The discussion over the student-loan crisis has become much more sophisticated of late. Instead of sneering coverage of people with expensive basket-weaving degrees, or anomic millennials too entitled and disaffected to get a job and pay off their debts, there's increasing focus on places where student loans are genuinely an emergency. Predatory for-profit schools have left people far in debt with worthless degrees, while students who didn't graduate are hit with a double whammy of carrying debts without an income boost from a college degree to show for it.
We know this is a crisis because we can measure it. We can see delinquencies using data from the Treasury Department. We can see where people have far too high debt-to-income ratios from academic surveys of incomes or from for-profit credit reporting agencies; they are concentrated in poor areas. And we can see the way for-profit schools implode like a fly-by-night racket the moment they encounter any formal accountability measure for their practices and actions. This all tells a story of a student-loan crisis that's real, but one that's limited to the world in which the system didn't work for students.
While these arguments are being led by academics and activists, there's another group of interested parties: Professional business groups, representing members of their occupation, are also telling a story about student loans. Their worry is that even when things work out for young people, and they graduate from a good school and get a job, their life stories are still significantly altered as a result. Student debt has serious consequences for the type of work people can do, and how they can do it, as well as their transitions between the stages of life, from building a family to retiring. These are stories that are much harder to pick up in the data, but business interests see them every day. Student loans have grown faster and more pervasive than our ability to measure them, and there's concern that these changes are happening in ways we aren't seeing until it's too late.
Student loans are a barrier to the highest-level professional work, and the business groups representing those careers are reacting. This is obvious with one of the most debt-intensive graduate degrees, a medical degree. Doctors' groups are worried student loans are now a major barrier to becoming a doctor. For instance, the American Medical Association recently wrote in a statement that high student debt can "dissuade students from attending medical school altogether, especially students from diverse ethnic and socioeconomic backgrounds. According to surveys of the [Association of American Medical Colleges], under-represented minorities cited cost of attendance as the top deterrent to applying to medical school."
But this isn't just a problem at the high end of professions. One of the big worries for young people generally is that student loans force them into money-focused careers and away from public service, care and service work. If you need to be able to make a student loan payment right after college, there's less breathing room for experimenting with self-employment or lower-paid work. And student debt is eroding the value of and ability to carry out care and service work at the same moment those careers are becoming more central to our postindustrial economy.
Business groups are finding that the student-loan crisis is changing not only the type of work people can do, but the ways in which they can do it. Take the story of Katy Roemer, an Oakland-based registered nurse of 20 years. She graduated from UC Berkeley in 1985 with no loans, before deciding to attend nursing school a decade later. There, she accrued $20,000 in debt, which she only paid off this year. When Roemer was fresh out of nursing school, she worked at a community clinic that focused on poorer patents, but she couldn't stay, because the low pay made it impossible to maintain her student loan payments. Over the years she thought about traveling to another country and doing much needed medical care work, but she couldn't do that either. "I speak fluent Spanish, and would have loved to volunteer in Mexico for a period, but I had to make sure I could pay my student loans," Roemer tells Rolling Stone. She says she sees the same thing happen with newer nurses, who have even higher debt burdens than she did.
This phenomenon is difficult to find in the data, but professional groups are flagging it as a major issue. The American Bar Association, for instance, writes that "[h]igh student debt bars many law graduates from pursuing public service careers." With increasing student debt, fewer young lawyers can work as public defenders or in legal services. According to a survey by the ABA, "law student debt prevented 66% of law student respondents from considering a public service career." This pull within professions to have to focus on dependable income, especially early in a career, is changing the very nature of how we work.
It also affects self-employed people. As eight-generation farmer Peter Stocks has found, a lot of the way small businesses are created and expanded involve lean years that are dependent on credit – two things this new student-debt reality disrupts. Stocks graduated from the University of Illinois in 2011 with $18,000 in student loans, below the average of $25,000 for public school students who graduate with debt. And that debt hangs over his career as he tries to build up his family's farm. "If your credit dies, your farm dies with it," he says.
