Heretical Advice from a Happily and Heavily Indebted Ph.D.:Why Poor Students Shouldn’t Fear Student Loans

Recently a student told me how he had been discouraged from freely taking out federal student loans by his professor. When the student said he wasn’t particularly concerned about repayment, the teacher replied, “Well you should!” This mentality, while partially understandable, is promoting a fear of borrowing for education in precisely those who should be encouraged and emboldened to take out loans.

In the US, economic disadvantage breeds poverty that carries on through generations. One of the central purposes of federal student loans is to aid those who are financially less fortunate in obtaining a quality education. But again and again I have either personally listened to others warn against the dangers of student loans or heard countless stories from students who are discouraged from borrowing. As I see it, the discussion around student debt is significantly influenced and directed by the fallacy of magnifying risks.

The fallacy of magnifying risks occurs when the probability of negative outcomes is overstated. I’ll never forget family members overstating the negative outcomes of dropping out of high school. As it turns out, the GED literally reads “High School Diploma” and entitles students to enter into community and many state colleges just the same as students who graduate with a high school diploma from high school. When it comes to student debt, there is usually very little discussion as to why students should fear debt. Commonsense, which is quite often just plan badsense, tells us that borrowing beyond our means is bad! And it’s this kind of thinking that colors many teachers, parents, and, unfortunately, students’ attitudes about student loans.

But the very purpose of student loans is to allow those who do not have the means to acquire quality education to have the opportunity to do so. And when we examine the facts around student loans and repayment options there is no good reason for low-income students to fear borrowing. In fact, there are two good reasons students shouldn’t fear taking federal loans.[1]

Here’s the first reason students shouldn’t fear borrowing to acquire a college education.

If your education results in a good paying job, then making significant payments to repay your loan won’t be a problem. And if making significant payments to repay my loan won’t be a problem, then you shouldn’t fear borrowing.

In other words, if it works out that your education results in getting you a $60,000 or more annual salary, then you should count your blessings that you had the opportunity to utilize student loans to get the necessary education and/or skills needed for your new career. Sure, you won’t like the monthly bills, but the overall good outweighs the bad. To think otherwise would be like a cancer patient who would be cured by chemotherapy, but who decides against it because it will be painful. If the chemotherapy – student debt – will help you get well – get you a good paying job – then it’s probably worth it.

This raises the question, but what about those who don’t get a good paying job? Maybe you have in mind a friend who chose to go to school to follow his/her artistic dreams, getting a Master’s degree in Dance rather than acquire skills needed for a lucrative career. Now your friend is stuck with $85,000 in debt and a $22,000 a year job.

The answer is simple: these people will pay little to nothing and thus having virtually nothing to fear and nothing to lose. There are a plethora of repayment options for students. One such option is specifically designed to aid those students who, upon graduating, are unable to contribute very much or perhaps nothing to their student debt. “Income-Based” repayment (IBR)[2] is a form of repayment which bases repayment on a person’s earnings and family size. That means that if you are living on the poverty line as an adjunct instructor with a family of five, then you pay roughly nothing. And when that glorious full-time position comes a knocking and you start making 40K+, then you’re obligated to make appropriate payments—payments you can afford to make. And if you’re a single person with a Master’s degree in Dance, $85,000 in student-debt, and a job that pays $22,000 annually, you pay about $75 a month.

But that’s not all. Not only does the “Income-Based” repayment base repayment on income, it also caps the repayment period at 25 years for those who face continued economic hardship. After 25 years of sticking to the repayment plan, which is based on your income, the remainder of the debt is cancelled and then written off as taxable income for that year. That means generally that if your artsy friend keeps his $22,000 a year job for 25 years, and thus keeps his $75 a month payment, he’ll pay just $21,000 of his $85,000 loan. And if you’re a perpetual college adjunct who pays nothing towards your $100,000 student debt, that means at the end of 25-years, that balance is simply written off. Of course this may mean you will owe some money to the IRS. But that’s about as bad as winning $100,000 on the Wheel of Fortune and then being forced to pay a small fragment of your winnings to taxes. What’s more, if you work 30 hours or more a week as a public service employee and you continue to meet the qualifications for “Income-Based” repayment, then after 10-years of service the remainder of your unpaid student debt is forgiven and is not considered taxable income for that year.

