39: Is College Even Worth it?: The Dark History of Student Loans

2022/4/6

Chapters

The episode introduces the dark history of student loans, highlighting how they started as a means to ensure education for all but quickly turned into a significant burden for millions of Americans.

This episode is brought to you by Progressive Insurance. Most of you listening right now are probably multitasking. Yep, while you're listening to me talk, you're probably also driving, cleaning, exercising, or maybe even grocery shopping. But if you're not in some kind of moving vehicle, there's something else you could be doing right now. Getting an auto quote from Progressive Insurance.

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Hi friends, I hope you're having a wonderful day today. My name is Bailey Sarian and I'd like to welcome you to the Library of Dark History. Now this is a safe space for all the curious cats out there who think like, hey, is history really as boring as it seemed in school? Oh nay nay, this is where we can learn together about all the dark, mysterious, dramatic stories that maybe we just didn't learn about in school.

So, little fun fact here. Did you know that the average 35-year-old with student loans living in the United States has about $42,600 in student loan debt? But that's not even the worst of it. Because by the time most people have repaid their loans, they will have paid 287% of what they originally borrowed. Now, isn't that crazy? Yeah. Yeah.

Back in 1970, the average student loan was only $1,070. Yeah, can you imagine? No. Adjusted for inflation, that's still just $7,170. And back in 1970, the average cost of attending a public four-year college was only about $1,238. And private colleges? Well,

They were only $2,559. Now that's including room and board. Could you imagine if we all got to enjoy that? And if we adjust that for inflation, that's still only $18,388. Today, the average cost of attendance for the current school year is $42,000.

$427. That brings us to a grand total of $169,708 for a bachelor's degree, assuming you can finish it in four years. So, um, hey, uh, how did we get here?

That's the question. In the beginning, there was this mandate of education for all. And like, that sounds great, right? But where did that all go wrong? What happened to make things change so much? And by change, I mean, why is it so fricking expensive to get an education? Why do so many of us have to go into so much debt just for an education?

Now all these questions started floating around in my noggin and I realized it was time to dig into the dark history of student loans. Okay, now let me open up my dark history book to chapter student loans. Let's go. To my book. Let's see. That ain't it.

Oh, I found it. It's right here on this page. Why did people go to college in the first place? I think that's a fair question to ask, right? Let's go back. Now, during the 19th century, also known as the 1800s, college was a bit of a do-gooder thing. I mean, not so much college itself, but the reason people went to college was usually to prepare for a job that was service-related, something like a teacher or a minister. Now,

Now, these were pretty much low paying gigs, but important to our society. So there was an understanding that the education should be free. And even when college wasn't completely free, there were scholarships, endowments, and gifts from the wealthier people in society to help cover costs.

So in the early days, most of the universities in the United States were funded by the government or donations, which meant tuition was pretty low or non-existent. But room and board weren't covered, which meant students had to find a place to sleep and a way to feed themselves.

And that meant that even though school itself was cheap, it was still mostly the wealthy who were able to afford a degree. Now, back during the Revolutionary War, universities like Princeton and Dartmouth would sometimes front costs for students, and the students would pay them back when they could. But there was no formal loan process like we know today.

It's said that Harvard University was the first to offer loans to students, but that was in 1840. But things didn't get formalized until 1848 when the Harvard Loan Fund was created. The money in the fund came from alumni, and any student could apply when classes began. Well, I guess this idea was a pretty big hit because pretty soon other universities started doing it too. It all sounds very nice, doesn't it? Yeah.

It does. As the 1800s rolled along, more people from the middle class started attending university. We're not exactly sure why. Maybe because they wanted to give back to the community as a teacher or a community leader. Maybe it was seen as a good career move since the government and the community were largely covering the costs.

What we know for sure is more people were attending university. And then in 1862, the Morrill Act was passed and it gave money to each state to set up even more universities. Yay! It was like access to education for all. Sounds great, sounds dandy, right? Education, great.

But it's very important to note that the land for these institutions was stolen from indigenous communities. And when I say stolen, I'm talking about over 160 violent land grabs that we know of.

Now, these violent land grabs affected around 250 tribes, so you might want to do a little research on where your university came from. Anyways, lots of universities were popping up, and in 1867, the United States Department of Education was created. Now, their goal was to make schools more successful, but no one really defined what

quote unquote, "success" meant. That said, in 1870, student enrollment was around 63,000, and by the end of 1910, it was six times higher. So maybe that's what they meant by success? And 1910 is significant for another reason. It's when society's view of universities began to shift. Now, people were no longer enrolling in school just to learn.

