couldn’t finance a second year. She just couldn’t do it. Kai hated to leave Florida, but she refused to give up. Instead, she moved back home and started attending classes at the University of Colorado. That school didn’t have the same video-design programs, but it was much less expensive. She figured that she’d spend a year at the University of Colorado, get her degree, and then land the job of her dreams. Okay, she might not get her dream job right at the beginning, but she felt certain that she was born to work in the gaming industry and that once she got in the first door, she could kick open other doors for herself. Over time, she would pay down her student loans and start a real life.
Only there was just one small hitch: she needed yet another student loan to attend her new college. So she added another $13,000 to her debt load, which pushed her total to about $100,000. And because she had hit her maximum under the federal loan program, she now owed money to both the government and Wells Fargo.
During her last semester at the University of Colorado, when she thought she was just a few weeks away from graduation, the registrar’s office informed her that most of the credits from her first two years at AIS wouldn’t transfer. Students like Kai often find out too late that for-profit schools like AIS don’t meet the standards set by accreditors of state colleges and universities. After some back-and-forth, the university’s administrators explained that she would have to attend the school full-time for two more years before she could earn her diploma.
Kai hit the wall. After years of sacrifice and hard work, completing college suddenly seemed out of reach. “I couldn’t afford it,” she told me. “Wells Fargo wouldn’t give any more, my parents still couldn’t afford it, and honestly, at that point, I was done.”
It was also a personally difficult time. Kai’s dad was dealing with brain cancer, and the pressure was more than she could bear.
Kai didn’t finish the semester at the University of Colorado, and she never got her degree. So where is she now? She is twenty-seven, living with another sister in Connecticut, waiting tables at an Italian restaurant. She puts every penny of her paycheck toward her loans—literally every penny. “If it wasn’t for my family,” she says, “I would be homeless and poverty-stricken.” And even with this level of commitment, and after five and a half years of payments, her loan balance is still over $90,000.
This is the point in the story when all her apparent confidence drains away. Her hands drop to her lap, and she looks down at the table: “I’m the poster child for what not to do.”
KAI PLACES ALL the blame on herself, but I don’t see it that way. Kai was doing exactly what everyone told her to do: work hard and get a good education. She didn’t goof off and party. She kept her grades up. She had good recommendations from her professors. She had chosen a career path that promised a good job. Yes, she would have been better off if she hadn’t been taken in by a for-profit college and then set her heart on attending a high-priced private art school. But I don’t put all of that on the shoulders of a seventeen-year-old high school senior trying to figure out how to build a future.
Of course, Kai would also have been financially better off if she had been born into a family that could shell out $100,000 for her education—but I don’t put that on her, either.
Kai now joins the millions of Americans who have incurred student loans—some of them monstrously big—and have no diploma to show for it. And even when these young people do have a diploma, that alone won’t always do the trick. One and a half million people over age twenty-five have college diplomas but no jobs.
Kai’s story speaks of everything that’s broken with American higher education. She went through a college search process that runs on parallel tracks: rich kids benefit from parents who can work their connections and hire expensive coaches to help them make perfect matches with perfect schools, while middle-class kids like Kai get a hearty “good luck” from an overworked guidance counselor. After graduating from high school, Kai got snared in the trap laid by for-profit schools. These places are pulling in one out of every ten people who go off to college, getting them signed up for huge federal loans, and often leaving them with little to show for it. Even when Kai finally made her way to a terrific state school, she came smack up against the hard reality that the school still cost more than she could afford.
Years ago, I got lucky with my scholarship. Later, when I returned to college and earned my degree, it cost me only $50 a semester. I grew up when America was investing in education and keeping the doors open wide for any kid who had the pluck to come in and do the work. But since the mid-1970s, the cost of an education at a state school, adjusted for inflation, has quadrupled. And it shows. Today, two-thirds of kids in state schools must borrow money to make it to graduation.
Ah, the debt. The bone-crunching, never-ending debt. Kai works every day just to tread water on her student loans. Her $90,000 adds just a tiny bump to the giant ball of outstanding student loan debt nationwide. She has joined an army of Americans who are struggling to pay back money they borrowed to get an education. The way I see it, every happy-face story about this economy should include a footnote that tags this fact: forty million people are trying to figure out how to pay off a combined $1.4 trillion in student loan debt.
That debt is toxic in more ways than one. It casts a huge shadow on a person’s credit report, driving up the cost of everything from insurance to a home mortgage. And unlike a home mortgage, student loans can’t be refinanced when interest rates drop. And unlike casino loans or credit card debt, these loans can’t be discharged in bankruptcy when the borrower can’t pay.
The loans can also chop off big parts of a former student’s future. In Kai’s case, they kill her opportunity to take out a mortgage to buy a home. They kill her chances to borrow more money to go to school and finish her degree. Without that degree, those loans kill her dream of getting an entry-level job in a business that employs people with a degree in visual arts. And she can just plain forget about building up a little savings, buying health insurance, or stashing away some cash for retirement.
Kai still sees visual arts as “her field.” But will she ever work there? Her answer is short and defeated: “No.”
Kai and her friends were born into a country that told them to work hard in school, get a good education, and the world would be theirs. But a grim new reality is starting to sink in: they can work their butts off and they still won’t be able to carve out a place for themselves in the middle class.
Kai and her friends have prepared themselves for the future better than any other generation in history. They are more educated: today a higher proportion of young people graduate from high school, graduate from college, and even pick up postgrad degrees. They have more part-time work experience from their high school and college years. They are computer savvy, and their experience with technology often makes them teachers rather than apprentices to people a generation older.
As young people enter the job market and begin to put shape to their lives, they should be flying high. But they aren’t.
The unemployment rate for people sixteen to twenty-four years old who are actively looking for jobs is 12 percent—almost three times higher than for their older counterparts.
The $1.4 trillion burden of student loan debt that’s being carried by those who went to college is unlike any in history—and the amount keeps climbing, at a rate of
