October 30, 2012 If you work hard, you could be rewarded a better life. Working hard could make climbing the ladder of opportunity easier. Since the 1920s, homeownership has been viewed as the token to the American Dream. If you worked hard, you would be able to own a home. Owning a home gave a person of stability and comfort. Just to sign your name on the dotted line motivated people to resort to extreme measures and take out loans to hold on to their token to the American Dream. Hard work was the answer.
Today, education is that token. It has been instilled in many young minds that if you go to college, it will lead you to a better life—the American Dream. This intangible yet "promising" dream is deeply rooted in communities striving for something better. Times have changed and so has our economy. Lower levels of education have shifted from inadequate to an extreme necessity. Simply obtaining a bachelors degree seems like it just isn’t enough; one might consider it the bare minimum. Without higher education, it is almost impossible to survive in this country. People need higher education or some sort of additional training to make ends meet.
October 10, 2012, Devin Fergus, along with UC Berkeley’s own Carolina Reid, hosted a lecture about asset building at the College of Environmental Design, UC Berkeley. Professor Fergus is an Associate Professor from Ohio State University who teaches African American and African Studies. Fergus explained how the rise of hidden consumer finance fees has impacted individuals from wealth and opportunity since the 1970s. The foundation of Fergus’ lecture was from his second book: Land of the Fee: The Hidden History of Consumer Finance Fees and Why It Matters, 1980-2008. Fergus gave a brief history lesson on how the rise of consumer finance fees has affected housing, employment, transportation and education. He explained how predatory lending and unsecured loan alternatives (such as Pay Day Loans) have hindered many people from a piece of the American Dream when working hard just wasn’t enough. As a student, I couldn’t help but focus and relate the housing crisis to our higher education system, specifically student loans and alternative online institutions and how citizens strive for economic improvement.
Fergus mentioned that ‘fear of debt’ is the number one reason why college-qualified students do not enroll in college. As a student who is relying heavily on student loans, I am ashamed to admit that I really do not know the complete details of how my loans work–I am sure I am not the only one. The one thing I do know is that when I graduate, I need to be able to pay off my debts. Assuming when I graduate I’ll have a high paying job doesn’t seem realistic in this economy. Since the 1980s, there has been an extreme erosion of grants and low interest loans for college students. Fergus mentioned that two out of three students have an average of 23,000 in debt and often times over the years, due to lack of knowledge of the loan’s fees and penalties, those students will pay three or four times than their original loan amount. Late fees and other penalties are on the rise, partially due to the fine print provided by the student loan lenders.
Profiting off of dream seekers: A thing of the past? No. Home mortgages, specifically subprime lending, have been the leading factor in the housing crash. Banks, investors were giving loans to people who did not have the proper financial knowledge or the money to afford even a down payment. Often times these agreements had hidden fees and expensive penalties for late or no payments. The fine print on these contracts exists on mortgages and on student loan agreements. Instead of banks lending to undesirable families, now schools are enrolling individuals who were struggling to make ends meet into their universities.
Online universities, like the University of Phoenix, and DeVry University were designed to give opportunity to the citizen who wanted to learn, provide for their family, and to be able to survive in this country. But some of these school are promising degrees or certificates that are essentially useless or do not require higher education. Some of these career paths will lead people to a job that will not be able to repay their debts, thus leaving them with years and years of debt. These institutions are willing to enroll anyone just to get federal funds at the student’s expense. Basically, school costs money, and some of those promising careers cannot repay the long-term cost. This act of ‘predatory learning’ is how institutions commoditize education. People are left with very few options that they turn to any source that could potentially improve their lifestyle. I am not discrediting online or 2-year institutions. However, these institutions, as well as 4-year accredited public or private institutions, could do a better job making education affordable. Education institutions should offer degrees for careers that would not leave them financially worse-off than before.
Homeownership was viewed as the token to a better life, now it is education. Hidden fees and vague details on student loans are impacting individuals from wealth and opportunity. Fergus mentioned that it would take a person with a PhD to fully understand the details of a student loan. This form of asset building, obtaining higher education, is suppose to help citizens build a better life not hinder them. Yet the price and struggle to obtain a great education seems to be worthwhile knowing that this debt will better you family and generations to come. This is a huge risk; especially when the degree, career you’re pursuing might not help pay your debts; and when there are unclear, hidden term and agreements from your student loan.
As a future planner, asset building involves a series of skills. One must have better resources that will help people understand their options. People need help translating the fine print of these loans. High interest loans (whether for home mortgages or student loans) are making asset building almost impossible to achieve. Owning a home was a way a validating if you made it in this country. But now people are even sacrificing their beloved houses to this pursue this new path to the American Dream. How can one pursue “happy” without knowing the details of how to get there.
I was told that if I worked hard in school, I would get a great job. The motto was once applied to working hard in the workplace. Now education is that ladder to success and fortune. But how long will it take before I can reap the rewards?
I am victim of those students. I am also a witness to some students whose families are putting their homes on the line, just to get a shot at the American Dream. I have tons of debt that I hope will be able to repay with my shiny new degree. As we’ve witnessed over the last couples years, houses aren’t as valuable as they once were; yet education is worth more. With my degree depreciate too? Now higher education is what every American needs. It is amazing that my bachelor’s degree cost the amount of a new Mercedes Benz; better yet, the debt I’ve accrued could be a hefty down payment on a home. The joy of seeing my name on a piece of paper on graduation day is the ticket to a better life. Well in this day and age… maybe.
Jasmine Sadat is a Philadelphia native who obtained her BA in Sociology from Spelman College. She is currently a first year masters of City & Regional Planning at the University of California, Berkeley. She is interested in Urban Policy; Community and Economic Development; Socio-spatial segregation; and Local Government. Her email is firstname.lastname@example.org.