They were there for the party. Well, maybe not necessarily to party, but for the social aspects. Now, why did this happen? Industrialization meant people were making more money, which helped them pay for school. And the possibility of landing a more profitable gig inspired them to go. So the purpose of universities began to shift.

Remember in the beginning, universities were there to help the community. Now it seemed that they were more about helping people make a lot of cash. So with lucrative careers in mind, enrollment in universities continued to rise. We're talking 598,000 people by 1920. And most of these students were wealthy white men.

Now quick side note here, historically black colleges and universities and historically women's colleges have existed since 1830s, but the majority of American college students remained wealthy white men for freaking decades. So with all these changes to the makeup of universities and colleges, the money guy started saying the cost for an education should change too.

And one of the loudest money guys was a man named John D. Rockefeller Jr. So let me tell you about John D. Rockefeller. Joan, you listening? Good. Listen to this. He was born January 29th, 1874. So he's an Aquarius. You know what's up with that. I don't.

Tell me. Anyways, he was born in Cleveland, Ohio to John D. Rockefeller Sr. Could you imagine having the same name? Like that's so – I hate when they do that. Like get creative at least. Anyways. Anyways.

So he's born to John D. Rockefeller Sr. and Laura Spellman Rockefeller. Now, John Sr. was the founder of Standard Oil and the country's first billionaire. Now, in case you haven't heard of Standard Oil, their claim to fame was being the largest oil refinery in the world.

And Laura, she had some seriously impressive roots of her own. Now, she was a philanthropist and abolitionist. Those are fun words. Now, the name Spellman, it might ring a bell. Maybe that's because Spellman College was named after her. I don't know.

So John Jr., or Junior as he was known, had some pretty big footsteps to follow in. Junior was homeschooled until the age of 10. Now life at home, I guess, was pretty strict. Money, school, and social reform were meant to be taken very seriously. Now Junior took these values to Brown University and graduated in 1897. And after that, he moved to New York City, the headquarters of Standard Oil, and began working for his daddy,

But there were some scandals at Standard Oil in the early 1900s and Junior decided that the scene wasn't there. It just wasn't for him anymore. He's like, no, I'm out. And in 1910, Junior decided to leave the biz and like his mom, he wanted to focus on philanthropy. Junior had lots of philanthropic interests. For example, he gave money to Margaret Singer for her work on birth control. Remember birth control, Margaret?

But he was especially interested in higher education. Now this wasn't entirely random because his father had focused a lot of his attention on education as well. So I guess he was like just following in the footsteps of both of his parents. And this is where capitalism and education start to intersect.

Now, Junior noticed that the makeup of universities was starting to change. They were no longer do-gooder institutions focused on the betterment of society. More and more students were seeking out a higher education for their own personal gain. Because of that, Junior thought students should have to pay for their own education. Now, from his perspective, most students were the sons of racists.

rich people. And when they graduated, they were going to get even more rich. So why shouldn't they pay for their own education? Plus, with a soaring enrollment, the expenses of running universities was just going up.

So there was even a way to justify the increased cost of higher education. It wasn't just that students were benefiting personally from an education, so they should cover the cost. The universities actually needed the money. So in 1927, Junior proposed a solution to the problem he and others like him had kinda sorta maybe invented. Remember all those grants and donations that were helping people attend college? Well, Junior told donors and administrators that

That idea should be thrown out the window and replaced with something called tuition. He gave them his pitch. Students are getting a higher education to improve their lot in life, not to help the community. So why shouldn't they pay for it? He knew that many students wouldn't be able to afford the higher cost. So he proposed offering loans to students who couldn't pay for their studies upfront.

And these loans wouldn't have to be paid back until 10 years after a student graduated. Now, okay, Junior said his plan was philanthropic. The aim was to make higher education more accessible to more people. The plan, it may also have been an attempt to divert attention away from the labor strike that was going on against Standard Oil. I'm just saying. But that's a completely different story for a different day.

Now, believe it or not, Junior's plan went nowhere. Are you shocked? I'm shocked. Well, it turns out people thought Junior's plan unfairly favored the wealthy. So it was tossed out the window. Then how did we get here? Well, the cost of tuition kept going up.

Things got especially rough in the 1930s with the Great Depression, when government funding went down and so did private donations to universities. But hold on to your rocket ships because things are really going to take off a couple of decades later with the space race, the war on poverty, and a little girl's name, Sally May. But before we get into that, we gotta pause for an ad break. BRB.

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And we're back. Hi. So we're going to use our imagination. Picture it. October 4th, 1957. The Soviet satellite Sputnik 1 is launched into outer space and the people of the United States are experiencing some serious FOMO. Okay. The Soviets had beaten them to it.

