The Money We Owe

There is a formative tension throughout debt scholarship with which I begin: that tension lies between the argument – or realization, depending on where you are in time – that crisis is manufactured and confronting the lived experiences of crisis. In other words, while there are many theoretical and conceptual gains from locating the man behind the curtain there is still the palpable drudgery for those of us not profiting from it to survive the crisis. In thinking about social construction and its reality, Bruno Latour (2003) suggests that “the more constructed the more real,” which Janet Roitman (2014) adopts and I use here. Taking this adage quite literally, I argue that the more manufactured the crisis becomes, the more real are its effects. The more the mythos of crisis, limits, and scarcity are enacted materially and discursively the more we live the crisis. Importantly, the more real the crisis becomes – whether as a site of theoretical inquiry or catalyst for social change, or both – the more crisis is re-invoked and the more normative it becomes.

This paper contextualizes scarcity and limited resources as rhetorical tools within the neoliberalization of higher education. Under the specter of crisis, educational institutions offload costs of once public services onto an increasingly indebted and immobile citizenship. What follows is an exploration of how the logic of limited resources, scarcity, and crisis promotes individual behaviors that solidify economic disparity and maximize the capitalist accumulation of wealth. Bemoaning the loss of state and federal funding, colleges have taken every opportunity to ratchet up tuition and fees, thus generating revenue (Cantwell) but not high quality undergraduate education (Samuels, 2013). Out of fear of impoverishment and social immobility, individuals are persuaded to attend college, taking on massive student debt (Meister, 2011). But, with or without a degree, graduates find themselves overwhelmed by debt, becoming living embodiments of scarce resources as they struggle to survive in conditions designed to dishearten and disenfranchise.

For the sake of this paper I pause briefly to define three terms used throughout this presentation. One: Indebtedness is a social, cultural, and fiscal relationship that widely canvasses economic, political, and affective ecologies. This broadly based definition intends to wed the abstract workings of neoliberal capitalism with the not so abstract people they effect. Two: Neoliberalism is a political, economic, and cultural ideological apparatus that promotes the tenants of individual responsibility, privatization, the upward distribution of wealth, and a free and unrestricted market. And three: crisis. We must ask, what is crisis? What does it mean to be in crisis? Quoting Eric Cazdyn’s The Already Dead, “Crisis is not what happens when we go wrong; crisis is what happens when we go right.” Through example, Cazdyn argues that in capitalism: “crisis is not what happens when capitalism goes wrong, but when it goes right” (2012, 2).

What I suggest here is that through the manufacturing of crises, both materially and discursively, indebtedness as a logic, as a state of being, is produced thus engendering ongoing generations of debtors, whose labor, lives, and loves are extracted ad infinitum. Higher education, I show, by adopting the promise of social mobility and the American Dream, presents itself as an alternative to crisis, thus enticing and shackling people to the crisis economy through student debt. In this way I suggest that the crises within higher education of funding, costs, and mounting debt burdens are not where something went wrong, but where everything went right.

The rest of this paper is organized in two parts followed by a discussion and conclusion. First I will locate through examples how crises have been produced within higher education institutions but also how institutions  use crisis to recruit students. Second I show through statistics and interviews how recent graduates and student debtors are living in crisis every day, becoming yet another embodiment of capitalist extraction. In my discussion I argue that more important than the ongoing questions of access, affordability, and quality is the culpability of higher education institutions in debt production. That is, while it is important that institutions exist to promote intellectual development to any and all that desire it, it is paramount that we separate the pursuit of knowledge from the machinery of debt production.

Crisis in Higher Education; Out of Crisis through Higher Education

Endemic to higher education scholarship and popular discourse is the argument that higher education is in crisis: arguably, these crises in could have been avoided or tempered. But as these crises are the  logical outcome of capitalist machinations working well and NOT the unfortunate consequence of mismanagement and error, there is nothing to fix.  

