Some days ago I published a blog about why student debt has become almost unavoidable. I mentioned that there are at least two sides to this issue. The first one is the increasing cost of education. After exploring reasons for this increase, I proposed the discipline of simplicity as an avenue to prevent unnecessary spending and, in consequence, some of the injustices of the current educational system. Now I would like to consider the other side: the culture of “immediate satisfaction and I deserve” that frequently is sustained by loans.
Student debt has a wider context: a general debt culture that has polluted society. We are inundated with credit card offers and publicity stating: “Take it home for this easy monthly payment.” It is hard to resist loans because they have become a way of life in a society that tells us that we deserve it… and now. It is even harder to see their consequences, yet the Bible warns us: The borrower is slave to the lender (Proverbs 22:7). The more that we owe, the more that we lose our financial freedom, and with it our peace and hope for the future.
This debt culture includes also a misuse of student loans. Recently my daughter completed her FAFSA. As soon as she sent it, a response came saying that according to her situation she could borrow approximately $20,000. While her graduate tuition and books amount to $8,000 a year, the other $12,000 is provided for additional expenses. Unfortunately, many people consider this extra money as a free ride to buy a car, the latest computer, or the best Spring break trip. So they borrow as much as possible because in their minds they deserve it… and now. Others, afraid of facing work responsibilities, keep living from loans and studying for the sake of studying, without a clear career path/goal. Considering loans as grant money, borrowers live as if they will never have to repay them.
The accessibility of loans and the ignorance of their repercussions will bring serious consequences. If most of the population is in debt (student loans, mortgage, car, credit card payments), who will have money to save for a rainy day, kids’ education, or retirement? Furthermore, who will have money for tithing, offerings, and charitable giving?
So, what can we do about this? As church leaders, educators, parents, grandparents, it is urgent that we address this issue. We need to bring awareness to debt dangers, and propose/model creative, simpler ways of life that lead to contentment. (For other suggestions, see my 2/18/2014 blog).
In addition to awareness and education, I would like to see also a disclosure of student loans’ consequences. Reflecting on my daughter’s FAFSA response, I thought that what was missing is to tell her that if she borrows $20,000, she will have to pay X amount monthly for X years, with an estimated cost of … including interest. What student loans need is legislation similar to the 2010 credit card reform that requires a consumer’s awareness message in each monthly statement (for a $10,600 debt, paying only the minimum, it will take 25 years to pay the balance with a total estimated cost of $22,452. If the payment is increased to $350 monthly, it will take three years with a total estimated cost of $12,593). Furthermore, FAFSA responses should disclose also that student loans are rarely dischargeable in bankruptcy.
As I close my three essays on this topic, I ask where I am in all this. As a professor, how can I practice simplicity and still offer an excellent education that avoids increasing costs? How can I convey this educational style to my colleagues? As a citizen, how can I advocate fairer student loan legislation? As a parent/educator/church leader, how can I teach young people financial awareness and a simpler, content lifestyle so that they do not abuse loans? As an individual, how can I live with simplicity and avoid debt, so that I can save, give to church and charities, and hopefully retire with dignity one day?
Everybody is affected by this debt culture. How do we get out? Little by little as we work in the Spirit’s power, following Jesus’ courage, and under God’s blessing to turn this thing around: one kid, family, institution at a time.