Oh my God, we were supposed to be in space first. How dare they? Now to make matters worse, not even a month later, the Soviets did it again. They launched Sputnik 2, whose precious cargo included a dog named Laika. Now this dog, Laika, went into space. Good for him. Space dogs.

That's a good movie, space dogs. I'd watch it. Well, anyways. It wasn't until the following year that the United States got their first satellite into the air. And that one didn't even have a puppy. Now, the United States, they were losing some serious face. The Cold War was raging and people in the United States were terrified of the Soviets. Now, they needed to do something fast. I'm talking fast.

We need to do something fast. So the National Aeronautics and Space Administration, also known as NASA, was formed with the goal of sending people into space. And what did NASA need?

People with brains, smart people, AKA college graduates. Now I'm not trying to say that smart people are only college graduates, but you get what I'm saying. Great. Anyway, the space race increased the demand for intelligent people, educated people, and it was thought that the best way to get more intelligent people was to send them to college.

So, in addition to the first United States satellite launch and the formation of NASA, 1958 was the year the National Defense Education Act came into existence. Now, the idea was to help students who excelled in science, technology, engineering, or math, aka STEM, go to college. Because the United States was trying to keep up with the Joneses, or in this case, the

the Soviets, you know? And the help came in the form of grants, scholarships, and you guessed it, student loans. Oh yeah. So the National Defense Education Act created the very first federal student loans in the United States. Now it's kind of sad in a way because the origins of the student loans were so well-meaning. Senate...

Majority leader Lyndon Johnson, who later becomes president. Yeah. Now he was a big proponent of the program because he thought it would advance STEM education, which as we know was very important for the next generation because I mean, look, the Soviets, they're coming for us and we can't have this competition. We got to win. You know, we can't all just get along. Okay.

We can't. Plus, LBJ was a former student loan recipient himself, so he wanted more people to have the same opportunity he had. Now, the program was so important to him that while he was president, LBJ approved the Higher Education Act of 1965. Now, the idea was to make it possible for people of all income brackets to attend college, not just wealthy white men, which is like...

We love that, right? Now, he specifically mentioned the loans would be interest-free. Now, spoiler alert, if you're not aware, that didn't last forever.

And here we see the beginning of the modern day student loans. The Higher Education Act was part of LBJ's War on Poverty, which was exactly what it sounds like, an attempt to fight off poverty using government spending. It gave grants to colleges to support students with financial need. It also created the Guaranteed Student Loan Program, or GSL. The name is a bit confusing because it makes it sound like the government was offering student loans,

Nay, nay. For most of the program's existence, the government didn't loan students money. It guaranteed loans that banks and other private institutions made to students. You may have one of these loans. Today, they're known as the Stafford loans. So how did guaranteed student loans work?

Normally, if you or I go into a bank and take out a loan, we're on the hook for the money. And if we don't pay it back, the bank takes a loss. Now when the government guarantees a loan, it means that if you or I don't pay the bank, the money that we borrowed, the federal government will pay them. In other words, there's no risk to the bank. One way or another, they'll get their money back.

So this means student loans were all profit and no risk for banks because even though the loans were guaranteed, banks were still allowed to charge interest. And reminder, who was covering the losses? The federal government. And who funds the federal government? Taxpayers. Mm-hmm, mm-hmm.

Are you starting to wonder why the federal government didn't just give the money to students in the first place? The GSL program was the nation's first big push to encourage the general public to go to college. Now, there had been the GI Bill back in 1944, but that only helped veterans. So this was like the first widespread effort.

And the statistics said a lot. At the time, only one in four people had a high school education and even less had graduated college. Also, poverty was rampant. LBJ was a former teacher, so he really valued and understood how important education is. I mean, he saw it as key to ensuring what he envisioned as a super great society.

A nation that was safe, socially fulfilling, and economically sound. The program was a success because the number of people entering college increased. And when I say increased, I mean it really increased. By 67% from 1960 to 1979. Part of the program's success was probably due to the fact that tuition was so low, okay? So lots of people didn't even need loans.

and people who did were able to pay them back very easily. In 1966, the National Association of Financial Aid Administrators, woo, that's a name, was created to keep tabs on things, right? It still exists today. And in 1969, Apollo 11 landed on the moon, beating out the Soviets. The United States did it!

And they earned their bragging rights. And in the process, the United States higher education system became the, quote, envy of the world. But things started to shift again in 1972. For starters, a program called the Basic Educational Opportunity Grant came into existence. I know, so many big names. That's really not the point. It would later be renamed the Pell Grant.

You probably heard of that, right? I think so. So that probably sounds more familiar to you. Anyways, its purpose was to help students with financial need pay for college, which is great stuff, right? Also in 1972, the then president Nixon set up something called the Student Loan Marketing Association. Now the abbreviation for this is SLMA. It kind of looks like Slima. I don't know. And for some reason, Slima morphed into Sally Mee.

