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American College Students: In Debt, Distracted, And Doomed

By Frugaling 9 Comments

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College Classroom Distracted With Macs

Being a teacher and instructor in college is more challenging than ever. Nervous eyes take glances at iPhones, quickly minimize Facebook apps, and craft rapid text messages. Students are unbridled in their distraction. They look uncomfortable sitting still.

As a college instructor for about 4 years, I’ve become increasingly aware of fellow educators expressing frustration over “lazy” students that multitask. Some educators ban smartphones and iPads during classes. Others call out students that text in class, and ridicule them in front of peers — aiming towards social conformity.

Unfortunately, technology is serving as a scapegoat for something worse. Teachers want to limit these technological forms of distraction to heighten learning for everyone, but this classroom management strategy misses a fundamental problem. Today’s students aredistracted, but their attention problem results from atmospheric student loan debt and poverty.

The American Dream and business of higher education

Built in to our ailing economy and concrete erections is a fundamental dream: hope for a better life. It’s why many emigrate here.

While achieving that success is attained through various methods, college still serves as the number one predictor of middle class life. High school graduates make a median salary of $651. By attaining a bachelor’s degree or higher, individuals make a median salary of $1,108.

BLS Educational Attainment Statistics

For decades, the message has universally been towards greater higher educational attainment. Generations of students, employees, employers have followed this rule — requiring college educations and encouraging people to get at least a bachelor’s degree. Now, about 32% of Americans have college degrees.

Guidance counselors ask high school and college-aged students to envision anything they want to accomplish. Fundamentally, they ask, “What do you desire?” and “What would you like to do if money were no object?”

But money is an object, and we are controlled by its properties — through empowerment or restriction. These questions of freedom tease students with a reality that doesn’t exist.

Student loans restrict, constrict, and destroy choice

Many will graduate with nauseating student loan debt. Heck, there’s $1.2 trillion right now! For class of 2013 college graduates, the average student loan debt was nearly $30,000. With that amount of debt and interest rates that vary from 3.86% to 7.21%, today’s graduates don’t have the freedom that’s espoused and propagated by higher education and mainstream media.

The problem gets compounded as “student tuition now outweighs state funding at public colleges.” Now, state taxes and revenue sources are contributing to even less of the total cost for students. This all flies in the face of socialistic policies in many European countries that have highly progressive, free (tax-supported) higher education.

Americans place the burden on students as young as 17 to make educated decisions that could affect the rest of their lives. Faltering in payments and failing to swiftly pay off the debt can lead to forbearance, default, skyrocketing interest rates on credit cards, and more. Credit scores and future livelihood are at risk.

Educating the desperate, sleep-deprived, and in debt

The interest is already ticking for many before graduation. Students can feel eager to get a job, get paid, and pay off debt. But even before they graduate, they must ask themselves some serious questions:

  • Should I work during college?
  • Should I take more than a normal credit load each semester to finish faster?
  • Should I skip study abroad opportunities that cost more and may extend my time?

Previous generations had the incredible luxury of minuscule tuition rates. Between 1978 and 2013, college tuition and fees grew by an overwhelming 1,225%. Simply put, college cannot be paid for with summer jobs and temporary work.

To the financially disenfranchised, student loans fill the gap for access. But there are still students that work during college. I had two jobs while also a full-time student, and there are many like me.

Then, there are students with disabilities, children, and veterans of foreign wars (to name a few). They are challenged to keep paying utilities, attain an education, and somehow keep a roof over their children’s heads. Again, student loans often serve as a mediator to accessing education — a temporary source of funding to attain a better income and vocational future. But real dreams can subtly disappear from view as financial aid bills take precedent.

Student loans magically appear, as do depressed dreams

Like many of my readers, I’ve worked hard to turn around my financial future. When I was in debt, I felt horrible. I spent money without concern and bought things I couldn’t afford. My debt was the illusion of success.

When I finally stopped to breathe in May 2013, I realized I had dug a hole nearly $40,000 deep. I was embarrassed with what I had done, and who I’d become. I wondered what I could do to reverse this dangerous course. Trust me when I say this is a common problem for many students.

