The young woman reached into her backpack for her business cards. Bagged in a small Ziploc, the business cards advertise a photography company, the only part-time work Sara Schroeder has been able to find since graduating from Elmhurst College with a philosophy degree last spring.
Except today, as with most days, she is handing them out not to a prospective client, but to a reporter.
Schroeder is among those manning the corner of South La Salle Street and West Jackson Boulevard as part of the Occupy Chicago movement. She is also one of the hundreds of thousands of college graduates who are out of work and thousands of dollars in debt from college loans.
Schroeder says she’ll be lucky to repay her loans in less than ten years, with the help of her parents. She says she has friends who won’t be fully free for 75 years.
In 2011, total outstanding student loan debt surpassed $1 trillion, according to the Federal Reserve Bank of New York, an unprecedented figure that has been blamed on colleges, lenders, and the government, with proposed solutions ranging from a complete federal student bailout to a fundamental restructuring of the student loan lending and repayment system.
Schroeder believes this student loan debt crisis boils down to the entire culture surrounding college education.
“I think it has to do with the values we’ve been raised on,” Schroeder said. “We go to college, we get a job, we get the job that we wanted.
“If you don’t go to college, you don’t have a future,” Schroeder added. “Now, you don’t have a future if you do go to college because it’s $40,000 worth of debt, $90,000 worth of debt.”
Another Occupier, 23-year-old Chicago resident Christopher Reyes, echoed this antagonism toward the basic picture that society paints of higher education.
“I’m not against college,” Reyes said. “I’m against the system with which they promote college.”
Of course, $1 trillion doesn’t stack up this quickly just because of misguided cultural perceptions. It is a vastly complex issue. Fast Company and Huffington Post writer Anya Kamenetz has authored two books on the matter.
“There is a broken ‘market’ in higher education and colleges are only one piece of the problem,” Kamenetz said. “Education, like health care, is subject to a pattern called ‘Baumol’s cost disease.’ Put simply, these are highly skilled, labor-intensive industries so the base costs are always going to rise faster than inflation.”
In other words, a college education comes at a high cost because it is an extremely and ever-increasingly expensive product to produce.
Kamenetz said she does believe the colleges are partly responsible for the debt crisis.
“Rather than focusing on affordability, they prefer to increase revenues and spending if they can in order to raise their profiles,” she said. “I would like to see the federal government extend and reinforce the ‘gainful employment’ rule, punishing colleges when too many of their students default on their loans.”
Under the current laws, a school’s students’ default rate is not factored into whether a school prepares its students for “gainful employment.”
Yet, defaults are becoming increasingly and dangerously commonplace. According to the Department of Education, around 8.8 percent of student borrowers who entered repayment in 2009, more than 320,000 people, defaulted by the end of 2010, up from 7.0 percent the previous year.
In spite of these rising figures, Morton Schapiro, president of Northwestern University and author of hundreds of articles and multiple books on the economics of higher education, said he believes the price of college remains well worth it.
“With the returns to higher education at record levels, reasonable loan debt makes perfect sense,” Schapiro said. “Graduation rates at highly selective private colleges and universities are very high, and so are the economic returns to attending these schools.”
Northwestern’s six-year graduation rate for its entering class of 2004 was 94.36 percent, according to the Office of the Registrar. PayScale.com’s most recent “College Salary Report,” an annual ranking of schools and degrees based on post-graduation salary potential, says Northwestern’s mid-career median salary is $88,300.
In comparison, the University of Illinois Urbana-Champaign’s six-year graduation rate for its 2004 entering class was 84.3 percent. Interestingly, the school’s mid-career median salary is $94,300.
However, that some schools are producing less economically crippled graduates than others, as Shapiro said, does not take away from the fact that there are many economically crippled college graduates.
To help out these hundreds of thousands of students, Kamenetz calls for the restoration of bankruptcy protection on student loans.
Kamenetz said she believes that bankruptcy protection would provide “a fair recourse for borrowers in tough spots.”
She also said debtors need to take advantage of income-based repayment options, such as the “pay as you earn” program executively ordered by President Obama in October this year, which administration officials have said could help up to 1.6 million borrowers by capping federal student loan repayments at 10 percent of discretionary income and relieving all remaining debt after 20 years.
It remains to be seen though whether such measures are miracle drugs or mere stopgap solutions. Some believe that there must be more drastic action.
“A full student bailout would be a lot more efficient than the [bailout of the] banks,” said Zach Warburg, a Northwestern senior and neurobiology major.
Sara Schroeder agrees that a student bailout may be the best option.
“There definitely needs to be some sort of student loan debt forgiveness. It’s become so unsustainable,” Schroeder said. “I think that education is a human right and that our society would benefit from everyone having an education.”
“Had I not gone to college I would be a totally different person,” Schroeder said. “I wouldn’t be here. I am endlessly grateful.”
Photo Credit: 1) Associated Press 2) C-SPAN