So when you hear people talking about Sallie Mae, they're not talking about a little girl. They're talking about a government sponsored enterprise. Yes, a mouthful. So let's just call it a GSE. Now a GSE like Sallie Mae is a little bit complicated because it's created by Congress.

but it's not part of the government. So Sallie Mae was confusing from the get-go. Let me see if I could break it down for you a little bit, okay? Sallie Mae made it possible to use money from the US treasury to buy government-backed student loans from banks.

In other words, banks were able to borrow money at a very low cost and with very little risk. Before the invention of Sallie Mae, only the United States government could borrow money for so cheap. The idea was to make it easier for banks to offer loans to students.

If you're a money person, you know like this is some serious foreshadowing of the subprime mortgage crisis that started in 2007. If you're not a money person, let me just tell you this was a crisis waiting to happen because banks don't like to, they don't want to play nicely, okay? Low cost loans weren't enough, they're not enough for them. They started using the loans as collateral and you don't need to be a money person to know that wasn't going to end well, okay?

But before we get into that, let's pause for an ad break. This episode is brought to you by Progressive Insurance. Most of you listening right now are probably multitasking. Yep, while you're listening to me talk, you're probably also driving, cleaning, exercising, or maybe even grocery shopping. But if you're not in some kind of moving vehicle, there's something else you could be doing right now. Getting an auto quote from Progressive Insurance.

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Your cash back really adds up. And we're back high. So this new system didn't just make it possible for banks to make as many student loans as they possibly could. It gave banks the incentive to make as many loans as they possibly could. Slight difference, but an important one. The idea behind Sallie Mae was going to make going to college more affordable for more people. But it kind of backfired because the vultures started circling. I think we were the prey.

Remember, Sallie Mae wasn't part of the government. It was just created by the government. And when Sallie Mae and the bank started making big bucks, the universities wanted in on the action. They're like, what? Money? Let's get in on that. Tuition rose exponentially. And top-end universities were even involved in price fixing. Instead of focusing on offering a great value to their students,

and just offering maybe a great education, universities started focusing on their rankings and reputations. And oh yeah, what amenities they had on campus, as if that has anything to do with a good education. The situation was ripe for exploitation. Young people coming out of high school were sold this story that college was the path to the coveted American dream and cheap federal loans were easy to get.

So even though universities kept raising the cost of tuitions, students kept paying. And with all these factors at play, the cost of a higher education just kept going up and up and up. I mean, why wouldn't it? Why wouldn't it? Look at where we're at.

This was unfortunate but sustainable for a while. And then things took a turn in the 1980s. Ronald Reagan was elected and, bitch, with him came tax cuts, lots of them. The tax cuts led to cuts in funding for higher education and student aid. And this wasn't just on the federal level. States also passed laws that limited taxes and expenditures.

That meant education funding decreased on the state level too. Now, between 1980 and 1985, higher education funding was cut by 25%. Now, in dollar amounts, that's $594 million less in student assistance and $338 million less in Pell Grants. So it's no surprise that the cost of college soared.

And then things got really messy really quickly. Students who got grants for their first year of college had to take out loans to pay for their second year of college.

And it wasn't just dollar signs they were messing with. They changed eligibility requirements as well, which really took a toll on middle America. These low cost, low interest subsidized federal loans were suddenly only available to families whose total household income was under $32,000.

If this is starting to sound a little complicated, mostly what you need to know is that the federal government largely got out of the business of offering higher ed grants, aka we're all fucked. Instead, they mainly offered student loans. In other words, free money was out, buy free money, and money that you had to pay interest on was in. Why would... My nail fell off. Oh no, I lost a nail.

I was doing so good, it's gone forever. RIP.

Why would Ronald Reagan do this to all these students just trying to live and go after that American dream? Well, it depends on who you ask, okay? Some say that these cost-cutting measures were necessary in order to reduce the deficit, which doesn't entirely make sense because if you have a deficit, why would you cut taxes, which is, you know, the government's only source of income, question mark, you know? Some people in the government believed that

you know, parents should pay for their kids' education, not the government.

I mean, we already went to the moon. We don't need you for anything else. You know, I don't need to pay for you guys anymore. I'm sure other people have other things to say as well, but I'm also sure they make just as little sense. Bottom line, funding students had gone from being viewed as an investment in society to being viewed as having a negative effect on the economy, which I'm sure at home, if you're listening to this, hi, it makes no goddamn sense, right? Because if we invest in our people...

