Blind Faith

In an article entitled "Placing the Blame as Students Are Buried in Debt" (6/1/10), Ron Lieber discusses the plight of a "26-year-old graduate of New York University" who has "nearly $100,000 in student loan debt from her four years in college" and apparently cannot afford the full monthly payments with or without her mom's help.

As the title suggests, the article explores where to place the blame; is it bad parenting, the fault of the financial aid office (for not saying hey, you can't afford this, go somewhere else), or the bank that made the "extra" loan to cover the $40,000 gap that the student and her mom could not cover with federal loans and Sallie Mae loans. There could, of course, be other culprits, but they are not really discussed. The author seems to place most blame on the bank, but is very critical of N.Y.U. as the entity with "the most knowledge of the financial aid process" while acknowledging to some extent the university's actual role and its need to protect its reputation (as opposed to, for instance, suggesting that its alumni could never pay back their loans).

The author appears to be very sympathetic to what he calls the "blind faith that the investment would be worth it" on the part of the mother-child pair. But I can't help noticing what they invested in -- it was "an interdisciplinary degree in religious and women's studies." Quite honestly, if I were looking for an undergraduate degree that might give me a good return on investment, that's not the one that I'd choose.

This story reminds me about opinions released last April by courts in New York and Texas, denying two unfortunate law school graduates admission to the bar after they had racked up some substantial debt. The opinions did not seek to place blame for taking out or granting the loans in the first instance, but focused instead on what they perceived as ongoing fiscal irresponsibility. A bad, bad thing for a lawyer, since mishandling escrow accounts and commingling funds (even by temporarily "borrowing" from a client's account and then repaying it) is one of the most serious disciplinary offenses out there. Nowhere near as common as neglect of client matters, mind you, but vastly more serious.

Postlude: Coincidentally, a friend of mine mentioned Wednesday night that her brother had been accepted into N.Y.U. as a transfer student (undergraduate). She's very excited about it for him, from an academic perspective, but said N.Y.U.'s financial aid office is notoriously stingy -- and this will probably be a bar for her family. It looks like, after all financial aid, they'd be expected to come up with $20,000+ which they cannot afford.