Page 52 - UD Research Magazine Vol5-No1

Student Loan: Handle with Care
WARNING Useofthisproductmay
be harmful to your financial health |by Beth Miller
If the United States were to put a warning label on student loans, it might say something like this:
“WARNING:Useofthisproductmaybeharmfultoyourfinancial health. Student loans may be addictive, produce distorted perceptions of the cost of education, offer no guarantee of future employment and cannot be erased in bankruptcy court.”
Such warnings haven’t put an end to tobacco use, of course. And it will take far more than red caution flags to arrest the mushroom cloud of student loan debt that continues to grow over the U.S. economy— a heavy burden of more than $1 trillion.
It is a problem University of Delaware sociologist Joel Best has been thinking about for decades, with special interest in the changing social dynamics, public con-
versations and government policies that were developed to address various needs. His son, Eric, a social scientist with experience in investment banking, intro-
duced him to the financial dynamics in play, suggesting the student loan crisis may be kin to the housing bubble that left mil- lions in foreclosure. Eric, who earned his bachelor’s, master’s and doctorate at UD, is an assistant professor of emergency man- agement at Jacksonville State University.
Now, in a new book they call The Student Loan Mess, Best & Son share several years of collaborative
research, showing how well-intentioned public policy produced one student loan mess after another and suggesting ways to address the problem in the future.
The book, published by the University of California Press, traces federal student loans from their genesis in the late 1950’s, when the Cold War with Russia prompted U.S. officials to see higher education as valuable to national interests, to the 1970’s, when tighter repayment terms emerged
to address student default, to 2012, when student loan debt topped $1 trillion.
The rapid growth in the popularity of the loans is demonstrated throughout the book with a series of milestones—$100 million borrowed in 1962, $1 billion in 1971, and $100 billion in 2011, so that total debt reached $1 trillion in 2012.
The surge reflects continuing change in society’s view of debt and the value
of education. Where families of the
50’s were loath to borrow, education
was promoted as an investment in the future, a stepping-stone to a more profit- able career, well worth a temporary loan. As credit became a larger part of families’ financial profiles, student loans carried less stigma. Better jobs were promised to graduates—until, quite abruptly,
they weren’t.
50 | UD RESEARCH