Indentured Students: How Government-Guaranteed Loans Left Generations Drowning in College Debt

by Elizabeth Tandy Shermer

The untold history of how America’s student-loan program turned the pursuit of higher education into a pathway to poverty.

It didn’t always take thirty years to pay off the cost of a bachelor’s degree. Elizabeth Tandy Shermer untangles the history that brought us here and discovers that the story of skyrocketing college debt is not merely one of good intentions gone wrong. In fact, the federal student loan program was never supposed to make college affordable.

The earliest federal proposals for college affordability sought to replace tuition with taxpayer funding of institutions. But Southern whites feared that lower costs would undermine segregation, Catholic colleges objected to state support of secular institutions, professors worried that federal dollars would come with regulations hindering academic freedom, and elite-university presidents recoiled at the idea of mass higher education. Cold War congressional fights eventually made access more important than affordability. Rather than freeing colleges from their dependence on tuition, the government created a loan instrument that made college accessible in the short term but even costlier in the long term by charging an interest penalty only to needy students. In the mid-1960s, as bankers wavered over the prospect of uncollected debt, Congress backstopped the loans, provoking runaway inflation in college tuition and resulting in immense lender profits.

Today 45 million Americans owe more than $1.5 trillion in college debt, with the burdens falling disproportionately on borrowers of color, particularly women. Reformers, meanwhile, have been frustrated by colleges and lenders too rich and powerful to contain. Indentured Students makes clear that these are not unforeseen consequences. The federal student loan system is working as designed.

Genres: Education, Nonfiction

400 pages, Hardcover

Published August 3, 2021

About the author

Elizabeth Tandy Shermer has written about labor, politics, and education for the Washington Post, HuffPost, and Dissent. Author of Sunbelt Capitalism: Phoenix and the Transformation of American Politics, she is Associate Professor of History at Loyola University Chicago.

Reviews

[Andrew]

This book is a what you could call a supply-side history of student debt: it's not about students, it's about the federal legislative wrangling that has shaped funding in higher education from the Civil War (and the passage of the Morrill Land Grant Act) to the election of Joe Biden. (It does not, of course, include the recently announced Biden-Harris plan for partial student debt cancellation.)

If you enjoy reading about the cloakroom, sausage-grinder details of how Congressional bills make their way to a President's desk for a signature, this is the book for you. But Shermer's intense focus on Congress makes for a rather one-dimensional story, in which legislators spend most of their time not listening to people outside of Congress, stubbornly sticking to truisms about what government should and should not do, and how it should and should not do it. Search for the word "tradition" in the book: you will find that whenever Shermer disagrees with a proposed policy, it is inevitably the latest instance of a tradition of similar policies.

While Shermer eventually acknowledges the forceful role played by lobbyists during the Clinton and Bush fils administrations, Congress is almost always seen doing what it will let itself do: the principal and in some cases the only source of friction or constraint is internal "gridlock." Congress apparently doesn't really think in terms of opportunity costs; it seldom is faced with a situation where anything is fiscally infeasible. The only reason it doesn't fund higher education the way Shermer thinks it should is because it does not want to do so.

Indentured Students mostly treats students and their families as hapless victims and college administrators as beleaguered bystanders, just trying to keep the lights on in their financially struggling universities. (Shermer excepts the Ivy League from this assessment: they're just assholes who are trying to keep women and Jews out.)

It's not that there is no truth in these judgments, but the book would have been immensely helped by a stronger grounding in political economy and a richer, more curious approach to the ideologies that pushed Congress toward "creative financing" as a panacea, for funding the expansion of homeownership as well as postsecondary ed. The student loan clusterf*ck (the technical term) is not the result of a few bad laws. To understand it (and I'm not pretending that I do) will require careful investigation from multiple directions, at multiple levels, and with several different analytical tools. More recognition of that polymorphous, multi-faceted reality would have given Indentured Students a stronger position from which to critique Congressional actions—a necessary but not complete or sufficient endeavor.

[EricheBooks · Rating 3 out of 5]

This book wasn’t really exactly what it implied it was about and again had a very unclear thesis. But there were historical moments about student debt tied together. I honestly think you don’t need to read this to add anything new to your understanding of the crisis. Just felt like it didn’t add that much. The historical context is not always necessary in such great detail and 1920s government financial products are an absolute snooze to read about. However for facts and research I can’t say it was BAD, just not enjoyable.

[Roman · Rating 3 out of 5]

This is a history of elite decisionmakers and their thoughts, with a segue from philanthropists to politicians as government lending developed. It is interspersed halfheartedly with information about how ed fundraising policy was seen by and how it affected the people going through the school system. There is little direct information about what lenders thought of these debt programs and how they performed for them - they are primarily mentioned as lobbyists trying to influence the politicians at the core of this history.

The book gets very tedious as it devolves into lists of chronological facts or lists of stakeholders and opinions loosely fit into paragraphs. I don't think it's well crafted at a paragraph or subchapter level to present a coherent narrative or argument, biasing towards factual rather than readable.

However, the book belies its argument, hidden in the facts it chooses to present - almost all persons and policies introduced are assessed through the lens of whether or not they helped the underclasses, in contrast to the middle classes. While Shermer documents, time and time again, how government funded education has failed to proportionately lift up the protected classes, she never asks the question - can education be used to lift them up? The grand narrative being that education - eventually - must.

[Zach · Rating 5 out of 5]

This is an impressive and important account of the relationship between the expansion of higher education in the US during and after the 20th century and the creation and expansion of the student loan industry and its companion, the student debt crisis. The frame here is policy history, but this is a text that will be quite useful for historians of higher education, but also for student activists and radicals in the anti-debt movement interested in understanding why and how student debt came to be the manner in which the US funds post-secondary schooling.

[Mel · Rating 4 out of 5]

This is a hard read. It has a lot of info and is technical. It explains the history dating from the very founding of land grant colleges the debate about how to pay for college. We get a political look at how student aid began and evolved. There is much to learn from this. The background it offered can go a long way to informing the changes we need to make to encourage and push post secondary education. How we pay for this will be central to any and all reforms.

[David R · Rating 3 out of 5]

Got a bit lost with this book, even as a practitioner. But it interestingly provides a legislative and political history of Federal Work-Study, much of which I hadn’t known.

Note: I received a review copy from the publisher.

[Lori Marble · Rating 5 out of 5]

Bold and well researched!

Eye opening, revealing, and very informative! The detailed exposure of the student loan and loan servicing industry is an important element in the ongoing debate about adequately financing higher education.

[Rolf · Rating 4 out of 5]

An excellent, thorough (if anything, overly thorough for the casual reader) history of how college education has been funded in the U.S., from the earliest universities through the 2010s.