Case in point, institutions of higher education are verklempt – how do you do more with less resources? In the last few decades there has been a steady decline in educational spending at the state and federal level. The Center for Budget and Policy Priorities found that most states are funding schools less than before the recession. As a result, institutions have deemed it necessary to raise tuition and fees, if not an actual opportunity to do so. Within the last decade alone tuition and fees have risen 5.2 percent above inflation every year. While there are a number of problems with the Bennett Hypothesis that I address in my dissertation, for the sake of brevity I present it here. It posits that as the federal government extends financial aid to students, institutions can increase costs and absorb that revenue (Frederick, Schmidt, Davis, 2012). Against the backdrop of neoliberal financialization, funding education through loans is sensible, and indeed profitable: in April the Congressional Budget Office reported that the federal government would realize profits of $129 billion over the next decade. And we see this play out in the data: since the 1990s there has been a noticeable inversion in the types of financial aid. Aid as loans exceeds financial aid as grants and it has outpaced grants every year since (College Board). Should the Bennett Hypothesis be valid, then a simple solution could be to place tuition and fee caps on institutions that accept federal funding. As it is now, tuition and fees increases are outpacing financial aid. And as educational funding decreases the student loan crisis worsens. While not a cure-all, if educational spending had been a fiscal priority and came with stronger government interventions into the college cost problem, today’s ongoing crisis could have been avoided.

Out of Higher Education and into Crisis

The threat of crisis looms large everyday; institutions in and outside of higher education use the conceptual threat of economic crisis to promote a college degree as the definitive solution to social immobility. Robert Meister (2011) writes in “Debt and Taxes” that students and guardians see higher education as an insurance against poverty, as a ticket to the top. But he argues that no one except the top one percent has made any income gains, and a post secondary education is not the asset it is thought to be. But universities, both public and private, assume that when students buy a degree they are not paying merely for the cost of an instructional service; they are also purchasing a financial asset—a kind of insurance against a rising income gap between graduates and non-graduates. (Meister, 2012, 129). And yet, higher education studies, news, and television personalities all contribute to the logic that college is still worth it thus producing a discursively rich landscape in which the mechanisms of debt production are obscured or flat out ignored. Everywhere we are surrounded by crisis: the STEM crisis wherein we do not have enough domestic STEM graduates. It is more accurate that there are not enough STEM jobs to place those STEM graduates. There is the crisis in long-term unemployment rates and the crisis of stagnant wages concomitant with record profitability amidst the ongoing housing crisis and the American people deserve to know what really happened in Benghazi! That’s a joke, albeit not a very funny one.

All of this is quite excessive and we can borrow a line from Naomi Klein’s Shock Doctrine, which borrows a line from Milton Friedman. The shock doctrine, as Klein calls it, is the prevailing capitalist strategy of the last forty years, wherein “only a crisis—actual or perceived—produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop al­ternatives to existing policies, to keep them alive and available until the politi­cally impossible becomes politically inevitable” (2009, 6).

Amidst all of this shock and awe is the relative constant: obtaining a higher education degree is a smart and worthwhile investment, and that despite its ups and downs, you should still go. And while each and every moment crisis is invoked to exact a predictable and profitable consumer behavior - and the consequent library of scholarship and critique - it is higher education’s role in debt production that I emphasize here.

To elaborate on this point I juxtapose the findings from a recent Pew report titled with a quote from a viral photo first posted in November 2011. In the Pew Social Trends Report, “The Rising Cost of Not Going to College” (2014) the researchers’ overview is as follows: On virtually every measure of economic well-being and career attainment… young college graduates are outperforming their peers with less education” (3). What is most concerning is that the economic disparity between college graduates and their peers with less education has never been greater (3). According to Pew, and most of the sources that I have cited earlier, nearly every aspect of your life will be vastly improved if you just go to college. Rather address why economic disparity is on the steady incline the scholarship advocates going to college without significant reflection on debt.

