By Andrew Kerr
Noël Flynn is spending more than 80 percent of her income to pay back tens of thousands of dollars in debt for her Art Therapy degree. In 2016 alone, the Department of Education loaned $25.9 billion to students who, like Flynn, chose degrees under the umbrella of the liberal arts and humanities, an analysis by The Daily Caller News Foundation found.
A significant portion of those students are unlikely to have the means to pay back their debt after graduating.
“I find myself struggling financially, and the biggest reason why is student loans,” said Flynn, 23, who says she was told the loans “wouldn’t be overwhelming” once she graduated.
Most federal student loan programs do not require a credit check, nor do they require a cosigner. Rather, the loans are backed by nothing more than the borrower’s future earnings with a college degree, but the kind of degree isn’t a consideration in the loan process.
“What you make depends on what you take,” Anthony Carnevale, director of the Georgetown University Center on Education and the Workforce, wrote in a 2016 report. “A major in social work pays $30,000 a year compared to $120,000 a year for a major in petroleum engineering.” Business, vocational, and STEM majors all have significantly better chances of paying off their loans, TheDCNF’s analysis of federal data shows.
In addition to lower pay, many liberal arts and humanities majors enter a job market with less opportunity, leading to high rates of unemployment and underemployment, according to the New York Fed.
Are students being set up to fail?
The $25.9 billion in arts and humanities represents a massive annual investment in students who are likely to struggle to pay back their loans.
Flynn said she was drawn to Art Therapy because it married her passion for art with clinical psychology. The program offered what she believed could feasibly become a viable career.
But it wasn’t until her junior year when she started interning did she learn that, in order to practice Art Therapy as a licensed therapist, she would need to obtain a master’s degree. Since only a few colleges offered a master’s program in Art Therapy, Flynn found her opportunities post-graduation were limited.
While her job out of college as a support professional for the disabled falls in line with her college education, but it doesn’t pay her anywhere near what’s needed to support herself financially while paying down her debt.
“I’m paying around $1,000 to $1,200 a month in loans,” Flynn told TheDCNF. “With the job I’m working full-time out of college, I bring in about $1,400 a month.”
The salary leaves Flynn with no more than $400 a month to cover her living expenses. She’s had to move back in with her parents in order to stay afloat financially. The reality Flynn faces post-college is in stark contrast to what she was told to expect when she first started her studies.
“I would have loans for years and years in the future, but it wouldn’t be something that would be overbearing,” she said she was told. “Post-graduation, I don’t think I feel that way,” Flynn said.
“I find myself struggling financially, and the biggest reason why is student loans,” she added.
Liberal Arts & Humanities Majors Are More Likely To Default On Their Student Loans
The federal government offers struggling borrowers more than a dozen loan repayment and forgiveness plans. But even with widespread access to loan assistance programs, student loans enter default at an astronomical rate. Upward of 29 percent of student borrowers will ultimately default on their loans, according to a Brookings Institution estimation.
Borrowers who fail to make a payment for at least 270 days enter default, meaning their entire balance is due immediately. In addition, they lose access to most assistance programs they had access to prior to defaulting.
And students who majored in the liberal arts and humanities are more likely than any other field to default their student loans by age 33, according to the New York Fed.
At both selective and non-selective colleges alike, liberal arts and humanities majors have significantly higher rates of default than business, vocational, and STEM majors.
Micah Caffey, 28, saw the writing on the wall after graduating from the University of Southern Mississippi with a bachelor’s degree in psychology. He was following his passion when he decided to study psychology, Caffey told TheDCNF. His initial post-graduation plan was to continue to graduate school to obtain an advanced degree in psychology.
But Caffey said he got nervous after accumulating $65,000 in student debt in pursuit of his bachelor’s degree. The prospect of going into further debt to obtain a master’s degree in a field with low pay encouraged him to change directions.
“I realized psychology wasn’t going to be a viable career path,” Caffey said. “It just started getting scary.”
“I’ve had to give up on that dream, so to speak, of becoming a psychologist for the reason of money and low prospects of employment,” he said.
Caffey said he was unable to pursue his dream with his undergraduate education alone. A bachelor’s degree in psychology is typically viewed more as a stepping-stone for an advanced degree than a workforce-ready program.
“Were I to go back in time, I would have said this will be pretty much worthless in terms of getting a job out of school,” Caffey said of his undergraduate degree. “You will not be able to get a job, period.”
Caffey has been working at his father’s construction company as an administrator since graduating college. He’s currently taking intro-level computer science courses in hopes to eventually transition into a career in the STEM field.
But all the while, Caffey is left holding what he describes as an “insurmountable” amount of student debt. He will be making payments of $600 every month for the next 30 years to settle his debt.
“I probably won’t be able to afford a house,” he said. “I probably won’t be able to ever buy a new car.”
