The story of student loans in the U.S. is a story of evolving policies, shifting political agendas, and the lives of millions of borrowers. In the 1990s, student loans were seen as a way to help middle-class families afford college, and the topic of college affordability was not as heated as it is today.
However, as the years passed, the issue of student debt ballooned, with growing concerns over the long-term consequences of loans that many borrowers were struggling to repay.
The Early Years: A Growing Debt Problem
In the early days of federal student loans, the focus was on expanding access to education. Policymakers wanted to give more people the opportunity to attend college without causing a financial burden on the government.
However, this led to a reliance on student loans as the primary method to cover the growing cost of higher education. Initially, college affordability was rarely discussed in public debates, and student loans were seen as a necessary tool to achieve the goal of providing education to all.
As student loan programs expanded, it became clear that the benefits were not as straightforward as originally promised. While a college degree still held the promise of higher earnings, many students found themselves drowning in debt.
By the 2000s, reports emerged of deceptive recruiting tactics at for-profit colleges, and alarm bells began ringing about the true value of student loans.
The Shift Toward For-Profit Colleges and Growing Debt
In the 2010s, the financial crisis and the subsequent rise of for-profit colleges created a perfect storm for student borrowers. The Great Recession led to budget cuts for state colleges, increasing tuition, and rising student debt.
Meanwhile, for-profit online universities boomed, luring in students with promises of affordable education, only to leave many with heavy debts and poor job prospects.
At the same time, some students, especially Black borrowers, faced disproportionate challenges. They borrowed more, struggled with repayment, and had fewer opportunities to pay off their loans.
Many of these students attended institutions where the promise of a college degree did not lead to the expected return on investment.
The Impact of Sunk Cost and Student Debt
In her book Sunk Cost, Jillian Berman outlines how student loan debt has become a generational issue. She highlights that while student loans were initially intended to provide access to education, they have become an economic burden.
The book provides numerous accounts of students who were misled by the promises of higher education, only to find themselves trapped in cycles of debt that they could never escape.
These stories reveal the real-world consequences of a system that often fails to deliver on its promises.
Berman’s book shows that while the student loan crisis is frequently blamed on poor decision-making by borrowers, it is often not a matter of personal choice.
Many students enroll in the cheapest colleges available, believing that it is their only path to a better future. For many of them, the debt they incur is not the result of poor planning but the unfortunate consequence of a broken system.
The Call for Reform
Berman’s analysis of the student loan crisis calls for a philosophical shift in how we approach higher education.
She advocates for a system where individuals take on less risk and taxpayers assume more of the burden, ensuring that higher education remains accessible to all, regardless of income.
This approach would require significant investment in public colleges and the implementation of policies that address the growing financial burden on students.
While the Biden administration made strides in addressing the issue, with programs like the Saving for a Valuable Education (SAVE) repayment plan, the future of student loan forgiveness remains uncertain.
The recent Supreme Court ruling that struck down Biden’s debt cancellation plan serves as a stark reminder of how difficult it is to make real change in this area.
The Future of Student Loans: Moving Toward a More Sustainable Solution
Looking forward, Berman suggests that the solution lies in a combination of free college, scholarships, and loan benefits that would replace the current student loan system.
While the Republican budget proposal seeks to limit Pell Grants and increase loan costs, Berman argues that such measures would only make college less accessible for low-income students and students of color.
Instead, she advocates for a system that balances the costs of higher education with the societal benefits it brings.
Reforming the student loan system will require not only policy changes but a cultural shift toward seeing education as a public good rather than an individual investment.
This shift could help make higher education a more reliable investment, especially for students attending community colleges and regional public universities.
In the end, Berman’s book is a powerful reminder that the current system is failing a significant portion of borrowers. If we are to fully realize the potential of higher education, we must make it more affordable, equitable, and accessible to everyone.
FAQs
What is *Sunk Cost* by Jillian Berman about?
*Sunk Cost* by Jillian Berman explores the history and consequences of the U.S. student loan system, highlighting how student loans evolved into a generational burden. The book examines how policies and political decisions have affected borrowers, revealing the flaws in the system.
How did student loans become a generational issue?
Student loans started as a middle-class benefit, helping students access college education. However, over time, rising tuition costs and burdensome loan repayments turned them into a generational grievance, especially for those who borrowed more than they could repay.
What is the central argument of *Sunk Cost*?
The central argument of *Sunk Cost* is that the U.S. student loan system is broken. The book argues for a fundamental shift in how education is financed, suggesting that taxpayers should bear more of the financial risk instead of relying heavily on student loans.
How have for-profit colleges contributed to the student loan crisis?
For-profit colleges played a major role in exacerbating the student loan crisis by luring students with promises of education that led to poor job prospects and unmanageable debt. Many students from these schools are left with large debts and degrees that do not lead to high-paying jobs.
What is the role of race in the student loan crisis?
Racial disparities play a significant role in the student loan crisis. Black students are more likely to incur higher levels of debt and struggle with repayment, as they face greater barriers to high-paying employment and are more likely to attend institutions with lower graduation rates.