Against this constructed reality is the lived reality of those students who went to college. In November 2011 a woman posted a photo on the Occupy Student Debt  blog that reads, “student loan paid faithfully for 23 years; borrowed: $26,400. Paid back: $32,700. Still OWE: $45,276.63. No bankruptcy or forgiveness allowed only death or total disability frees you. No social security or Medicare till paid off.” Who knows what her loan repayments are like now, nearly three years later. And still, my point is not about the outrageous costs of college or the out of control and often predatory student lending because if free education was a priority we could fix it. My point is that there is, in the minds of those lining their pockets with gold, there is nothing to fix. And while the researchers and lobbyists and think tanks keep churning out the data about how serious the problem is they all play the same tune like the Pied Piper of Hamlin. As Matthew Segal writes for CNN, “Of all the economic trends holding back America's young people, perhaps the most disturbing is the soaring cost of a post-high school diploma. So many young people have been sold the imperative nature of a higher education.” He then quotes President Barack Obama’s 2009 Speech to Congress that calls on every American to get a degree.

"I ask every American to commit to at least one year or more of higher education or career training. This can be community college or a four-year school, vocational training or an apprenticeship. But whatever the training may be, every American will need to get more than a high school diploma."

What he forgot to say is that the federal government and student loan companies are just dying to lend you some money too. 

Against a backdrop of uncertainty, of scarcity, shortages, and limits higher education appears tangible, even manageable. But as students find out the costs of college are many and debts unimaginably high many leave, and those that manage to finish bring with them into the world a debt that for all intents and purposes has been justifiable and logical.

Discussion

In order to separate debt production from the pursuit of knowledge we must expose that the promise of social mobility through higher education is flawed. Indeed it is a lie should you have to take on debt to get an education. Despite investing in themselves through post secondary education, many graduates and non-graduates struggle with student debt burdens, unemployment, and fail to be financially self-sufficient. In a recently published report from the Take Charge America Institute at the University of Arizona, researchers found that two thirds of UA graduates are not financially self-sufficient, with many of them needing to borrow money from guardians or other credit sources. The Report, “Life After College: Drivers for Young Adult Success” highlights that only about half of graduates had full time employment. The study also found that for all groups, regardless of employment, that debt burden significantly affects well being saying that, “For participants with debt, financial well-being was 17% lower, 19% lower and 31% lower for those employed full-time, employed part-time and unemployed, respectively. Debt was associated with 4%, 8% and 10% lower life satisfaction for those same groups. These findings suggest that more than a financial burden, debt undermines well-being. Furthermore, carrying debt seems to erode the benefits of even full-time employment” (Serido & Shim, 2014, 5). One woman on the Chronicle’s Facebook page commented on the article saying,

“Get used to it...my friends are 6-10 years out of college and still struggling with debt and underemployment. Even those of us who finally have a decent career are paying off the debt we incurred trying to make it here. No stepping stone positions available for this generation, lots of unpaid internships and freelancing.”

In 2012 the economic consulting group National Economic Research Associates, conducted interviews with graduates that held six-figure debts and found that for many life was put on hold. Graduates moved in with parents, worked two jobs, forwent buying a car or a house, and neglected their health and well-being to alleviate the cost of living. And while the average student loan debt in the United States is $25,000 the number of six-figure debtors is growing, and six-figure debt is common amongst graduate students. While Matthew Segal argues that “the deck is stacked against millennials,” suggesting that the problem is localized against one tragic demographic, I reiterate that the deck is stacked against anyone who goes into debt because of education. Of course this position urges the question of what is the role of debt within a capitalist economy more broadly speaking and I welcome that discussion at the end.  

Conclusion

My solution to the production of indebtedness - and thereby the ongoing sustenance for a crisis economy – through higher education is simple yet bold: not only should all education be free but all outstanding student loan debts should be forgiven. You might suggest that this solution is fantastic – as in remote from reality. I would counter that it is necessary because this is about much more than the pursuit of knowledge. This is about the pursuit of human development in harmony with itself and its environment. And such a pursuit is not compatible with the logic of capitalist expansion. Therefore, the problem is not just that the pursuit of knowledge comes at a greater cost these days but that there is any cost at all. And that, is a problem with the influence of capitalism, particularly neoliberal capital, on the structures and functions of higher education.