Simply put, my argument in favor of poor students taking out student loans is this:

If your education fails to result in a high paying job, then the federal government’s income-based repayment plan will not require you to make payments beyond your means. And if the federal government’s income-based repayment plan will not require you to make payments beyond your means, then, once again, you shouldn’t fear borrowing.

In a worst-case-scenario, low-income students are given an opportunity to go to school to pursue their interests – the arts, music, humanities, philosophy, dance, you name it – while they utilize Pell grants and loans to supplement their income and facilitate their education.

I can speak from experience. I owe more than $100,000 in student debt after completing a BA in Humanities, Master in Liberal Studies, and PhD in Comparative Studies. Since my income as an adjunct instructor puts me at the poverty line – particularly considering the fact my wife is a student and we have three children – this means I pay a whopping zero dollars and zero cents a month. And when the dream job comes along, I’ll be happy to pay more. And if it doesn’t come along, I won’t pay a dime.

The bottom line is this: without student loans I couldn’t have become the first person in my rather large family to get a PhD. This is particularly true because my father and mother were always financially poor. They didn’t have any money to send me to college. Along the way I ignored the fear-mongering of loved ones and strangers and borrowed every dime I could get. The money I received from the Pell Grant and federal loans, in addition to what I made working part time, allowed me to sustain myself through 10 years of education. When I was a graduate student, I borrowed $20,000 annually along with what I made as a freelance journalist. Doing so allowed me to not only pay for tuition and books, but gave me extra money that allowed me to be a full-time stay-at-home dad during my eldest daughter’s first three years of life. Knowing how to live cheaply and being able to utilize federal loans also gave me the opportunity to escape the obscenely low-wage jobs so many students are forced into: working for $7-8 an hour, often being treated with little to no respect from superiors and/or customers. Instead, this poor boy found a way to escape into a big, beautiful world of discovery; a world the poor are usually implicitly denied from entering.

This would’ve been impossible had I listened to the “commonsense” warnings against borrowing. Of course, living on part-time work and a shoe-string budget subsidized by federal student loans doesn’t make for a rich-man’s life. But then again that’s not something I’m used to, nor aspire to. I just wanted a chance at intellectual development and flourishing.

On a final note, I think that teaching students to fear federal loans is also detrimental to the project of democracy and the development of moral and political autonomy in the poor. As thinkers such as bell hooks and Henry Giroux along with many other critics argue, the K-12 education system increasingly promotes conformity and obedience in students. In contrast, colleges generally continue to be, at least for now, spaces where critical and creative thinking is often encouraged and cultivated. Of course, this isn’t always the case, but there are many classrooms, such as those guided by critical pedagogy, where students are invited to go beyond education models based on memorization; where students are invited to critically examine dominant cultural and social norms, and, at times, re-imagine and perhaps even begin to transform them. As Henry Giroux recently wrote, such college classrooms insist “that knowledge is crucial not merely to thinking critically, but also to acting responsibly in the service of civic courage.” My experience as both a student and now as an instructor have bolstered my belief that the college experience can, under the right circumstances, change lives and, more broadly, our society for the better. Many students develop new self-awareness, healthy skepticism about institutions and mechanisms of power and manipulation, and unlearn the fatalistic lies that significant social change is impossible. In the process of listening, speaking, and critically engaging instructors and classmates, students often learn new respect for democratic practices.

If my students’ experiences are to be trusted, this is not an experience they have until they reach college. Each semester I begin classes by asking students about the nature of their K-12 education. Again and again, the vast majority of students indicate that their education experience has emphasized obediently memorizing ideas and being silenced rather than encouraged to speak and ask questions. What a shame it would be if poor students were robbed of this kind of politically relevant self-discovery because they were afraid to borrow money. So again I say, low-income folks, if you’d like a shot to go to school, but you’re too broke to do so: borrow, borrow, borrow.

[1] I want to make it clear that my arguments relate only to federal student loans which can be paid for via the Income-Based repayment plan.

[2] For more info on the Income-Based repayment plan.