that what the party school administrators told them was true, that a child with a college degree would make enough money that it would not be a problem. Student aid counselors at colleges are notorious for minimizing the problem of paying back loans. About 70 percent of families didn’t even consider their child’s postgraduate earnings when they decided how much to borrow, according to a study of 1,400 students and parents released in August 2007 by student loan company Sallie Mae. Also, 40 percent said they paid no attention to the cost when deciding which college to attend.
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The idea that there are thousands of corporate jobs waiting for brand-new college graduates as middle managers, researchers, and marketers is at least a decade out of date. American corporations have either phased out those kinds of jobs, sent them overseas, or transformed them into positions for temporary consultants. Any kind of job that can be performed over the internet, from radiological scan review to research to marketing, has been outsourced to third-world countries, where they cost companies only a fraction of what they used to pay here.
While a minority of the best college graduates are able to find jobs related to their intended careers, most of them, particularly the graduates of party schools and subprime colleges, have to settle for much less. What they can look forward to is what one author calls “crap jobs.” They work in a cubicle at the minimum wage as a temporary employee with no benefits or are forced to accept jobs as pizza deliverers, mail carriers, clerks, and waiters. Jared Bernstein of the Economic Policy Institute estimated that in 2006 about 17 percent of jobs that did not require a college degree were held by college graduates and that there were seven million college graduates employed in jobs that did not require a degree.
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Most graduates of party schools have absolutely no idea how to find a job. During their college years, they never really chose a career and only chose a major when the college told them they could not put it off any longer. Then they chose their majors based on which department asked them to do the least amount of work. This lack of any kind of career direction fits right in with young adults’ belief that luck will intervene and provide them with what they need when they need it. There was little understanding that the decisions they were making in college would have a direct impact on how successful they would become. They genuinely expect that recruiters from large corporations are waiting for them at the end of the graduation line to sign them up for $80,000 office jobs.
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