There are many ways in which individuals become indebted – credit cards, cars, and houses – but higher education is unique. Not only does higher education capture the hopes and dreams of those who attend, it is formative in the production of individual and collective consciousness. And it is formative in the production of indebtedness as a culture, as a social and fiscal relationship. Therefore, by intervening against the production of indebtedness through higher education we insert a new reality, the beginnings of what is conceptually necessary to reform education.

As the theme of this conference shows, debt is on the minds of the populace. From the housing crisis to the national deficit to student loan debt surpassing credit card debt everyone is thinking about debt. The numbers are big and the consequences are scary – mostly for those who are not already wealthy. For me, my interest lies in the reproduction of indebtedness through higher education. That is, not only do individuals go into debt because of higher education, they expect a certain level of indebtedness because of it. Like the name of this conference, there is a logic of debt that is promoted through media, policy, and in academic research. The crisis that has become so familiar to our economic and political history is bound to a logic of indebtedness with which consumers are disciplined and wealth is accumulated.

Frankly, it is not unusual for credit and debt to be on the minds of those within capitalist economies and it is not the first time. For example[1] Karl Marx, explored the role of credit and consequent debt in Capital: Volume III arguing that credit allowed merchants to extend themselves beyond their actual returns. But the credit system intimately ties the mechanisms of capitalist production and accumulation to crisis. Capitalism relies on an infinite growth model: each year businesses need to make more profits than they did the last. The only way to continue that level of growth is through artificial methods. And, when capitalists do not meet their quotas, do not make those record profits, and the bills are due, we witness the, “attendant collapse of the credit system,” which “leads to violent and acute crises, to sudden and forcible depreciations, to the actual stagnation and disruption of reproduction, and thus to a real falling off in reproduction” (Marx, Volume III, Chapter 15, Section 3). Marx even goes on to suggest that “business always appears almost excessively sound right on the eve of a crash” (Marx, Vol. III, Chap. 30). Published over a hundred years ago, these words are very apropos.

Regardless of the long history of credit systems and the familiarity of capitalist crisis, it is a unique experience to live through a moment of crisis. It is qualitatively different when the mundane everyday occurrence of lending and borrowing on both an individual and state level stops and the cycles of capitalist accumulation and spending retreat. And here we are, living out the day-to-day impact of that crisis, of crises before it, and of a system that strives to achieve profits over everything else. In scales unheard of since before The Great Depression wage and income disparity is rampant.

The Congressional Budget Office in a 2011 report found that the top one percent saw the greatest income growth at 275% between 1979 and 2007. A recent analysis of Internal Revenue Service’s data shows that the top one percent collected a record 19.2% of household income in 2012. There are plenty of other sources to quote but I will just leave it at: the rich are getting richer and everyone else is getting poorer. The recent outpouring of resentment against the rich is fitting but it is not enough: Walmart, who boasts incredible profit margins is organizing food drives for its workers; fund managers are worried about the widening gap between the haves and have-nots; and all the meanwhile corporations like Boeing are cashing in on huge tax breaks, making record profits, and freezing their workers’ pensions.

If one is cognizant of these crises and growing disparities, then it is appropriate to seek methods of preparedness: higher education is one such method. In order to do well for oneself, to be prepared for the next crisis, to be better off than those who have come before you, you get a degree. This is the familiar but not immutable American Dream: the promise of social mobility. And yet, achieving that dream has become harder and harder. Moreover, the familiar narrative of the American Dream struggles through layers of redefinition: now, according to new polls the New American Dream may just to be “debt-free.” Gone are the days of a house and 2.5 kids, a car, and well paying job. And truly, those days have been gone for a long time.