We do great things, we succeed, blah, blah, blah. Yeah, you get it. Reagan's education secretary even compared students seeking financial aid to other, quote, undeserving members of society. In other words, people on welfare, unemployment, Medicaid, Medicare, oh, and farmers receiving subsidies. In trying to justify cuts to student funding, Reagan's second education secretary pointed the finger at tuition hikes.

He said student loans were the reason for the skyrocketing cost of higher education. But that doesn't make a whole lot of sense either because if the cost of college is too high, wouldn't students need more funding, not less? And if something needed to change, wouldn't it make sense to regulate tuition hikes instead of cutting financial aid? But clearly, I'm not an economist because none of that happened.

Nobody listens to me. Hold on. Hold on, Joan. I know. No one listens to us. The College Board, which keeps track of these things, says that the cost to attend a public college increased 24% from 1980 to 1990. And the cost of private college increased almost 50%.

In the same time period, the minimum wage went from $3.10 per hour in 1980 to $3.80 in 1990. In today's dollars, that's the equivalent of $10.53 per hour in 1980,

and $15.10 per hour in 1990. And in case you're wondering, the federal minimum wage today is still just $7.25 per hour, which is such a joke. Don't even get me started. So while the value of minimum wage is still lower than its equivalent in 1980, the cost of college continues to increase in freaking leaps and bounds.

While the numbers are jaw-dropping, the truth is that the public didn't seem to notice. Or maybe they just, like, didn't care. Or maybe we're distracted because there's so much shit going on all the time, you know? Reagan, he won re-election in a big way in 1984. And Daddy Bush lost re-election in 92 after going back on his promise of no new taxes.

So clearly the country was showing where its values were. And they were definitely not focused on funding higher education. They don't care about your future. We got our future and our education. We don't care about yours. To make matters worse, funding on the state level was going through all the same twists and turns taking place on the federal level. So there's been less and less funding for higher education on the state level since the Reagan years too.

The system as we know it today really started to solidify with the higher education amendments of 1992. There were two major outcomes of this piece of legislation. First, it established the Free Application for Federal Student Aid or FAFSA. I always hate that one because they threw the F before the S and it's like you want to say FAFSA but it's FAFSA. Yeah, you know. It's exactly what it sounds like. A Free Application Process for Federal Student Assistance.

Second, it allowed for unsubsidized Stafford loans. Yeah, remember those? They were originally part of LBJ's war on poverty, but under Reagan's administration, there was a maximum income level put on them. And that restricted access for a lot of people. But the new law got rid of this maximum. So, I mean, it sounds promising.

But these unsubsidized Stafford loans required students to cover the cost of interest while they were still in school. Now, prior to this, the government was footing the bill. So it looks like a step forward. Maybe it isn't really. Some of you with Stafford loans probably know what I'm talking about. Then the final nail in the coffin came in 1993 with the Student Loan Reform Act.

This finally allowed the government to make loans directly to student borrowers instead of through private institutions. Now, the previous system had been the only one in place since 1965 and LBJ. Anyway, direct loans sound like a good thing, right? There's no middleman, but there's still that catch.

Direct loans aren't guaranteed loans, which means the students doing the borrowing are going to end up on the hook for lots of money. Now, to make matters worse, something called income contingent repayment plans are part of the Act.

And if that sounds confusing, that's because it is, and honestly, it's done on purpose to confuse us. Let's be real here. The plan was meant to make it easier for students to repay loans. Plus, there was the added incentive of loan forgiveness when the loan matures 25 years later.

But even that has a downside because if you do happen to qualify for loan forgiveness, the amount you haven't repaid is considered income, which means you now have to pay taxes on it.

Anyways, you're being punished for going to school, okay? And you were probably paying a higher interest rate over those 25 years anyway. So one way or another, they're gonna get you. And if you haven't guessed it yet, while all these changes to student loans were going on, the price of an education continued to go up.

What does this look like in dollar signs? Well, look at this. In 1990, the average college student graduated with the equivalent of what today would be about $13,978 in student loans. 30 years later, the average college grad had accrued about $30,441 in student loans when they were handed their diploma. Now that's a huge jump.

Right? And it doesn't even tell the whole story. So let me introduce you to another guy named Alan Collinge. Now this guy, Alan, he wrote a book called The Student Loan Scam. Now in this book, Alan tells the story of his experience with student loans. The numbers are crazy, but here's the thing. Alan's story is more like the rule than the exception. Alan saw student debt as a quote, necessary evil. I mean, I think a lot of us do.

There's that whole American dream thing that's like freaking pounded into our heads and it's just creeping back in again. And college is the path to success, right? Well, maybe not. But anyway, Allen was a smart guy. He got accepted to the University of Southern California and borrowed $38,000 in order to pay for it. He also got himself not one, not two, but three degrees in aerospace engineering. So this guy's like a smart cookie.

