She calls in, hoping to hear advice that will change her life. She wants out of the crushing debt that is defining her, shaping her marriage, constraining their opportunities. She tells Dave Ramsey, the radio show host, the numbers.
She and her husband are in debt, way in debt. Ramsey asks her about income. They are a married couple making forty, forty—five thousand dollars a year. She is largely unemployed and considering going back to school. Ramsey asks about their debt.
Listening to the show on the radio in the car, the landscape going by in the near darkness, the voices disembodied—that’s the way to experience the Dave Ramsey show, to partake of it as an aesthetic experience. There is beauty in the show and horror. There is also bewilderment and then anger.
She and her husband are two hundred thousand dollars in debt. Ramsey is shocked like a professional actor on stage is shocked, you can hear him miss a beat. One hundred thousand, one hundred and fifty thousand, those are much more common numbers. This one is special. But he already knows what is coming next, and if you’ve listened to even a few of the show’s episodes you know, too.
What sort of debt is it, he asks. He knows, you know, but he asks anyway. There is a theater to the conversation. Student debt, she says. There’s a pride in her voice from naming out loud her failure. You’re not blinking now, holding the wheel, intent on every word, every intonation of her voice, waiting for the next question, the same question Ramsey asks every time this same scene plays out.
Who’s the doctor or lawyer in the family? he says.
And, of course, there is no doctor, no lawyer. The debt is from her undergraduate degree and from her husband’s undergraduate and masters degrees. She’s going to tell you what they majored in and you know already—it’s almost always the same, more or less—but when she says the word, when she names the field they spent a combined ten years pursuing, it still feels like you are falling backward through the air. Sociology. They majored in sociology. They both have degrees in sociology.
A.M.-crackle silence is on the radio and road-noise silence in my car. Then, there behind the wheel, I laugh. Look on the bright side, I say to her out loud. At least you didn’t get an art degree.
You don’t go to art school to get rich…because if you go to art school you are already rich. That’s the old saying but what it doesn’t tell is that the kids go anyway, rich or not. The kids with money go, the kids without borrow the money and go. And borrow they do, and their parents borrow, too.
The federal government has in recent years required schools to share data on the level of debt they leave their students with and, just recently, started to share data on parental debt, taken out to fund the child’s education. None of this will matter to seventeen-year-old kids who are applying to college, nor to their younger siblings who are taking all the art classes in high school and skipping all the AP science and history and math and economics courses, setting them on irrevocably their life path even before they can legally drive. But it’s fun to offer young people advice, to go through the motions, to play your part. It’s debt theater, a new genre.
The chart I’ve put together, below, gives the sense of it. What I really wanted was a list of the top ten masters programs in art—the MFA is the standard degree for the field—but US News does not rank MFA programs—so I used their undergraduate school ranking instead, which does have a fine arts category. I looked at other lists and had quibbles with them all (including the US News list) but any of them would have the same sort of results. This top ten list has fourteen entries because of several ties.
The second column is the total average cost of the degree. This includes housing and books and takes into account grants and scholarships. This number is calculated only from those students receiving federal loans and doesn’t include the cost of art materials, unless those are charged as fees by the school. The number actually reported by the school but not displayed here is an annual figure—for clarity I’ve taken that and multiplied it by four to give the approximate total cost for a full bachelor’s degree program.
A few years back I saw a listing for the most expensive schools in the United States—the cost calculated after accounting for grants—and you’d think the list would go something like “Harvard, Yale, Stanford…”, right? Those schools weren’t even on the list. Seven of the top ten most expensive schools were art schools and here we see that again. At the low end we have two California state schools and a Michigan state school but the high end, at over $170,000, is Lamborghini territory.
The next column is the most depressing one, and the one that those seventeen-year-olds can’t quite compute. They’ve never paid bills. They’ve never paid taxes. They’ve never even borrowed money before. Twenty, maybe thirty-thousand dollars a year, two years after graduation? Wow.