So if the question regarding higher education is: if the costs are so high and the debts are so serious, why does anyone go to college? In light of the growing income disparity the answer seems obvious. Without a degree how would someone get a well-paying job? The answer is second nature, a story or an admonition heard countless times: with a college degree one can get a good job, experience less unemployment, and earn more over a lifetime. Those with higher education degrees live longer, are happier, have thicker hair, and on and on go the statistics. Higher education is the quintessential cure-all for income disparity, the ultimate elixir for social mobility. In the United States public education is touted as a great equalizer and, as Christopher Newfield argues in Unmaking the Public University, higher education specifically bears the legacy of producing and maintaining the middle class. Newfield argues that public research universities helped produce an educated, highly skilled middle class that experienced and expected better occupational trajectories. But interestingly, Newfield starts his manuscript with crisis, explaining to the reader that the crisis so long familiar to capitalism on the outside had come to the academy saying that, “By 2005 or so, it had become impossible to ignore the sense of crisis that hung over the American college and university. It had become hard to see higher education in terms other than crisis, and harder to capture its situation in other than crisis terms” (2008, 19).

But Robert Samuels in his recent book Why Public Higher Education Should be Free argues that the quality of instruction has denigrated as universities focus more and more on profit in response to this financial crisis. That is, the methods that universities use to generate profit are not those that guarantee rigorous and high quality undergraduate instruction. He also shows that higher education through the accrual of debt is contributing to greater and greater socio-economic disparities. So he muses, “It is unclear why more students do not protest the fact that as they pay more for a shortchanged education, they commit themselves to a life of debt” (128).” It would be obviously inaccurate to say that there has been no protest in the United States against student debt, especially as the Rolling Jubilee campaign just passed 15$ million in loans paid off. But for me, the war is not over until we stop the reproduction of indebtedness. Paying back bad debts or improving repayment plans is helpful but it does nothing to stop the steady flow of prospective students who still abide by an ethereal American Dream.

So the answer to why we go to college is obvious, but why we agree to debt is less so. More to the point is why do students and guardians continue to agree to debt for higher education? Again, this is specific to those who pursue higher education; mechanisms of attrition and prohibitive factors are already in place by the time we get to college. It is safe to say that the narrative of success, the promise of social mobility embedded within higher education, acts to justify the cost of education with the anticipated return on investment in the future. Marketplace Money recently had a month long focus on higher education. In one radio segment three professionals were asked to give advice on the value on higher education. The first speaker, David Leonhardt, the Washington bureau chief of the New York Times, argues that despite the fact that higher education costs have increased faster than the rate of inflation, college is still “worth it.” He explains that college affordability is maintained because financial aid has grown with costs – even if it has done so with loans. More to the point he argues that $28,000 in debt is not a terrible cost to pay over a lifetime for someone with a college degree because they will have increased earnings and less unemployment over a lifetime. But Derek Price’s (2004) research shows that not all colleges, degrees, and outcomes are equivalent. Leonhardt assumes a particular audience, one that pursues four year degrees. But a student who is concerned with the significant cost of a selective school may choose to attend a less competitive two year institution. And, that student may not accrue the same dollar amount of debt as someone who went to a four year school but their debt burden will be significantly. Not only will their degree not warrant a better paying job, Price shows that low income graduates and graduates of color earn less for the same degree. I think here is the perfect moment to say explicitly that not all debts are created equally. And for someone to argue that “college is still worth it” can effectively obscure those very important differences along lines of race, class, gender.

Now, you could say that David Leonhardt is just a mouthpiece, spreading a popular conception for a mainstream publication whose audience wants to hear. But his argument that college is still well worth the investment is common in academic and policy circles. The Center on Education and the Workforce at Georgetown University published a report in August 2012 titled “The College Advantage: Weathering the Economic Storm.” In it the authors conclude that, “For students and their parents who are contemplating whether higher education is a good value, [their] findings make clear that the answer is a resounding yes (35).”  They find that unemployment rate for college graduates is much lower than those with just a high school diploma. However, they like others, seemingly gloss over the fact that “recent graduates” are having a harder time finding jobs and that recent graduates are often underemployed. What I want to challenge is the argument that permeates media, academic research, and policy design that college, through debt, is still worth it. Leonhardt, in his carefully calculated advice contributes to a logic of indebtedness and fosters socio-economic disparities through debt.

