Over the past week and a half I have had five speaking engagements all throughout the country. Over that time frame there have been over 1000 people in the audience and thousands online. They all face the same danger. Not student loan debt. It is deeper than that. They face the indirect costs of student loan debt. Many people in personal finance focus on student loan debt as the main problem when it is just the tip of the iceberg. When it is just the beginning.
The high school and college students that I spoke in front of and the ones that have heard me speak over the last seven years they have bigger problems than their parents and their grandparents. To understand what I mean let's look at the recent past.
In 2008 the government was blaming the banks and the monitoring agencies for the global collapse of the housing market. Each one of them in that blame game never seen their houses taken, their retirement emptied, their cars repossessed, their pensions dismantled. Nope! None of them felt the weight of their behavior, only middle and lower income people and families felt the tragedy known as the Great Recession.
The banks have went back to their profits and families around the country are still recovering. They are getting up on their feet and moving forward more each day. The Great Recession was a crisis that could have brought the world to a financial end, but today something different is brewing. Brewing under the surface and not many people are talking about it. Maybe they are not talking about it because it doesn't affect them or maybe they are not talking about it because they think nothing will happen. That it will all pass over eventually.
Those who were instrumental in the housing crisis said the same sentences and look how that turned out.
Fast forward to today.
In higher education people are saying don’t worry. State funding definitely will come back. Federal funding will pick up the slack. It will get better. While higher ed is saying these reassuring sentences to the world, the world especially the political world is thinking differently. While these two enter into the phase of he said, she said guess you is squarely in the crosshairs? Students.
Students that all they want out of life is to get a college education and move on to the career of their dreams. Be in a position to one day buy a home and live the American dream. The American dream. Sounds familiar doesn't it? That was the mindset of want to be homeowners in the 2000’s and it worked for a while and then it came crashing down. Now there are situations happening all over the country. Not new situations, but worsening situations.
State after state are stretching the limits of the institutions in their states. They continue to reduce funding each year and if they increase it many now know that the funding will never get back to pre 2008 levels.
I can name states like Illinois, Georgia, Oklahoma, Texas, West Virginia, Washington, Iowa, South Carolina, North Carolina, and the list goes on and on! So the states are pulling away, but the federal will always be there. Right? Obviously not. In the past year there has been talks about ending the public service loan forgiveness program (PSLF), discontinuing subsidized loans, trimming the work study program, and more. Those who are making these statements, those that are pushing these policies will not be hurt by their actions. Students will.
It will be students like the one I spoke in front of in the past week and a half. After one event I was sharing about how the PSLF may be threatened and the next words out of a student's mouth was “guess I'm not going to be a teacher now!” That one policy threat potentially steered a college student from her passion and denied future k-12 students a great and caring teacher. How about the student who needs that work study. They are not doing it for experience they are at that work study for the money! Take that money away and you just put another barrier in front of that student. It will be the students that will be hurt financially if they are only able to have unsubsidized loans. The $1.5 TRILLION dollar student loan debt crisis will explode. The economy surely will slow down.
That is just the tip of the iceberg.
Under the water.....
-The wealth gap continues to grow between the haves and the have nots
-Baby boomers will not be able to sell their homes
-Drain on local and state benefits (unemployment benefits, snap, housing vouchers, etc)
-Wealth gap between African American and Caucasians will explode
-Colleges with low endowments will close
-Financial stressed employees causing productivity and profit loss
-Generation X parents never being able to retire
-Non-existent retirement savings
-No money to move for career opportunities
-Decrease in entrepreneurship
-Decrease in non-profits
This will not be solved by just refinancing loans or just checking the box when it comes to financial literacy. If it was that simple then the crisis would not sit at $1.5 trillion. We have to go deeper. We have to show those who have the potential of being affected a different way of thinking when it comes to money. I promise to keep doing my part 1000 at a time.