But by the time he graduated, his student loan debt had grown to $50,000. Now, some of you are like, no biggie, right? Because he's going to make that money because he's so smart. Al's got himself some serious aerospace engineering degrees. You know, he's going to pay that off in time. In no time, really. Or is he? I don't know. We have to take an ad break first and then we're going to find out. ♪

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Well, Alan did his best to manage his student loans. He consolidated them with Sally Mae because he thought Sally Mae was part of the federal government. And unfortunately, he was wrong. That innocent sounding name, Sally Mae, it's so misleading, isn't it? It sounds so cute and innocent. So I'm just going to backstab you. Alan also got himself a new job. His new title, aeronautical research scientist. Sounds fancy.

Only thing is the pay, not so fancy. His salary was 35,000 per year. What a slap in the face to such an educated, highly educated smart man.

To put that into perspective, his student loan payment was 20% of his paycheck. Maybe you can see where this is going. Anyway, at the beginning of 1999, Allen had a problem. He didn't have enough money to cover his entire payment. So he called Sallie Mae up and asked for some help. They told him that he'd be charged a one-time late fee as long as he kept up with his payments.

Well, Alan was a smart guy, but he wasn't the most observant. Six months later, he looks at his bill and he notices that the late fee was being charged monthly. So Alan called up Sally Mae and was like, hey, you told me it was a one-time thing. Okay, like what is this on my bill? And Sally Mae, they weren't having any of this. That's when Alan realized Sally Mae wasn't part of the government at all.

They were a good old fashioned capitalist corporation out for money. Now here's where it gets really ugly. Allen decides he had enough of Sallie Mae and wanted to take his loan somewhere else, but he's not allowed to. Federal law prohibits people from refinancing student loans more than once. Allen was already struggling. So the added fee only made it harder on him.

Plus there were, you know, the everyday life expenses like rent, utilities. I don't know. It might be nice to eat some food, you know, little, little things. So things are just really adding up.

By the end of 2001, Allen found himself unemployed, sleeping on his friend's couch. And to make matters worse, he was about to default on his loans. With things looking so bleak, Allen decided to apply for economic hardship forbearance. Now this wouldn't actually get rid of his loans, but it buys him some time. He submitted his application on December 1st in 2001, but Sally Mae said, we never got it.

We never got that. So Alan, he did it again. He sends in another request. So he sent it again, but it didn't matter. He was denied on December 13th and a day later, he defaulted on his loan. Now, what did defaulting on his loan mean for Alan?

Well, there were added costs. It messed with his credit and there were potentially legal issues. With this added pressure, Alan desperately tried to find work wherever he could. He took a job as a cook in Alaska that required him to work 92 hours a week with no time off. I mean, I don't even know how that's possible. Are there 92 hours in a week?

So Alan had obviously zero time to himself. He's working his ass off. His student loan debt continues to grow. His payments were barely covering the additional costs of the loan, nevermind the original loan itself.

Now to make matters worse, the collection agencies were now coming after him. Allen tried to work out a deal with them, even offering to pay a higher interest rate if they would just like get rid of some of the fees, but they wouldn't budge. Why would they? Are you wondering why Allen didn't just file for bankruptcy?

Cause that's kind of like a way out, you know? Well, with any other type of debt, he would have had lots of options, but with student loans, there are none. Isn't that amazing? Slimy business owners can do all kinds of underhanded things in their businesses and then file bankruptcy and then like start a new company the very next day. No strings attached, but a well-meaning college graduate just trying to make something of themselves is strapped with their student loans for life. Now,

Now by 2005, seven years after Alan graduated, the size of his debt had more than doubled to the price tag of $103,000. Alan sums it up best saying, quote,

While Alan's story is frustrating and sad, it's even more sad that it's not unique.

And the situation is even worse for women and people of color. The American Association of University Women estimates that 56% of college students are women, which is great, go women, but women have more than 66% of the debt.

And to make matters worse, it's harder for women to repay their loans because they tend to make only 81% of a man's salary. These are facts. This is not an opinion, so I don't want to see any comments down below saying, well, you're being biased. No, these are facts. I am presenting facts to you, bitch.

Anyways, in other words, a woman with a master's degree tends to take home what a man with a bachelor's earns. And a woman with a bachelor's is paid the equivalent to a guy who has an associate's degree. In other words, women are earning less. Hi.

The situation is similar with people of color. Their loans tend to be higher and they repay those loans more slowly because they're getting paid less for the same job as a white male, assuming they're even hired because unemployment rates are higher for people of color too. And again, I don't want to see any comments down below saying I'm wrong. These are facts. These are facts. Just accept it as a fact. It's true. And when we acknowledge it, we can do better and move forward and make positive change. That's what I'm trying to do here, people.

