Brad Hargreaves | Building Things

Brad Hargreaves on entrepreneurship, community and life

Occupy Wall Street is about student debt

with 27 comments

Up to this point I hadn’t thought much about the macro reasons behind Occupy Wall Street, assuming it was driven by a general disaffection with economic inequality. But when I checked out We Are the 99 Percent this weekend, I saw a clear common thread among the protesters: the presence of overwhelming student debt.

Student loans are a unique kind of financial instrument. They are the only kind of debt that can’t be forgiven through bankruptcy, even when the loans come from private sources rather than government-affiliated institutions (like Sallie Mae). These loans have been a pretty standard part of the American education system for the past decade, especially among private, for-profit universities, where 96% of students graduate with an average of $33,000 in debt [PDF].

Protestor at Occupy Wall Street


The past 70 years of American education have been built around a simple social contract: go through four years of liberal arts education, and there will be jobs waiting for you on the other side. You can even take on an otherwise unconscionable amount of debt to do it — after all, education is an investment, not just an ordinary expenditure.

Over the past three years, that social contract has been broken. The jobs that used to be available to young people with passion and drive but no appreciable skills are gone, and the graduates who would have taken those jobs are unemployed. But they still bought into the social contract, accepting suffocating amounts of student debt to get the education that didn’t give them the skills they actually needed to get a job. And just when these young people should be at the height of productivity — working hard, inventing things and starting companies — they are left deep in debt with no marketable talent.

So they’re angry, although without the channels or eloquence to express that anger in a meaningful way. So they lash out at the faceless financial-industrial complex — the people who ostensibly have created and maintained this destructive environment from behind the curtain.

But reality is much more complicated. While the folks on Wall Street have managed to hack the system, manipulating a need for liquidity and market inefficiencies to drive incredible financial returns, they’re hardly the only group at fault for a badly broken educational framework.

As a first stop, the frustrated graduates should take a look at the for-profit university administrators who adopted shady, over-promising marketing practices or the government officials who allowed often well-intended laws to be hijacked to saddle students with unforgivable debt. Or perhaps they should take a look at the state education heads and politicians who have resisted a move toward more practical, vocational education for some segments of Americans.

I maintain that unemployment is not high due to a lack of jobs — General Assembly, for one, has plenty of open positions. Rather, it is high due to a colossal mismatch of skills and market needs resulting from a dated and broken educational system.

The protestors at Occupy Wall Street are right to be angry. But articulating the problem is the first step in fixing it.

Written by Brad Hargreaves

October 9th, 2011 at 2:02 pm

  • e.p.c.

    I was commenting on just this to a friend of mine.  Over the last decade states cut back aid to state universities, forcing tuition up, the Federal government trimmed the Pell grant to near oblivion.  The “reform” in the bankruptcy laws mid-decade changed these loans to be non-dischargeable in bankruptcy court.  Colleges seem to engage in a mindless race to the top in tuitions (while the few faculty I know have seen negligible or even negative salary increases…so that’s not the cause).  Any one of these would suck, but the combination is overwhelming.

    It took me nearly a decade to pay off my student loans in the 1990s, and I was earning a fantastic salary at the time and had at most $75k total across college plus grad school.  I remember the distinct feeling of “oh shit” once someone actually sat down with me and walked through the debt I’d accrued (I don’t know how it’s done today but I had zero, absolutely zero information on the loan terms until just before I graduated).

    It’s incomprehensible to me that the parents and school administrators aren’t warning their kids about this as they go through school, let alone on the day they graduate.  

  • Kieran McGrady

    The problem they face is the same millions of people are facing. And everybody is trying to pass the blame. People who lose their homes blame the banks who gave them mortgages. And students are trying to blame Wall Street on the loans they took out. The real culprits are the people themselves. People were greedy, took out several mortgages on their homes and purchased homes they couldn’t afford. Now they are in trouble. The same goes for the students. A university education is not essential or a right. Their are plenty of jobs that don’t require a degree. And in this day and age is it not a stretch to look at starting your own business. But instead people who couldn’t afford further education took out loans they couldn’t pay back. The real issue at the heart of the current economic situation is greed and people refusing to live within their means.

    I say this as someone who does not come from a rich or above average background, decided not to got to university because of the expense, and taught myself a skill so that I could start my own business. People need to take more responsibility for their actions. Every day they waste protesting they could have spent looking for a job, or learning a new skill.

  • Startupgrrl

    Who owns the debt? Who caused the “social contract” to evaporate in the past three years? It’s not the universities– it’s financial institutions and globalized, gluttonous corporate “citizens”. Claiming there’s a mismatch of skills to market needs is backwards. There’s a mismatch of markets to skills. Is a market that values high frequency vampire traders and golden parachutes for fuck-up CEOs really a market we should be chasing after?

    Oh, and when you say the protesters aren’t eloquent, you come off as a huge dick.

  • Kieran McGrady

    “There’s a mismatch of markets to skills”

    So go create a new market. You can’t hope someone invents a new business or market that suits your skills. You need to do it your self. 

  • Ken Hillyer

    Brad – 

    Maybe it’s time to hand off that “puppy rental for hipsters” business plan.  Could be the right match of skills and market needs…

    Just a thought.