Financial aid usually was deposited into negative balances at universities and then extra amounts were distributed to the individual student’s bank account. Suddenly, bank accounts were flush with thousands of dollars — budgets seemed irrelevant.

Everyone from the in debt to the creditors to general public confuses these loan instruments for real cash. Yes, you can spend student loans however you see fit, but the consequences are punishing. Every dollar is taxed by the current loan interest rate, and is a dollar in the wrong direction: towards poverty.

The problem of poverty in college-age students

Unlike the clarion calls that suggest America is number one, we seem to have created a master plan for educational failure. Research suggests that “poverty, itself, hurts our ability to make decisions about school, finances, and life, imposing a mental burden similar to losing 13 IQ points.”

By saddling our future graduates with nearly $30,000 in average student loan debt and a future of near poverty for many, we are hurting their ability to learn in the process. Lower-income and impoverished populations constantly report lower amounts of sleep, vocational uncertainty, higher stress, and show evidence of hindered decision-making capabilities.

These are the students of today. They are trying to succeed in a cultural landscape that begged them to get educated, punished them for getting that college degree with years of debt payments, and then limited their employment options.

As the dreams fade due to financial concerns, anxiety and distractedness likely increase. The dream of “What’s your purpose?” can quickly be replaced with “Who will hire me?”

We want bright, capable graduates, but we “victim blame” them instead

America is eager to have the best workforce in the world. We are a nation that aims to be a beacon of hope and role model to developing states. And yet, we are breeding and cultivating some of the most in debt, distracted, and impoverished students.

It’s not in the interest of this country, the world, and future progeny to continue this wicked cycle of educational attainment and poverty. It’s not in the interest of creating a bright, educated populace to have them cowering in poverty for doing so. It’s not in the interest of America to impair decision making in finances and education in the process.

As teachers express frustration for their distracted students, they need to fundamentally understand the complex, systemic interplay of student loan debt. This financial instrument is inherently complex and can psychologically impair the most capable students. They might not be able to pay attention because they’re burdened by a future of poverty, student loan debt, and restricted opportunities.

Something needs to change. This system isn’t sustainable. Fortunately, a small light of hope might be on the horizon.

Post by The White House.

President Barack Obama recently announced a massive initiative to empower those from diverse financial backgrounds to receive a “free” education. His plan includes funding community college educations for those working part-time and maintaining certain educational requirements. Over the coming months this will be hotly contested and debated. But this is the first step, in what needs to be many, for those in need of an education that’s truly accessible and affordable.

Students cannot continue to shoulder most of the burden. There are powerful inequalities in income and wealth — educational opportunities shouldn’t be one of them. If we can muster the courage and wherewithal to increase taxes towards education, we may see what America is truly made of.

Filed Under: Loans, Social Justice Tagged With: America, American, college, debt, Financial, financial aid, freecommunitycollege, Income Inequality, loans, lower income, poor, poverty, Student Loans, Students, university

The Debt Breaking Point: A Student Reforms His Budget

By Frugaling 5 Comments

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Budget College Graduate Student Loans Debt
If your budget looks anything like this truck, you’re in trouble.

As a student, we are presented a nearly blank check in the form of student loans and financial aid packages (aka, more student loans). It can be hard to resist taking out more than you actually need. But once you open the intravenous drip of federal funds, it can be hard to quit it – hard to reduce your liabilities.

A close friend of mine confided in me that he was broke. The credit card debt had taken over. It wasn’t supposed to work out this way. He had student loans, but he knew better. Something had happened; sort of inexplicable, really. His expenditures soared, but the income was stagnant.

After realizing his budget couldn’t right itself, he scrambled to find help with friends and family. Fortunately, they supported him financially and he’s been fixing his broken budget. The following are some excerpts from our conversation (via email), as he’s learned a lot about what drove him to this level.

Romantic relationships and money

Our conversation ran the gamut, but for a moment, he focused on the impact of relationships and money. Implicitly, there’s a pressure as man (whether there should be or not) to treat and offer to pay – to be a provider.