So stop coming after me, saying I'm making this shit up. Well, in 2005, the Higher Education Reconciliation Act was passed to help people like Alan. It lowered student loan fees from 4% to 1%. But by this time, total student loan debt had already grown to $391 billion. Yes, billion with a B. Then came the recession in 2008. You remember? Shout out to the recession.

It led to big cuts in spending on higher education, like we saw in the Reagan years, as well as a very high unemployment rate. Many people were desperate to improve their prospects in the job market, so a lot of people were enrolling in college. Now, by 2008, total student loan debt had grown to $639 billion.

Now between 2008 and 2018, college costs and student debt continued to rise. But funding didn't. And I don't know, but minimum wage hasn't gone up in quite some time. As a matter of fact, in 2018, state and federal funding for college was $7 billion less than it had been in 2008.

The next major piece of legislation relating to funding for higher education came in 2010 with the Healthcare and Education Reconciliation Act. So many acts, you know, so many. It got rid of guaranteed student loans and required the federal government to directly loan money to students through the direct lending program set up in 1993. It also increased grants and income-driven payments.

But it may have been too little too late because by 2010, student loan debt had grown to $811 billion. And even though banks were no longer allowed to profit off of student loans like they were before, they weren't required to do anything to make up for their underhanded behavior.

Colleges and universities weren't required to slow tuition increases either. So by 2012, total student loan debt broke the trillion dollar mark. And today it's over $1.75 trillion, which is like, is that even real money?

This is a side note. If you're listening and you hear a helicopter in the background, I guess somebody got stabbed down the street and they're looking for the guy. He's on the run. So stay tuned for Murder, Mystery, and Makeup where I talk about the stabbing that happened down the street and the helicopter ruining this episode. Which leads me to the next question. If college is so expensive, are people better off just skipping it altogether to avoid this crazy student loan trap? I don't know. But let's take an ad break really quick.

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And we are back. So should you just blow off college and jump right into the workforce in order to avoid all that student loan debt? Well, if you're Bill Gates or Mark Zuckerberg, the answer is yes. But for the rest of us, not so much. I don't know. A pre-pandemic study done by Georgetown University estimated that 35% of all job openings would require a bachelor's degree by 2020.

And well, that doesn't sound so bad, right? That's a good thing. No, no, is it? I don't know. Even though only 35% of job openings require a bachelor's, 91% of the jobs are going to people with a bachelor's degree. And no surprise, people with bachelor's degrees earn about 66% more than high school graduates.

To put it in dollar signs, people with bachelor's degrees earn about a million more dollars over the course of their lives. Now, the other statistics for people with only a high school diploma, they aren't much better. A lot of the times, the only jobs available for people who don't have a college degree are

Sometimes can be in unsafe environments with erratic schedules. And to make matters worse, they're low paying and usually have no freaking benefits. And switching careers usually comes with a big pay cut.

Also, if a high school graduate becomes unemployed, it's way harder to find a new job. This really played itself out with the pandemic. I mean, millions of people found themselves unemployed and the first people hired back were the ones with bachelor's degrees or higher. But the pandemic has also brought a shift in hiring practices. Many companies are now faced with a shortage of workers. So they're easing up on requirements that employees have college degrees.

Now, at the same time, college enrollment has seen its biggest decline in 50 years, maybe because we're all kind of catching on to this little scam they've got going on. So there are more opportunities and better opportunities for people without college degrees, but it still remains to be seen if skipping college is the more profitable route.

Well, if going into debt just, you know, sucks and not going to college at all limits your earning potential, what other options are there? Do you have titties? Well, you better start busting them out. I mean, is there a better way? Well, it turns out there is. Have you guys ever looked at what these other countries out here are doing? Okay, great. Step one. How about free or practically free college? Now, before you start asking yourself,

Bailey's on crack. What's she been smoking? Let me tell you, this already exists. Seriously, every country in the European Union has free or essentially free higher education. And it's not just rich EU countries. Kenya, Egypt, Uruguay all offer free tuition. And then get this, Germany and Slovenia also offer free tuition to students from other countries. Let's go.

Yeah, that means you and I, we can head right over there and get ourselves a degree without going into debt or learning another language because both countries offer classes in English. Now, ain't that some shit? Now, I know down below, I'm gonna get a lot of comments about, we gotta raise taxes, blah, blah, blah. We already pay a shit ton of taxes. What if it went to things that actually bettered us

as people, as a society actually helped us because where are our tax dollars going? I don't see a stop sign in my name. Okay. I want to see a receipt. Where's my tax dollars going? I need a whole breakdown. Anyways, sorry. In conclusion, back in the sixties and seventies, students in the United States paid for college by working a summer job or just, you know, at an ice cream stand.