But it’s worse than that. The figures here don’t characterize the source of the income and that source need not be related to the arts. In California these incomes are mostly below minimum wage—newly hired baristas at Starbucks are making more money than these arts graduates—and, in fact, it’s quite possible that that the more experienced barista who trains the new employee graduated two years before with an arts degree, unable to find a job in her field.
Four years of dreaming and then “would you like a pastry with your coffee, sir?”
So we have the cost of schooling, and we have a “payoff” number to put that cost in context. Now we are down to the real question—how did they pay for it?
They borrowed it, of course. The next column identifies the amount of one category of borrowing (there are many), the Federal student loans. These come in two varieties: the variety where the government waives the interest while you are in school and for a short period after graduation, conveniently putting off the reality of the loan’s cost until the student has fully buried themselves in debt, and the variety where you start paying interest right away. It’s basic economics—if money is cheaper to borrow you’ll borrow more, and you’ll borrow a lot more if you feel you have no real option and you have some vague hope of a good job in the adult world.
The amounts here aren’t special to art students—the same level of debt happens in most of the majors at college. And it’s not as bad as people say. Say, twenty-seven thousand dollars of debt at seven percent over ten years is around $313 a month, less than four thousand dollars a year. Will going to college increase your earning power by at least four thousand dollars a year? Science degrees, math degrees, business degrees, economics degrees, obviously. In the arts, no. Arts majors have probably lost earning power compared to a person who skipped college and at this point has four years of work experience.
Looking closer, there’s something funny about this list of loan amounts, do you see it? It seems like there is some sort of ceiling the numbers keep bumping up against. Look at the highest figures: $27,000, $27,000, $26,725, $26,998, $26,950, $27,000. For some reason $27k is acting as an upper limit. But why? The altruism of the schools, unwilling to mire their charges in debt? Some collective wisdom of the under-age, revealing itself in the data?
Turns out, $27,000 is the legal limit: $5,500 for the combined total subsidized and unsubsidized federal loans in your freshman year, $6500 in your sophomore year, and $7500 in each in your junior and senior years. $27,000.
A cynical person might think that having so many entries at or just below $27k hints that schools are loading up the kids as much as they are allowed by law with loans—and then turning to other sources. That’s where the parents come in.
The new data on the Federal Parents PLUS loans shows that the level of debt is not only deep but wide. The next column shows the numbers. I’ve combined the student and parent column to help see the total debt on federal loans. There is no specific limit on the amounts that can be borrowed in the PLUS program and it shows—in every case the parent debt exceeds the student debt and exceeds it by a wide margin, in four cases roughly tripling it. A lot of education debt formerly hidden is now revealed.
This isn’t the last word on parental debt by any means. For many people—for many parents—the PLUS loans are bad deals. The interest rate as I write this is 5.3%, which is not terrible, but the rates on HELOC loans—the kind of home equity loan that you can withdraw in installments, paying interest only on the portion outstanding, are much lower, not to mention the tax advantages of borrowing against your house. In my own experience, my kid’s school offered loans at 7% while my local bank offered private loans at 3.5%. So, perhaps we are seeing here only the numbers for parents who don’t have the ability to borrow from other sources. In any case, both the student loan numbers and the parent loan numbers list only that debt from federal programs—no state programs are included, no direct-from-the-university loan programs, no private loans, no home equity, and no informal loans from grandparents.
There’s nothing wrong with debt. It can be smart to borrow money for assets that appreciate in value, assets like an education. But the scale of the student loans—especially when you start to see some of the previously hidden numbers—can astonish by their bleakness and nowhere are the numbers bleaker than for art students whose skills are amorphous and in low demand.
There’s a joke in public policy budgeting circles that one way to look at the United States isn’t as a county but instead as a giant insurance program that happens to have an army. One way to look at higher education might be as a giant loan program that happens to have a curriculum.
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