|Want to graduate without student debt? You may want to look abroad. (Photo: pixabay.com)|
The topic of higher education is one where the differences between America and Germany become starkly clear. While both countries have many well-respected and internationally recognized universities and you will arguably get a great education in either place, the way the two countries go about executing and funding their respective higher education systems couldn't be more different. While there are pros and cons to participating in both systems, from a financial standpoint studying at a German university is a much better idea.
The American university system is no doubt very strong, with great public (state) as well as private universities. (For the sake of consistency, and to avoid confusing the Europeans reading this, I will use the word "university" in this post rather than the word "college." Americans, keep in mind that when I say "university" I'm including colleges too.) The problem is, the private universities, as the name implies, are not intended to be resources that anyone can access. As private entities they are expensive and (supposedly) limited to those who can afford to attend. As an example, the private university that I attended, Mount Holyoke, has a sticker price (including tuition, room and board, and other fees) of approximately $52,000 per year (at least it did by the time I graduated in 2012. That amount has now gone up to more than $53,500). These expensive private universities are also usually the schools that are more sought after and the prestige that comes with a degree is greater. The state universities should be another story; they should be the schools that are funded by public (i.e., tax) dollars and are accessible to anyone who wants to attend. Unfortunately, in reality that's not the case. State universities are often not much less expensive to attend than private ones, especially if you aren't a resident of the state where the university is.
To bridge the gap between prohibitive costs and students whose families are not wealthy enough to afford them, the government has decided, in all its wisdom, that the best solution is to loan students massive amounts of money. This money is then given to the university and must be paid back in full, plus interest of anywhere from 3 to 8 percent, by the student in the ten years following graduation (or withdrawal from school, if the student does not complete a degree). This gives universities no incentive to lower their tuition costs to attract more students, since the students simply take on debt in order to cover the costs. This is American individualism at its worst, since nothing is done to fix the systemic problem and individuals are simply expected to shoulder the burden of a broken system.
Germany, however, takes a different approach. The public universities in Germany, instead of making individuals pay huge amounts of money for education, spread the cost out over the entire population in the form of taxes. This money in turn benefits anyone who wants to study and results in tuition fees of several hundred euros per year (aka, several hundred dollars). For anyone who has attended an American university, this amount seems laughably small. (Then the laughter turns to tears, because we realize we've been seriously ripped off.) The lower tuition means that many more people can afford to attend the universities, and graduates are not burdened with debt that exceeds their annual starting salary. For the students who can't afford this amount of tuition, loans are available to cover the fees and living expenses, but these loans are interest-free and graduates must only pay back half of the amount they borrowed. Germany also has private universities, but the public ones are understandably more sought after. The thought is that if you have a degree from a public university, you really worked for it (and German students have to work hard for good grades [a statement which I have slightly amended in this post]), but if you have a degree from a private university you essentially bought your degree and your good grades.
When I was deciding which university to attend and I got my financial aid letter from Mount Holyoke, it seemed like I was getting an amazing deal. While my family (and later I on my own) was expected to pay several thousand dollars per semester, the remaining gazillion dollars were covered by generous financial aid, scholarships, and, you guessed it, student loans. Compared to offers I had gotten from other schools, this seemed like a dream. However, I didn't stop to think that those few thousand dollars in student loans for my first semester, which looked innocuous enough at the time, would be multiplied at least by eight (an additional loan for each semester) and that those suckers would later bite me in the ass with hundreds, if not thousands, of dollars in interest per year. Even while I was still studying at Mount Holyoke, some of my loans had already started accruing interest, so even before I had my degree I was already falling further behind.
That's what it feels like now: falling behind. Because I was in AmeriCorps last year, my loans were in forbearance (meaning I didn't have to make any payments), and at the end of my year of service AmeriCorps paid the interest that had accrued. They also gave me $5,500 to pay down my loans (although this is considered taxable income, which is a whole other infuriating story). Now that AmeriCorps is over and I'm out on my own in the world, payments have started to hit me, and it's painful. I currently have almost $25,000 in debt, which thanks to AmeriCorps is down from $31,000 when I graduated. In the last four months I've already paid around $600 or $700, and roughly a third of that amount was just interest on the money I borrowed. With my current disposable income of approximately 45 euros per month, this is an impossible burden, and I've had to dip dangerously into my savings account, which is intended for traveling and emergencies.
