The Business of Education

Anya Kamanetz, Susan Cates, and Danielle Douglas-Gabriel discuss the money behind education—is college worth it, and the big business of student debt.

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85%,

that’s the increase of seriously
delinquent student loan debt

from 2003 to 2016.

To be clear, serious delinquency
means loan payments

that are overdue
by at least 90 days.

And check this out: $2,726.27,

that’s the amount student loan
debt increases every second,

that’s right, every second.

Right, who here thinks they
have the most student loan debt,

over $50,000?

Over $50,000? That’s a lot.

Danielle, is this generation
just financially doomed?

I’d like to think no,
I mean, look,

it’s not a small amount
of money by any means.

I will say there’s one thing
that’s kind of beneficial

this generation has
that at least I didn’t have

when I was coming out of school
was income based repayment plans.

This is something that the Obama
administration has expanded.

What it means is that

you will pay back just a
percentage of what you’re earning,

so if you’re not making anything
for the first couple of years,

while you’re out of school,
you may pay nothing,

you may pay $20 a month
or something like that,

and the more you earn,
the more you start to pay back.

It’s not an easy payment plan
for anyone, don’t get me wrong.

I got out of school
$45,000, alright?

- Are you done paying it off?
- Oh no.

- And I’ll tell you why.
- Are you close?

I’m close but I’ll tell you why

because I made a decision
that I wanted to have

six months worth
of emergency savings,

I wanted to have,
to invest in a retirement plan,

- Woah.
- So I did all those things.

Can I ask how old you were

when you started investing
in your retirement plan?

25. I had a grandaunt
who made very…

Anyone in the audience
saving for retirement?

- Good girl. Very nice. Very nice.
- Gotta do it.

Gotta do it. Save.

It doesn’t have to be a lot of
money, and it actually works,

so yes, I do still
have student debt

but I’m okay with that
because it’s manageable,

it’s not at a really,
it’s not impossible

and I’m able to still save,
so it’s not, it’s not the end yet.

Many people tend to think student
loans are something you deal with

for a decade or so after college.

But this next stat shows us
it has a longer impact than that.

$208,000, that’s the loss in
retirement savings and home equity

for a 2-person household, paying
off the average student loan debt.

But it’s not just a problem
for that 2-person household,

it’s a problem for
the entire economy.

Our economy is based on
consumer spending, right?

And millennials, they’re not buying
cars, they’re not buying houses.

Why is that?

Because they don’t
have the money, right?

We set up this system

where you have to get
a degree to get a good job,

you have to get debt
for the most part to get a degree,

and that debt
is then stopping people

from making the financial decisions
that marked our parents’ lives.

But our consumer economy,
the Fortune 500,

is banking on those people
being powerhouse consumers

and that’s just not
going to work out.

And as we’re thinking about
these financial costs, Danielle,

are some majors just
less viable than others?

I wouldn’t say they’re
necessarily less viable,

there are certain majors where
you will earn more money,

but I am totally against
anyone who tells someone,

“Don’t follow your dreams.”

If you want to be a musician and
you want to study theory, do it.

Just don’t, maybe, do it
at a $65,000 a year school,

perhaps do it somewhere where
it’s a little bit more affordable,

and you’ll still get
a fantastic education.

You don’t have to go to all
the Ivies to get a great degree,

and you actually can still
go to some of the Ivies, depending.

Some of these Ivy League schools

will cover your full ride if your
parents make below a certain amount.

So for a lot of low income kids,

you can go to Harvard,
if you could get into Harvard,

let’s just say that,

and if your parents make
less than $65,000 a year,

they’ll cover everything.

Stanford now, it’s $125,000.

- That’s their definition of poverty?
- Yes,

That’s their definition of,
well, lower middle class, I guess.

- It’s the same thing at Princeton.
- $120,000?

Yeah, Princeton is $140,000
and Stanford is $125,000.

85%,

that’s the increase of seriously
delinquent student loan debt

from 2003 to 2016.

To be clear, serious delinquency
means loan payments

that are overdue
by at least 90 days.

And check this out: $2,726.27,

that’s the amount student loan
debt increases every second,

that’s right, every second.

Right, who here thinks they
have the most student loan debt,

over $50,000?

Over $50,000? That’s a lot.

Danielle, is this generation
just financially doomed?

I’d like to think no,
I mean, look,

it’s not a small amount
of money by any means.

I will say there’s one thing
that’s kind of beneficial

this generation has
that at least I didn’t have

when I was coming out of school
was income based repayment plans.

This is something that the Obama
administration has expanded.

What it means is that

you will pay back just a
percentage of what you’re earning,

so if you’re not making anything
for the first couple of years,

while you’re out of school,
you may pay nothing,

you may pay $20 a month
or something like that,

and the more you earn,
the more you start to pay back.

It’s not an easy payment plan
for anyone, don’t get me wrong.

I got out of school
$45,000, alright?

- Are you done paying it off?
- Oh no.

- And I’ll tell you why.
- Are you close?

I’m close but I’ll tell you why

because I made a decision
that I wanted to have

six months worth
of emergency savings,

I wanted to have,
to invest in a retirement plan,

- Woah.
- So I did all those things.

Can I ask how old you were

when you started investing
in your retirement plan?

25. I had a grandaunt
who made very…

Anyone in the audience
saving for retirement?

- Good girl. Very nice. Very nice.
- Gotta do it.

Gotta do it. Save.

It doesn’t have to be a lot of
money, and it actually works,

so yes, I do still
have student debt

but I’m okay with that
because it’s manageable,

it’s not at a really,
it’s not impossible

and I’m able to still save,
so it’s not, it’s not the end yet.