The Burden Atlas Can't Shrug Off

As Abigail Zechman, 20, inches closer to completing her undergraduate in journalism in Tennessee, USA, concerns about finding a job to pay off the Rs 24 lakh student loan will cloud her joy in the near future. "All the time I think of repaying my loan," she says. She does not know when she will be able to pay off her debt. For a family that dislikes accruing loans, Zechman's mother, Lara Zechman, 41, too has Rs 36 lakh to repay in student debt taken out for a masters at the Middle Tennessee State University. "My mother works two jobs to repay her loan," she said. 

With the cost of education spiralling over the last few years in USA, a large number of students are taking out federal or private loans to fund their studies. Over 13 lakh students in USA have taken out federal loans while tens of thousands have private loans to repay, according to the Institute for College Access and Success.

With over 2 crore students enrolled in universities across the country, the total student debt has touched Rs 1 lakh crore ($1 trillion). The reasons are not far to seek. The average cost of an undergraduate degree in USA varies between Rs 36-93 lakh, while a graduate degree costs between Rs 18 lakh and 1.2 crore, depending on the subject and the university — public or private. Also, universities differentiate between students on the basis of their state of residence. For instance, a citizen residing in Illinois will have to pay almost double the in-state tuition fee, on a par with international students, at universities outside Illinois. This forces students to take out more loans to pay out-of-state tuition fee once they fail to secure admission to an institution in their home state. 

With huge loans to repay, students with degrees in the sciences and the arts fail to find a job befitting their academic degrees, spurring them to take up low-end employment opportunities. "When I could not find a decent enough job, I decided to work at a pizza shop to set in motion repaying my student debt," said Michael Jefferson, 27, a native of Chicago, Illinois. He represents one of 59% underemployed youth with a master's degree, according to the Federal Reserve Bank of New York. That unemployment haunts the youth is borne out by the 1 crore unemployed people under the age of 25, according to the Bureau of Labor Statistics. "I have Rs15 lakh student loan to repay after I graduate next month," says a grim-faced Rachelle Blake, an alumna of the University of Tennessee. The pursuit of her dream of getting a degree in management will, for the time being, pale into insignificance, as Blake has made repaying her loan top priority — something that itself would take years to accomplish. "I am not returning to college before repaying every penny of it," she says. Blake has been assured by her bank that the monthly installments she pays back would be commensurate with her salary. 

With the youth in USA working for years to pay off their student loans, it takes a while before they can return to get their masters and doctorates. "Repaying student debt eats into our productive life," rues Michael Thorsten, 30, whose plans to pursue doctoral in engineering were dashed after he had to work low-end jobs to pay off his loan. However, he remains determined to join a PhD programme in the next few years. His only solace is that having taken a federal loan, and not a private one, he has the relish to repay on student-friendly terms. The grim scenario of student loans also has an even more unwholesome side to it — almost 45% of recent college graduates put off buying a house because of their debt, and 55% delayed saving for retirement. As many as 14% of recent graduates put off marriage on account of their debt, while 28% put off having children. In what is another source of expenditure for the youth, no one above age 25 is allowed to stay on his parents' medical health insurance. This means one will have the burden to repay student loans alongside paying the monthly health insurance premium.

With the approaching Presidential elections expected to witness a joust between the much-beleaguered Democrats battling anti-incumbency and upbeat Republicans controlling the Congress, the Obama administration is trying to make student loans more flexible through the Student Aid Bill of Rights. The Democrats hope to attract large number of young voters to their side through a singular act that will make repayment of loans easy for students. However, the Republican Party has misgivings about the Obama administration's plans on student loans. According to Republican senator Bob Corker, Obama's loan forgiveness plan will add Rs 90,000 crore each year to the national debt, affecting the future of those very youth who are now under the ambit of the loan forgiveness plan. He believes that streamlining of student loans should be done in a way to not put more burden on taxpayers and also not encumber future generations to shoulder the burden.