Caffey’s story symbolizes the reality faced by many people who earned an undergraduate degree in the liberal arts and humanities degree without a desire to obtain an advanced degree.
The Association of American Colleges and Universities considers liberal arts majors to be “drivers of U.S. intellectual capital” due to the fact that more liberal arts and sciences majors attain advanced degrees.
But can that statistic be truthfully attributed to an inherent desire by liberal arts students desire to obtain an advanced degree?
In Caffey’s case, he was strongarmed out of pursuing his passion due to an unwillingness to go into further debt to go to graduate school. Now, he’s left holding the bill for an undergraduate education that he describes as worthless.
Many Liberal Arts Majors Don’t Utilize Their Degree After Graduation
Students who enter the workforce with a degree in the liberal arts and humanities often find themselves working in a job that does not require a college degree, according to a New York Fed analysis of the underemployment rate for recent college graduates.
Yasmine, 30, found herself working in jobs unrelated to the bachelor’s degree in psychology she earned from the University of Michigan. She requested that TheDCNF not use her full name in this article to protect her privacy.
“My dream was to do something in the medical industry that would pay me decently,” Yasmine told TheDCNF. “I was interested in psychology and mental health, but I deterred from that after a while because you don’t make a lot of money in mental health.”
Yasmine said she didn’t make that realization until after she graduated with $50,000 in student loans. Since graduating, she has been working jobs in healthcare administration, unrelated to directly helping patients, which is what she studied.
Yasmine has considered going back to school to pursue an advanced degree in psychology or healthcare administration but has been dissuaded by the prospect of going into further debt.
“I took out $50,000 and am still paying the majority back because of interest. In the end, I’m probably going to end up paying double [the original amount],” Yasmine said.
Just like Flynn and Caffey, Yasmine said she has had to delay major life decisions due to the weight of her student debt.
“Everything revolves around making that one payment every month and not falling behind,” she said.
Government Grants Hefty Loans To Students Without Considering Chosen Area Of Study
The federal government does not consider a student’s chosen area of study prior to divvying out student loans, a representative for the office of Federal Student Aid told TheDCNF.
Neither are high school grade point averages taken into consideration, despite the fact that studies have found that high school GPA is a strong predictor of college graduation rates and future earnings.
Instead, the two main factors the Department of Education considers are the expected contribution from the borrower’s family and cost of attendance at the borrower’s chosen school, two items that have little to no bearing on an individual’s merit.
And regarding a school’s cost of attendance, there’s ample evidence to suggest that research-heavy colleges and universities are spending only a fraction of student tuition on instruction.
In essence, the federal government appears to be giving billions of loans to students without any real consideration of the borrower’s ability to pay back the loan after graduation.
A crisis in the making
Many experts caution that higher education is the next economic bubble to pop.
Rajeev Date, a former deputy director of the Consumer Financial Protection Bureau, likened the student loan crisis to the subprime mortgage crisis that contributed heavily to the 2008 recession.
“If one is not thinking about where this is headed over the next two or three years, you are just completely missing the warning signs,” Date warned in 2012.
The general consensus is that the mortgage lenders bear most the blame for the housing crisis for lending massive amounts to individuals with poor credit histories and a high risk of default.
Just as mortgage lenders knowingly gave bad loans to prospective homebuyers in the leadup to the housing crisis, so does the federal government give bad loans to students entering college.
And the delinquency rate for student loans is much higher than the delinquency rate for mortgages at the peak of the housing crisis, according to the New York Fed.
At its peak, 8.9 percent of all outstanding mortgages were in delinquency in the first quarter of 2010 and steadily dropped down to the 1.3 percent delinquency rate it sits at today.
In comparison, over 10 percent of outstanding student loans have been delinquent for nearly six years running.
The impact of the student loan crisis could have a devastating effect on the economy.
Over 44 million Americans currently hold $1.5 trillion in outstanding student debt, and more than 4 million are currently in default.
Multiple experts have noted that students saddled may find their true potential sapped due to the debilitating weight of their student debt.
“You wind up disadvantaged just as you begin. It has reduced the ability of our educational system to be a force for upward mobility, and for an equitable chance at upward mobility,” University of Kansas associate professor Melinda Lewis told CNBC. “It is still true that you are better positioned if you go to college, but you are not as much better positioned if you have to go to college with debt.”
Financial aid expert Mark Kantrowitz found that students facing excessive debt often regret going to college.
“Students who graduate with excessive debt are about 10% more likely to say that it caused delays in major life events, such a buying a home, getting married, or having children,” Kantrowitz wrote in 2016. “They are also about 20% more likely to say that their debt influenced their employment plans, causing them to take a job outside their field, to work more than they desired, or to work more than one job.”
“Perhaps not surprisingly, they are also more likely to say that their undergraduate education was not worth the financial cost,” Kantrowitz added.
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