Stocks' student debt counts as any other debt when it comes to negatively affecting his ability to receive loans, something the system of thin margins and tough credit has never encountered before. It hurts his ability to access credit, since he looks like a far worse credit risk, and having to make the payment each month eats into his ability to survive on a low income as a small business earner in this phase of his life. "It seems like a small number, but the margins are really small in farming," he says. "It has a much larger impact on the debt you can handle and the profitability you need to survive."
Beyond blocking Stocks' ability to invest in new, environmentally progressive farming technologies, student debt turns all of young farming into a catch-22: To thrive in today's markets, young farmers needs to know cutting-edge information on everything from genetics to financial markets to engineering to public policy. Yet to gain that information, they need to take on debt that makes starting off as a farmer much more difficult. For people with less deep networks in farming than Stocks, the situation is all but impossible. As he says, "If you're trying to service student debt on a farmer's income, you can't farm. Yet if any profession needs extra education, it's farming. It impacts everything from the drinking water to the air we breathe."
There's been a major decline in the number of small businesses since 2000, and experts are debating what has caused it. A study from the Federal Reserve Bank of Philadelphia found "a significant and economically meaningful negative correlation between changes in student loan debt and net business formation for the smallest group of small businesses." This evidence may not be conclusive, but it's hard to imagine the rapid accumulation of student debt hasn't played a role in this change. Small businesses play an important role in jobs and growth, and if student debt is harming them, it puts the entire economy at risk.
There's also a deeper worry that the student loan crisis is changing how and when people experience major life events like moving out of a parent's home, starting a family, buying a house and retiring. For instance, some research points to student loans delaying marriage. The average length of student loan repayment is now 13.4 years, up nearly 80 percent from 1992. This changes how easily people can transition from one life stage to another; each stage requires a certain amount of wealth, and recent studies have found a negative relationship between student debt and the ability to generate wealth. The Federal Reserve Bank of St. Louis found that the median net worth for households with no student loans is nearly three times higher for households with student loans. It's difficult to tease out causation, but students from rich families are less likely to take out student debt than middle-class and poorer families, a trend that exacerbates wealth inequality.
Here, too, professional groups are trying to flag a major issue. Realtors, for instance, are raising concerns that student debt is preventing young people from getting the mortgages they need. Like Peter Stocks and his farming, this binds on two dimensions. As Tom Salomone, the president of the National Association of Realtors, tells Rolling Stone, "I might be with a young buyer today, and their ratios of debt to income are out of line because of student debt. But tomorrow I might be with a buyer, and their ratios are fine, but their down payment isn't there because they've paid down their student debt." This aligns with research from the New York Federal Reserve, which found similar results on declining mortgages for those with student debt.
As Salomone says, "There all kinds of reports that say millennials with student debt would rather rent. Our realtors on the ground aren't seeing that at all. The whole concept of homeownership and the American Dream is as alive as ever. Those millennials are disappointed and frustrated that they aren't in a position because of their student debt to enjoy it."
Professional groups lobbying on this issue are both an opportunity and a problem. Those in power listen to them, because they represent a large amount of clout, money and people, and they are more likely to make college costs a prominent political issue. However, their solutions involve carving out protections for their members, and their members alone. This means policy designed to ease the burden for specific occupations, instead of student debt as a whole. And this fragmented approach will do nothing to deal with college costs themselves, which are what creates the system of student debt down the line.
This conflict is a straightforward reason to simply make college free for students, and instead paid for by the government through taxes. Free college addresses all the long-term problems with student debt, as well as the more immediate emergencies. And it helps everyone, including people who will work in fields without political clout. Bernie Sanders has a plan to make college free, and Hillary Clinton a plan to make college debt-free, proposals new to this election that increasingly point to a necessary direction, and not just for the sake of millennials: The crisis is also jeopardizing the retirement prospects for Baby Boomers, whose efforts to fund their children's education don't often show up in the data. This phenomenon is well-known to nurse Katy Roemer, who just finished paying off her nursing school debt in time to start taking out loans to help her two children attend college themselves. "I should be saving for retirement," she says, "but instead I'm taking a line of credit on my home to make sure my kids have a chance to make it."