But not all is fire and brimstone. I've recently gone through the process of lowering my student loan payments, which thankfully is possible. For half of my loans (to further complicate things I have two types of loans, which have different payment requirements and options), I've gone into income-based repayment, which means they base the payment off of my income for the preceding year. Since I made so little money in 2012, the year the payments are based on, my payment is now zero dollars. For the other half of my loans, I've gone into forbearance, the same delay of payments I had during AmeriCorps. This eases the current financial burden tremendously, but here's the catch: interest continues to accrue on all loans at the same rate as before (for my loans, anywhere from 3.4% to 5.6%). This means that, while I'm not paying anything on them now, the amount I will later have to repay rises, and I will have to pay for 20 years, not ten. This is the cruel irony of student loan debt. People like me who don't have enough money to pay for our loans are punished for not having money, and the punishment is exactly the thing that we don't have: more money. That's like punishing a child who eats too many sweets by making him eat more sweets. It just doesn't make logical or moral sense.
Many people will tell me that this money is well spent and that a degree is an important investment in my future. This may well be, but if this is the result then it's not an investment that everyone should make thoughtlessly like I did. Among "average" middle class American families, the expectation of a better job and better life after graduation makes the absurd and inhuman cost of a university education seem like a worthwhile and necessary price to pay. The debilitating amounts of debt that come with it are simply accepted as the norm. The assumption that I would "go to college" and would be better off afterwards was so prevalent, and is so intrinsic to American life, that I didn't even think to question it. This clip from the movie Accepted demonstrates what I mean, albeit in a slightly overstated way (see specifically 0:52 to 1:07):
Now, when it's much too late to do anything about it, I have serious doubts. What use is my degree when everyone else interested in the same jobs has one too? In the current job market, when so many educated people are working at fast food restaurants to make ends meet, was the cost really worth it? What I'm doing now, and even what I did last year, does not require a college degree, and a liberal arts degree in Spanish is especially useless here in Germany where no one speaks Spanish and the education system is much more profession-focused rather than subject-focused. Having a liberal arts degree in Germany, especially one in a language that is spoken two countries away, seems tragically superfluous. Add to that the massive debt I acquired to obtain this degree and I really have to wonder why I thought this was so necessary.
My advice to anyone considering a university in the United States is this: seriously consider studying elsewhere. Don't just assume that the cost of an American degree is worth it, and don't take on debt without really thinking about what it will do to your financial future. Student loan debt in the United States surpassed $1 TRILLION dollars last year, and this has serious implications for the people who are trapped under it. Young people with student loan debt are less likely to make major purchases like buying cars and homes, and many are putting off other life goals such as having children or pursuing a higher degree due to the financial burden (see this article for more details on this trend). These trends and the loss of monthly disposable income have negative implications for the economy at a time when the middle class of America is still struggling. And unlike other forms of debt, such as credit card debt, student loan debt can not be forgiven in bankruptcy.
In opposition to this dark outlook, most countries in Europe have quality, affordable higher education systems with little to no debt required and degrees that are recognized around the world. Even countries that Americans usually consider underdeveloped have more affordable or free higher education, such as certain countries in South America and the Middle East. I heard a story a few months ago about one American high school graduate who decided, instead of going to an American college right out of high school, he would go to Germany, repeat his final year of high school at a German Gymnasium (the advanced track for German high school students), and then study at a German university. While doing this in most places in the world requires learning a language other than English, I encourage people to seriously consider following his example. Not necessarily repeating the senior year of high school, since an American high school diploma would most likely be recognized by foreign universities, but at least attending a university in another country.
Studying in a different country is not a decision to be made lightly, but again, neither is taking on horrendous amounts of student debt. All I'm asking is that people seriously evaluate all the possible options, and don't discount participating in a more affordable education system just because that system happens to be outside the United States. In general I'm satisfied with the experience I had at Mount Holyoke, and if I hadn't studied there my life would be very different. But it cannot be denied that if I had taken the advice I'm giving now when I was 18, my young adult life would be less stressful and I would have much more financial freedom. I know money can't buy happiness, but owing the financial equivalent of your first-born child to an entity that has way more money than you will ever have is certainly not the start of a secure and happy life.
For more information about studying in Germany and my experiences at a German university, check out the posts below. (Disclaimer: if some of these posts seem to reflect negatively on the German university system, please keep in mind that I wrote them during a difficult period of transition in my life, and that I'm comparing the German system to a previous university experience that was the gold standard of higher education and I may have had my expectations too high.)
Comparison of American and German Universities
Final Exams in Germany and My Reaction to Them
Graduate School, Here I Come!
My First Weeks as a German Student