How the Student Debt Complex Is Crushing the Next Generation of Americans

“Fundamentally broken.” That is how A. Wayne Johnson, the Trump administration official who resigned on October 24th, described the student debt system that he once led. Johnson also called for student loan forgiveness in a complete break from his former boss Betsey DeVos who ridiculed Democrats plans for doing just that.

Johnson is right when he says that student loans as we know them are punishing and unsustainable. And it is much deeper and more complex that even the $1.6 trillion dollars in loans. Families aspiring to send their children to college begin to work within its unreachable promises, archaic ideas, and arduous demands very early on in their lives together and expect the strain to last long after children leave their homes. I saw this clearly in the conversations I had with middle class parents and students for my book, Indebted: How Families Make College Work at Any Cost. Middle class parents feel obligated to send their children to college, but the only way to give them that opportunity is to pay for it, and the price is dear. This demand propels them into a bewildering maze of financial policies and programs run by the government, financial firms, and universities. The path is so convoluted that I felt it needed a new name: the “student finance complex.”

The student finance complex first draws in middle class families by holding out the carrot of investment. At the moment their child receives a social security number, the federal and state governments and financial firms join together to tell families to save in accounts known as 529 plans that, they claim, will grow in the same companies’ mutual fund offerings. The existence of these plans delivers an early, harsh lesson of the student finance complex: Responsible parents save for the cost of college; the act of trying is how they can show that they’re doing the right thing. No matter that no one can predict how much college will cost in eighteen years. Or that few are able to set money aside. According to a Government Accountability Office study, only a tiny fraction of U.S. families– less than 5 percent–invest in 529 accounts. It should not be a surprise that those who do are far wealthier than most, nor that the other 95 percent wind up feeling like they’re failing.

Even those few middle-class families who stretch themselves and manage to save for college feel that they have not done enough. This dispiriting sense often wells up at the next step of the student finance complex: filing the Free Application for Federal Student Aid. FAFSA, as every family applying for student aid calls it, is the gateway to financial support from the federal government, state governments, and schools alike. Critically, the information families supply in the FAFSA generates the “expected family contribution,” the amount the federal government asserts a family can afford to pay for college.

One major problem is that the design of the FAFSA reflects an idea of family that is badly outdated and unrealistic given the way we live now. The two-parent household with just children to support has long been unavailable and undesirable to many Americans, but the FAFSA is built to enforce that fantasy of the nuclear family. As the sociologist Andrew Cherlin has shown, wealthier families are the ones most likely to fit this profile. That means that simply filling out the FAFSA requires most families to shoehorn their lives into the federal government’s assumptions. It can be a stressful mess.

Consider what happens when there’s divorce in a family. The form forces children whose parents have split to choose a single, primary parent, although this may not reflect how they live or define their most important relationships, and the very act of choosing a first parent can generate real family tension and emotional pain. Some divorced couples have to report a stepparent’s income, even if they have children from another marriage and weren’t planning to contribute. In families where has been actual estrangement (the kind not falsely manufactured by high-priced lawyers), students who live with a grandparent or aunt will not only face difficulty in filling out the form, they will also receive the clear message that there is something wrong with their families. The mismatch can be so extreme that the FAFSA website offers instructions to help students answer the question, “Who’s my parent when I fill out the FAFSA?”

That question alone shows that something is deeply wrong.

The FAFSA also does not recognize many deeply-felt and weighty responsibilities. There is no place to account for obligations to support ailing grandparents, to assist nephews or nieces with their educations, or to help close friends through hard times. As a result, many parents are shocked to learn their expected family contribution and believe that their financial situations do not support what the Education Department says they can pay. And yet, what choice do they have?

The federal government then sends this distorted picture of family finances to colleges and universities, which use it to cobble together a family’s cost of attendance. Most often, the aid packages they extend require students to take on debt from the Direct Loan program—the main source of federal student loans. These loans were originally supposed to be “good” debt that, like a mortgage, functioned simply as an investment. But the high cost of college today means that student loans are burdensome enough that they constrain the lives of the young adults they are supposed to launch. According to research from the Federal Reserve, indebted graduates are less likely than their debt-free peers to buy homes. They also possess less wealth, save less for retirement, and are less satisfied with their work. Paying back student loans compromises the very middle class aspirations they are supposed to support.

The bottom line is that the tortuous student debt complex punishes too many of the people that it is supposed to help. College needs to be affordable and accessible if we want to open up opportunities for young adults, especially if we want to help them use their skills and interests to their best advantage and to build a strong civil society.

When students have an easy way to pay for college, education accomplishes much more than simply conveying knowledge of cell biology or the Civil War. Our own history can show us the way forward. Following WWII, the federal government inaugurated a program to pay for veterans to attend college and vocational school—the GI Bill. Returning soldiers did not have to worry about repaying burdensome loans. As the policy scholar Suzanne Mettler has shown, the GIs who benefitted recognized the gift and, in exchange, continued to contribute to the country in their careers. But the program did more than just give the GIs a leg up into the middle class; it also boosted American democracy. The beneficiaries – GIs and their families – joined community organizations and committed themselves to politics at every level. They responded to a free college education by reinvigorating our nation’s civic life.

Education policies today should also help students and families reach their full capacities as workers, people, and citizens. That means first and foremost that college needs to be an affordable aspiration. Parents should not have to dread the costs to come and all children should know that higher education can be an option for them. Once they enroll, students should be able to focus on the challenges of learning and growing into adulthood.

Not long ago, our federal and state governments were committed to supporting and expanding the American middle class. How did they do it? With free or low-cost public colleges and universities. How will we get it back? By dismantling the student finance complex and reinvesting in each other by investing in higher education.

The best way to reinvent our country is to support the next greatest generation. Today, they’re carrying an unjustifiable debt. We owe them much more.