Student Loan Debt: Indentured Servitude

by Project Censored
Published: Last Updated on

The rise in higher education costs (which rose 80% from 1996-2006) combined with drastic cuts in public funding of colleges and universities has culminated in high levels of personal debt that threaten the financial future of young adults entering post-graduate life. As administered during the last decade, especially, student loans often create a vicious cycle of debt from which many young people find it difficult if not impossible to escape.

As a result of higher education being an expected step after high school, private student loan companies like Sallie Mae have gained tremendous power over vulnerable consumers. The 1997 amendment to the Higher Education Act removed all consumer protections for such loans, paving the road to success for the student loan industry while causing massive hardships for borrowers. Cozy relationships between banks and political leaders favors the policies that fuel loan industry profits and consumer debt.

Due to the financial meltdown of 2008 and the ongoing high rates of unemployment, it is taking young college-educated adults longer to launch well-paying careers which, in turn, prolong the time it takes them to pay off student loans. Further, an undergraduate degree holds, on average, less value than it used to, as far as guaranteeing a wage that surpasses the cost of basic needs. As a result, college graduates are encouraged to continue on to post-graduate education with still no guarantee of a remunerative career. This leaves students even more highly indebted.

In recent history default rates on these predatory loans have risen increasingly, with those for students attending for-profit colleges being the highest. This results in even greater interest rates on these loans. In addition, when students default on education debt, their credit ratings plunge, which may lead to an increase in the interest rate they incur for all other types of loans. Those who experience a decrease in their credit rating may also have greater difficulty in getting hired, as some employers consider an applicant’s credit rating before hiring. As many student loans now require co-signers, loan companies are guaranteed payment regardless of the financial status of the loan recipient, thus locking parents or guardians into unmanageable debt as well.

While the cost of living is rising due to a variety of factors, the cost of attending college has risen exponentially. This discrepancy leads us to question why? Should not the U.S., the richest and most powerful country in the world, guarantee a higher education for all its citizens? Why do so many other developed countries do so while America does not?

In order to maintain accessibility to a college education, national and state policy regarding funding for higher education must be seriously examined. While the issue of predatory student loans is important, the cost of college tuition is of equal importance. By making higher education affordable, we would ensure that our citizens receive the high level of education and training required for the recovery of our national and state economies. The additional income earned by college educated individuals over a lifetime, in comparison with non-college graduates, would ultimately stimulate the economy.


Collinge, Alan. (2009). The student loan scam: the most oppressive debt in U.S. history and how we can fight back. Boston: Beacon Press.

Bernstein, Jared. (2008). Crunch: why do I feel so squeezed? (and other unsolved economic mysteries). San Francisco: Berrett-Koehler Publishers, Inc.

Dr. C Alonzo Peters. (2010, November 18) To hell with student loans—its time for college to be free. Retrieved from–_it%27s_time_for_college_to_be_free”–_it%27s_time_for_college_to_be_free

Student Researchers: Brittany Bardin, Christan Zbytniewski, and Gabrielle Vono,
Siena College

Faculty Evaluator: Dr. Mo Hannah, Siena College