Student Loans Are Doing Damage to Our Society

From a recent study at the Roosevelt Institute on student debt, higher education, and wage stagnation:

Despite improved educational attainment for every race group in the Current Population Survey (CPS), earnings have been either stagnant or declining for every level of educational attainment during the last 18 years. More education over time has not resulted in higher earnings over time—only in higher earnings relative to those who did not attain a postsecondary credential. As successive cohorts have climbed further up the ladder of higher education, the ladder itself is subsiding, resulting in no upward progress in household income for anyone other than the top 1 percent.

Declining worker power causes the credentialization or “upskilling ” of the labor market. With outsized power, employers can demand a higher level of educational attainment for a given job or a given salary.

Credentialization particularly harms students and workers of color, who are forced to acquire more credentials—and, therefore, increased debt—to access a given job because of racial discrimination and inequalities in household wealth.

One wonders whether the notion that student loans allow students to gain an advantage or to “invest in their future” is just a method of keeping those who are poor or middle class in their respective places in society. Theoretically, if these findings are correct, the whole idea of student loans is not a positive move for anyone — those who are poor get poorer, the wages of the middle class stagnate, and those who hold economic power gain more power and wealth, because the market becomes flooded with higher education credentials. This leads to employers seeking higher credentials for lower paying jobs. Further, when this is coupled with academic institutions that offer non-skilled academic credentials and we encourage students to use loans to pursue that kind of education, the likelihood of higher earnings decreases even more.

The question really is, what kind of a society do we want? When higher education has been co-opted by the rich or powerful to negatively impact the lives of the poor or those on the verge of poverty, the outlook for our future is bleak indeed.


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Even more disturbing:

College graduates make upwards of 50 percent more than their counterparts who did not earn a baccalaureate degree. But this earnings premium was mostly driven by a drop in wages for workers with only high school educations rather than substantial increases in wages for those with college credentials. In other words, the value of a college degree increased because the cost of not having one increased.

This confirms what was said above — we are not building a more just, fair, competitive marketplace for humans who truly want to work. Instead, we’re simply seeing drops in income for those without a college education, and a stagnation in income for those who do earn a degree, all while student loan debt is increasing per capita.