By Pilar De Haro and Keila Vizcarra
Mayra Hernandez needed a loan — and quick.
The twenty three-year-old Cinema and Television Arts student at California State University, Northridge, CSUN found herself needing financial assistance after her student aid fell through during her third year.
After looking into the interest rate of the university’s loans she decided to take out a loan from a third party individual her mother knew who offered less interest, she said.
While the first-generation college student from a low-income family had hoped the loan would allow her to focus on classes, she said paying back the $5,000 loan became her top priority. In spite of the financial burden, Hernandez said she felt fortunate that the interest rate that she got was still less than what she would have gotten from a university loan.
“It was doable compared to taking it out here,” said Hernandez.
Hernandez said she has at times struggled to get by financially, which led her to fail three of her classes.
According to El Nuevo Sol analysis collected by the Department of Education and National Student Loan Databases, Hernandez is just one of 5,947 students from low-income families at CSUN who are more likely to take on loans to pay for school. A 2015 report by the Public Policy Organization, Demos found that low-income minority students borrowed more often to receive a bachelor’s degree, particularly at public institutions.
The Demos report also found that minority students dropped out with higher loan balances and at higher rates than their white peers. About 38 percent of low-income borrowers dropped out compared to less than a quarter of their higher-income peers.
Source: Data from The Department of Education
“Our debt-financed system not only results in higher loan balances for low-income, Black and Latino students, but also results in high numbers of low-income students and students of color dropping out without receiving a credential,” wrote Mark Huelsman, senior policy analyst and author of the report.
For their report, researchers analyzed data from three U.S. Department of Education surveys and the Federal Reserve’s 2013 Survey of Consumer Finances as well as academic literature.
“I owe almost $5,000, plus interest was 10 percent if I didn’t pay on time,” said Hernandez, referring to her loan.
In order to pay off the loan and growing interest, Hernandez said she cleans houses and budgets her spending.
“I use the CSUN pantry when I need to and clubs are good for the free food. In Boyle Heights there is a community-based program that gives you food even when you have nothing to give,” said Hernandez. “I find ways to not starve.”
A History of Student Loans
Early government-assisted educational funding began with the Government Issued Bill that financially allowed veterans to pursue a college degree in the 1940s and about a decade later the first student loans were introduced under President Eisenhower through the National Defense Education Act.
By 1965, The Higher Education Act was signed into legislation by President Lyndon B. Johnson. This legislative document aimed to provide grants, loans and other programs to help students obtain a secondary education. The act also was made to provide educational opportunities for lower and middle income families
The Higher Education Act was the foundation for Free Application for Student Aid put in place in 1992 that is widely used today to determine whether a student is eligible for federal and state funds.
Economist and author of Student Loans and Dynamics of Debt, Brad J. Hershbein said there was higher debt in the 1990s than the 2000s because more people were going to school, borrowing money, but it was manageable debt.
“People were still getting jobs so the balances weren’t super high so it wasn’t like today,” said Hershbein.
Twenty four year-old CSUN student Kenneth Berry said he expects to graduate with about $20,000 in school loan debt.
Berry said he mostly navigated the student loan process on his own.
“I was mostly self-taught for a lot of it,” said the journalism major.
Berry said he’s concerned about taking on that amount of debt but is optimistic that he’ll be able to pay it off in time and has since given advice to his younger sister who is starting college soon.
“It’s going to be a headache, it’s going to be a long process…you’re going to hate yourself in the financial aid line…and want to jump yourself off a bridge with cement shoes but you will live,” said Berry.
Financial Aid Counselor and advisor for financial literacy at CSUN, Gregorio Alcantar said that about 32,000 student come into the financial aid office every year.
“I’ve seen students who do not get the financial information they need in high school or at the community college level to know what they are doing.”
Unlike the alarming number of trillions of dollars of student debt many people will emphasize, Hershbein said that there needs to be more attention placed on students who don’t finish, like the completion rate and what their debt looks like.
Source: The National Loan Student Databases
Charlie Facio, a 20-year-old Sociology and Chicano Studies major is also among those affected by student debt.
Facio, who has $10,000 in subsidized student loans said he initially lived in the dorms but moved off campus because of rising dorm costs.
“My first year, I took on a job at a daycare and was working at Little Caesars to pay off the rent for the dorms,” said Facio.
Facio, the oldest of eight children, added that he sometimes helps his family financially and hopes to be a role model for his siblings.
“Statistically it’s been proven if you work more than 25 hours you will damage your academic career,” said Alcantar who had 300 appeals last year that included students who couldn’t keep up with their school and working hours.
https://www.moovly.com/embed/14e9c804-509b-d56a
“Attaining a degree is like validation for the sacrifices our parents have made,” said Facio. “It irritates me that we have to feel validated and become indebted.”
Student debt in the era of Trump
In recent years, the student debt crisis has been front and center in U.S. politics and this election year was no exception. Former democratic presidential candidate Bernie Sanders, who gained praise from young millennials, ran on a platform that promised free education for all. His opponents, including fellow democrat Hillary Clinton, criticized the Vermont Senator for making promises they perceived as improbable. Clinton, the eventual democratic presidential nominee later pledged to make state colleges free for students of families making under $125,000 a year.
Some higher education experts say that, under a Donald Trump presidency, the concept of tuition-free college will be shelved.
President-elect Trump has said on the campaign trail that students should not have to pay more on their loans than they can afford and has called for income-based repayment plans, which the administration of President Barack Obama has done.
Students hoping for relief may not rest easy with Trump’s pick for secretary of education, Betsy DeVos.
On December 5th, The Wall Street Journal reported that DeVos is an indirect investor in online-lending startup Social Finance, Inc., a company that could see its fortunes rise or fall according to policies created by the Department of Education. Much of the company’s business comes from the refinancing of student loans and the Department of Education is the nation’s largest student lender, with $1.3 trillion in outstanding loans.
Around the world
In Chile, students protested at the capital of Santiago on May 26th to demand President Michelle Bachelet to follow through with her promise to make education in Chile free.
The demonstration quickly turned violent when pelted stones, water and tear gas cans were disbursed throughout the crowd of student protesters, Agence France-Presse reported.
Chilean students have been waiting for an education reform since the 1973-1990 dictatorship of Augusto Pinochet, but have not seen their demands met.
There were a total of 117 people arrested and 32 officers injured in the demonstration according to AFP.
About the Data
The data collected from the Department of Education, the National Student Loan Database and administrative data from tax records for the year 2013 of each California State Schools.
Voices of Debt 