Then they graduated with little or no debt. Lucky them. If they did have debt, they paid it off in a year or two. But things changed over the years. It was almost as if the government cared more about the companies making the loans than the students who needed them.

All the things that normally come with loans, refinancing, bankruptcy, and statutes of limitations were left behind. And people with any other type of loan had all these consumer protections, but people with student loans didn't. And on top of that, the companies offering the loans were guaranteed to get their money back, plus interest, plus penalties, plus fees, plus collection charges, because of all this.

People are making life decisions based on student debt.

And it doesn't just affect where they decide to go to college or what they decide to major in. It has an impact on other choices as well. Some people join the military just to avoid like having to pay off student loans. Others put off getting married. I'm sure a lot of us millennials out there can agree. We're putting off getting married, having kids, buying a house because you can't fucking afford it. And then there's this huge domino effect because of these decisions.

Higher student loans means people have to put off saving and investing, which not only affects our lives, but the lives of future generations. Never mind the effect of all that stress on students' mental health, right? So where are we today? Where are we today? Joan, where are we today?

People over 50 now outnumber people under 25 with student loans, and they owe three times more despite having borrowed much less. In March 2020, the government put all federal student loans on hold because of the pandemic. Now, this meant people with federal student loans didn't need to make any

It's kind of funny since more than half of all borrowers weren't making payments before the pandemic anyway. The hold was supposed to expire on January 31st, 2022, but President Biden extended it until May 1st.

Now that hasn't stopped the debate over what should happen with student loan debt. Some say all student loan should be forgiven. Others say the system is fine as it is. Those are the ones without debt. And as you can see, this is just an evolving issue that nobody seems to have an answer for. Advocacy groups like the Student Debt Crisis Center have real-time updates if you want to check it out. It's very interesting. So let me close my little dark history book here.

Who's to blame for the crisis? The government? The universities? The banks? Us? The answer is probably D, all of the above.

In the past, the system was set up to help students to go to college with the promise that everyone would benefit because of the tax dollars and other contributions they would make to society. But that system was turned on its head. Instead of helping students, we're taking advantage of them. Well, who's taking advantage of them? Like who's profiting off of this? Because I don't know anyone who's like profiting off of this, you know?

I guess it's just a reflection of our current value system. Money over everything. I lost a nail. America. America loves money. Fuck you.

Well, I would love to hear your guys' thoughts down below. I know student loans is very complicated and it's also a very hot debate. And I don't know why it's such a hot debate. You think we would all want to succeed and all be very educated so we can make this country as great as we think it is, right? And do better and be better and be smart and educated because education is everything. But instead they're keeping us dumb, poor, and stupid, which is the same as dumb. But you get it.

I know so many people out there who were struggling with student loan debts and it's just sad. And I wish this had a happy ending, but it really doesn't. But if we get out there and we do something, we can do something about it. Motivational words from me. If we get out there and do something, we can do something. America.

Well, everyone, I wish I had, I wish I could end this on a good note. But if you're new to dark history, none of this ends on a good note. I'm really sorry about that. Thank you so much for learning with me today. And you didn't have to go into debt with this one. I could give you an education. Yeah. Remember, don't be afraid to ask questions and to get like the whole story with your question because you deserve that.

I'd love to hear your guys' reaction or thoughts, concerns, anything. So make sure to use the hashtag darkhistory over on social media so I can follow along and see what you guys are saying. Join me over on my YouTube where you can watch these episodes on Thursday after the podcast airs. And also catch my murder mystery makeup which drops every Monday. I hope you have a wonderful day today. You make good choices. Be positive. Keep your head up. And I'll be talking to you next week. Bye.

Don't go to college. Just kidding.

Dark History is an Audioboom original. This podcast is executive produced by me, Bailey Sarian, Kim Jacobs, Dunja McNeely from 3Arts, Fanny Baudry, and Claire Turner from Wheelhouse DNA. Produced by Lexi Kiven. Research provided by Tisha Dunstan. Writers Jed Bookout, Joey Scavuzzo, Kim Yeagid, and me, Bailey Sarian. Edited by Jim Lucy. A special thank you to our historical consultant, Alan Collinge.

And I'm your host. Hi, Beiling Sarian. A Kia SUV is capable of taking you far. But when you use it locally to help your community, you go even further. Whether that's carrying cargo, bringing your team with you, ready, or navigating new terrain.

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39: Is College Even Worth it?: The Dark History of Student Loans