Cory Doctorow has coined a terrific word and concept: enshittification. Doctorow used it primarily to describe how platform monopolies like Amazon, Google, and Apple begin by being useful to both consumers and advertisers and business partners, then start screwing consumers, then advertisers and business partners. Blinding complexity and nontransparency is part of the enshittification.
But the concept describes more and more of the large systems that Americans have to deal with, such as health care and retirement accounts. Today’s example is student loans. The program is thoroughly enshittified, byzantine in its complexity, and a source of punitive debt for the young. According to the Department of Education, less than 40 percent of borrowers are currently in active repayment and nearly 25 percent are in default.
Changes ordered by President Trump to take effect June 1, with the main purpose of punishing universities, will add to the stresses.
The Federal Direct Loan Program will have new, lower limits. These changes eliminate the Direct PLUS Loan that have allowed graduate or professional students to borrow “the cost of your education for the academic year, minus any estimated financial aid you receive each academic year” with 8.94 percent interest. This will be replaced by new unsubsidized loans, with lower limits.
The new annual limit will be $20,500 for graduate students and $50,000 for professional students, with an aggregate limit of $100,000 for graduate students and $200,000 for professional students. Parent PLUS loans, for undergraduates, also have new limits, of $20,000 per year with a $65,000 aggregate limit per dependent student.
In addition, Trump’s Education Department is making several technical changes that will require students, indebted graduates, and parents to shift repayment plans, typically with higher costs to them. You can read about it here.
Some basic numbers: Under the direct federal student loan program, an undergraduate student under age 24 may borrow $5,500 as a freshman, $6,500 as a sophomore, and $7,500 as a junior or senior. That doesn’t sound like a lot of money. And compared to the average cost of attending a private college, it’s not. The average sticker price—tuition, fees, room and board—is now about $65,000. Even the average discounted price after student aid is included is about $36,000, or $144,000 for four years.
Even so, a student who borrows the relatively meager maximum of $31,000 will end up paying $350.42 a month for ten years. Where does the student get the rest?
If you are very rich, you don’t have to worry about any of this—you just write a check. If you are poor and don’t have parents who can incur debts, you may well qualify for enough need-based financial aid that you can swing it. But if you are middle-class, you and your parents are quite screwed.
Even public universities, which were once free, now have an average discounted cost per year for in-state students of about $16,000. Even that sum leaves students heavily indebted.
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What to do? For starters, let’s return to the days when state universities were basically free. Bernie Sanders has a good approach. The federal government would provide two-thirds of the cost of making all undergraduate education at public universities free. Participating states would have to provide the other third.
Sanders’s proposal would also cancel all existing student debt. As he points out, that would inject a huge stimulus into the economy, directed exactly where it is needed—to struggling young people. As the rate of student debt has risen, the rate of homeownership among young adults has steadily fallen, dropping by 19 percent since 2004.
The remedy is trickier for private colleges and universities. We can start by getting rid of higher-education bloat, where high costs are driven in part by the proliferation of nonteaching administrators and executives.
When I went to Oberlin, a private college, the entire cost was about $10,000 for four years—tuition, fees, room and board. And in those years, the college was governed by the faculty and the entire administration could fit into one small building. There was a president, a provost, a dean of men and a dean of women, a small financial staff, some admissions people, and not much more.
The federal government could require, as a condition of a college being qualified for Pell grants, that the college may not exceed a set ratio of academic (teaching and research) staff to nonacademic staff. Get rid of all those assistant provosts, vice deans, and enrollment managers. In return, the federal government could provide more scholarship aid.
Trump is right about one thing. The relentless increases in college tuition have been driven partly by the borrow-on-demand student loan program. But his changes to the program will only make a bad problem worse. With luck, they will push the strains to the breaking point and we can blow up the system and start over.
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