Editorial: A Heavy Burden on Students

The debt of $1.2 trillion accumulated by university students, is higher than what the country owes for credit card, car loan and mortgage payments. That means good business for an industry generated by the government to go after delinquent debtors, while a large portion of the weight falls on the shoulders of African-American and Latino youths.

The Obama administration made positive changes such as taking the banks out of the equation, expanding the possibility to match monthly payments to the debtor’s income and, now, by pardoning the $7.7 billion debt of 400,000 disabled people.

These are all constructive measures, but they are insufficient to deal with a crisis of this magnitude. Nearly 40 million people in the U.S. have college debt. It is estimated that 40% of them – 22 million – cannot make their payments on time, according to the Department of Education. Bankruptcy is not an option to them, as it does not apply to student loans the way it does to other types of debt, except in specific cases and through a process so onerous that only about 1,000 cases are solved per year.

Behind these numbers is an industry created to manage them, formed by companies dedicated to collecting and refinancing, others that help debtors avoid default and for-profit schools that receive millions in funding. This is such good business that now banks want to return to it, alleging that they would be much more efficient in collecting payments.

This system affects especially Latinos and African-Americans, who present the highest levels of non-payment. They also conform the majority of the students attending for-profit schools, which are more interested in collecting the federal loan money that comes with every student than seeing them graduate and learning or dropping out. The ones who do the latter, find themselves having difficulties to land a job and, if they do, they are paid too little to be able to repay their loans. Moreover, these minority debtors are disproportionately harassed by collecting agencies, prompting racism accusations.

The problem of student debt became worse when the general population’s purchasing power froze while the cost of education skyrocketed. It is time to see education as a social investment to bring financial benefits to all instead of a few who get rich at the expense of our youth’s dreams of success.