I like the thought too about expectations, the impact on relationships (if one partner has to suddenly cut back). Part of my expectation (related to gender role socialization) has made it tough for me. I’m so used to being able to buy nice things for Susie, to pay for her dinner, to treat her to nice surprises (fuck, even for little things like buying flowers).

He ran out, and in sharing this with his partner, she was surprisingly accepting, supportive, and helpful. It can be difficult to admit budgetary defeat, and the longer it goes unnoticed, untamed, and denied, the deeper the hole can become. Here are some things he learned from confronting and sharing this realization:

…She’s been great about the whole thing. I think she’s honestly relieved a bit. She’s been much better at being frugal than me (more self-disciplined and better at handling money) from day one. I think she’s been very aware that marrying me means joining with my maelstrom of ego-driven impulse buys, not effortfully considering the true cost (long term) of my purchases, whether I can afford things in reality, and my staggering student loan debt.

Dinner Budget Student Loans Debt
Shopping and going out can be easy – too easy.

Last May, I realized I was sinking, and attempted to change everything because I didn’t want my debt to destroy a loving relationship. Seemingly, by confronting and asking for support from others (emotional and/or financial), the way back can be made easier. My friend decided he needed to start from scratch and analyze the budgetary gaps where money was disappearing.

The sink is shipping… How do I take back control?

For me, I had a similar experience to your 7 day challenge. I had so many little expenditures I didn’t realize (holes in the hull of my “finance boat” if you will). I had far less variety in food while I was getting the hang of it. I made rice & beans and had it for like 6 meals. I changed a few things up, would add cheese or salsa. I would wrap it in a tortilla or just have in a bowl. And I would intersperse a McDonald’s dollar menu purchase to balance it out. But it was tough feeling like I’d failed. Tough having to tell myself no, you can’t have it. I think it helps knowing I can’t “cheat” when I have these either-or decisions to make.

As he traveled through the joys of cutting back and realizing what needed to go, the budget was pretty clear; all or nothing, he had to change. The spending couldn’t be sustained. The credit cards were maxed. The student loans were tapped.

When I had literally $0 mid-way through December, I started to realize what had to be done. And magically, I was able to change my expectations, get a roommate, cancel many unnecessary things (gym membership, no more buying expensive proteins, no more consumer reports, got Comcast to lower my cable bill, etc). I’ve been able to set up a budget and stick to it. I’ve been able to track every expense, because I finally HAVE to do this. Years of attempts and failures, but finally having “skin in the game” lead to success.

Changing, fixing your budget is more difficult than it sounds

To spout out the mantras and trite cliches that simply say, “Change your budget to take in more than you spend,” can sometimes be more difficult than it sounds.

Adjusting my budget wasn’t a small change, it’s a giant lifestyle change that’s hitting nearly every area of my life. I needed to change my workout routine since I cut my gym routine. I have to get a roommate and change my living situation. I have to get used to rarely eating out. I have to change leisure time since I can’t really afford 20$+ to take Susie and me to the theater. My choice was to bottom out with no money in May again, or finally get my shit together. And for now, I’m on the get your shit together path.

Like many who’ve participated on this site, asked me, or debated online, the line between frugality and simply stingy/cheap is sometimes a gray area. Being cheap can sometimes elicit a value question.

A big question a lot of this leaves me with is how to be frugal without being cheap. I think there is some overlap, but that they are different. Frugal to me means cutting back, often not being fully satisfied at the reward of more savings. Cheap to me often reflects a self-interested style of frugality. In my mind, I think of friends who would leave little to no tip at restaurants, try to get everyone else to pay for them, continually try to ask “are you going to finish that.” As I’m making huge changes, maybe I’m trying to find a way to stay congruent with my values in the process.

By sharing my friend’s hard lessons learned and insights along the way, I hope it gives you a window into a world. What you do with that window is yours.

Special thanks to my close friend and confidant. Really appreciate being able to share your growth and story with my readers. All names have been changed, but you know who you are!

Filed Under: Loans Tagged With: Budget, cheap, Credit Card, debt, financial aid, Frugal, graduate school, loans, management, money, relationships, student, Student Loans

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