Through a logic of indebtedness students and guardians are mortgaging their future on the costs of education today because all around them they hear, “It’s still worth it.” Robert Meister in his article “Debt and Taxes” argues that with only the top one percent seeing any income gains in the last few decades, a higher education degree is no insurance against a rising income gap between graduates and non-graduates (2011, 129)[2]. I think even worse than hearing that “college is still worth it,” “it” being the massive amounts of personal and irreversible debt, is that there is no singular coherent opposition to indebtedness. And while the work of movements such as Rolling Jubilee are important in building awareness around secondary debt markets, the premise of indebtedness is maintained. It is more than just the paying off of defaulted debt maintains the market, but that the Rolling Jubilee is not positioned to dissuade new individuals from taking on new debt. Understandably that is not the job of Rolling Jubilee but the parasitic adaptability of capitalism will undermine the material impact of this organized movement. The entrepreneurial spirit captured in Marketplace Money articles such as “Hey Occupy Wall Street!  Will you buy my debt?” captures the imaginings of a populace under duress, hoping to win the lottery, and distracts them away from protesting structural injustice. To be clear it is not Rolling Jubilee that does a sleight of hand, but mainstream media’s interpretive response to Rolling Jubillee, which undermines the collective and inspires the individual.

An education is certainly worth it: it is worth the time and energy to learn and explore and to become more participatory humans, let alone citizens. But a higher education degree through significant debt is not worth it. The system is rigged in favor of those who would make money off of your hopes and dreams. So in fact higher education through any debt is not worth it. And that’s why it is important to clear the smoke and break the mirrors.

It is not just that school should be affordable. It is not just that public higher education should be free. All education should be free. And only then will it actually be worth it.

[1] Alternate example, David Graeber (2011) suggests that credit/debt systems have been around for 5,000 years, preceding a monetary system. It was only when debts could not be repaid through trade, such as in times of war and occupation, that a currency was introduced.

Minnesota has the fourth-highest level of average student debt, according to a new report.

Why do you need to address rapidly increasing costs of higher education when low-income families could just learn to save more?

Katrina Verduzco hadn't thought much about going to college until a representative from the University of Arizona came to talk to her class at Flowing Wells High School. Then everything changed.

After hearing about opportunities at the University, Verduzco became determined to become a Wildcat and the first person in her family to go college.

She also became determined not to burden her family with college expenses, and she spent much of her high school senior year searching for scholarships and financial aid opportunities.

magine a diorama in an American Museum of Occupations showing the evolution of the professor. The exhibit starts in the early 1800s with an austere, black-suited man in a minister's collar, perhaps looking over the shoulder of a student at a rustic desk, with a Greek text open in front of him. In the next scene, from around 1900, he morphs into a pince-nez-wearing gentleman in starched collar and cravat, at a podium delivering a lecture. The professor of 1950 adopts the rumpled bearing of a tweed jacket, pointing with his pipe to a poem or a physics equation on a chalkboard. In the next frame, circa 1990, she wears jeans and is sitting in front of a computer screen.

How would the diorama represent the professor of 2020?

Blogger’s Note: Tamar Lewin writes on The Times’s Web site on Wednesdaythat President Obama will announce new programs “to lower monthly loan payments for some students graduating next year and thereafter and to let borrowers who have a mix of direct federal loans and loans under the old Federal Family Education Loan Program consolidate them at a slightly lower interest rate.” Mark Kantrowitz, the publisher of the financial aid Web sites finaid.org and fastweb, was asked by The Choice to write a quick essay explaining what the proposal might mean for applicants this year, and in the future, for current students and recent graduates. — Jacques Steinberg

More than 600,000 people have signed a petition calling on President Obama and Congress to forgive all student loans. The president has responded by making it easier for college students to repay their federal student loans. But many of the borrowers who signed the petition or who are participating in the Occupy Wall Street protests will not benefit from the lower monthly loan payments.

Five years after the financial collapse, President Obama admitted Sunday that his administration has overseen a deepening gulf between rich and poor, with 95 percent of all income gains going to the top one percent since the so-called "recovery" began in 2009.

Appearing on the Sunday morning show of ABC's "This Week with George Stephanopoulos," Obama was pressed by the host to respond to a recent study by University of California researchers that shows the rich have gotten richer while the poor continue to languish.