  • Pingback: Anya Kamenetz: Generation Debt at the Barricades | eduJunction()

  • Nospam

    Yeah, as soon as we develop college education that provides ten years of workforce experience and a willingness to work for $25K a year, we’ll be just peachy.  {rolls eyes}

  • Pingback: Quora()

  • KB

    Not all businesses in the US can be plumbing or auto-repair shops, nursing etc (i.e. service based). For a nation to be successful it needs to build something, create something. Not all are Bill Gates or Thomas Edison. A country needs engineers and scientists to be a world leader. With your mentality, the US will be nowhere in no time. I am not completely disagreeing with your notion of greed being the root cause. But why did the university fees jump all of a sudden. I don’t understand how in the US college education can be so damn expensive ? If university education becomes unaffordable for the middle class, the US is going to be a hugely divided nation where class warfare is going to be rampant.

  • Pingback: Trevor McLeod » Education. Be Laser Focused..()

  • Matt

    I disagree- expecting students to forgo tertiary education simply because the government refuses to subsidize it (as they do in most countries) is ridiculous. How are Americans expected to compete with workers in other countries whose governments help them obtain college degrees? 

    The problem isn’t greed; people feel squeezed because their wages aren’t keeping up with the cost of living, and their decision to refinance their mortgages reflected more a sense of desperation that they needed some sort of break. In a fairer society, the government would make obtaining a college degree affordable for everyone, and middle class wages would be high enough so that people wouldn’t have to use their mortgage as an ATM machine. In fact, we don’t even have to imagine- look at Northern Europe, Canada, Australia, and other countries as examples of where this model is working.

  • Ben Buckman

    I completely agree about “state education heads and politicians who have resisted a move toward more practical, vocational education” and the “colossal mismatch of skills and market needs.” I made this point to someone recently, however – saying the problem was a lack of marketable *skills* – and was asked, what skills? I didn’t have a good answer. I’m a web developer, which is a highly marketable skill, but not everyone wants to do that. Are we talking about “manual” labor like construction and manufacturing – when those are in decline? Should everyone be in marketing? I’m very curious to hear your thoughts.

  • Nadia Hassan

    Brad, I, wonder how would your thesis that a social contract concerning a liberal arts degree unraveled over the past few years explain rising unemployment among citizens without a college degree? I think you can reasonably argue that these numbers underestimate the situation among college graduates because some young college grads aren’t seeking a degree or doing interernships. However, how does it account for rising unemployment in other groups?

               Moreover, in surveys of small businesses, poor sales ranks above qualities of workers on questions about hiring. Why are all of these businesses talking about their weak sales challenge?

              Also, I wanted to ask about some alternative theses. Some say that the economic and employment situation results from the overhang of debt–primarily mortgage debt–that households took on during the bubble years of the aughts. After the bubble burst, it acted as a big drag on growth.

    These researchers have found that in counties with low debt a stronger recovery is going on than in counties with high debt:
           I suppose you could contend there are a lot of overleveraged liberal arts grads in those areas, however the counties specified as high-debt were areas with soaring house prices during the bubble years.

            Of some interest, the Dallas found US GDP trendlines are consistent with historical data on financial crises:

             On this note, many people who share your view point to Germany. It has the kind of educational practice you suggest here. They don’t have as horrible a jobs crisis. However, the German GDP #s from the crises to now, have not been dramatically better than ours. And forecasters are talking about sub 3% growth there next year, and Q2 was quite bad. Despite your suggestions, they’re still having growth problems.
                It’s possible that altering education and training would help a lot with jobs and that’s good, but this evidence on debt suggests other factors drove our current situation and weak growth is here to stay for it.

  • Nyyanks27ws2005

    The problem is that Sallie Mae can tack on large interest- it can charge whatever it wants for people who default because they own their own collection agency….there should be a freeze…people should only have to pay back what they owe plus so much interest that is fixed and not ridiculous…and Sallie mae collections should be shut down…it is a monopoly!

  • Pingback: Why Invest in Education Technology « Open Techonomy()

  • NotHannah

    I agree.  I’m writing a blog about it right now, and found your article in a Google search for “back up.”  So thanks for this.  Articulation is key for the OWSers right now.

  • Pingback: Occupy Wallstreet: GenY is losing The American Dream | How Cool Brands Stay Hot()

  • Pingback: Education Technology Investment is Essential For Digital Literacy « Open Techonomy()

  • Trevor Owens

    Clever ending. ie. GA = solution to Occupy Wallstreet. I hope you guys are right!

  • Kieran McGrady

    After investigating the reasons behind the protests more, I finally understand why people are protesting. Trying to find out the reasons behind the protests is tricky because people are all there for different reasons. So I have setup a website to try and explain the #occupy movement better If you want to help you can submit your own stories to it.

  • Pingback: Occupy Wall Street Destroys Jobs()

  • Michael Hussey

    Don’t go to a school that costs $40K a year if you have to borrow that much money to be there. Many kids don’t understand what debt is until they have to start paying it back, but blaming someone else is a child’s reaction.

  • Pingback: Edtech Investment is Essential For Tech Literacy | Open Technology()

  • Red Holio

    iOS developer = loser! It is not the debt that is overwhelming it is the application of compounding interest. Good for you that you have not taken out any student loans, neither have I. That being said, you are an uninformed wanker that should shut his face and go write some more useless programing for apple junk and leave the discussion to the grown ups. You have no idea what life is here in the states is like so your opinion is just that. Why do you not “write” a program for your crapple phone that bitch slaps you whenever you decide to speak on issues that are above your pay grade.

  • Drew

    Am I missing something? How can you come out of a 4 year university degree with ‘no marketable talent’. Isn’t that the whole reason you go to university? You study IT, you graduate with marketable talents in the IT field. I mean I can understand the reasoning if you go and spend $33,000 to get a degree in Philosophy or something. But surely most people going through university aren’t doing that.

  • paper writing

    To my mnd they do right thing! It is important to reach the aim

  • Pingback: Bertelsmann Future Challenges » Has America Found Its Occupation?()