The Associated Press reports today that the indebtedness of over 37 million American graduates now tops $1 trillion. That’s more than the total American debt load from credit cards. It’s more than the debt load associated with car purchases. And somewhere there is probably some politician touting how college is now “affordable” for every child.

And, as usual, the plight of law students in debt is a great case study in how debt is crippling a generation’s ability to generate wealth…

The AP focused on a law student when trying to explain to the general public how student debt holds people back:

Every month that Gregory Zbylut pays $1,300 toward his law school loans is another month of not qualifying for a decent mortgage…

Zbylut [is] an accountant-turned-attorney in Glendale, Calif. He’s been chipping away at nearly $160,000 in student debt since graduating in 2005 from law school at Loyola University in Chicago. Now 48, the tax attorney estimates he could have $150,000 to $200,000 in a 401(k) had the money he’s paid toward loans gone there.

“I’m sitting here in traffic. I’ve got a Mercedes behind me and an Audi in front of me and I’m thinking, ‘What did they do that I didn’t do?’” Zbylut said by cellphone from his Chevrolet. He’s been turned down twice for the type of mortgage he needs to buy a home big enough for himself, the fiancee he would have married already if not for his debts and her 10-year-old son.

“I have more education and more degrees than my father, as does she than her parents, and yet our parents are better off than we are. What’s wrong with this picture?” he said.

Well Greg, you probably borrowed too much money to go to law school. It’s probably that simple. Zbylut graduated in 2005, before the legal economy imploded. If he had graduated in 2009, he might be washing the Mercedes, instead of sitting behind them in traffic.

I tried to explain on ATL: Redline what this kind of debt does to student borrowers. People still think of education as an investment that is “worth the money.” And it can be, depending on how much money it costs. Nobody thinks that they could be in so much crushing debt that they can’t even kill themselves.

People have been told that they should get as much education as they can. That is false. People should get as much education as they can afford.

Of course, schools are pretty good at obscuring how much education you can afford. If you are going to make $160,000 working for a white-shoe law firm, sure, go nuts. Borrow all the things. But if you are not going to do that, if you are not sure that you can get that kind of job, like it, and keep it, then you need to minimize the cost of your degree. You need to get the minimum amount of education you think you can get away with to still get where you want to go.

That’s not an anti-education argument, that’s an anti-price-gouging argument. We’ve given everybody “access” to education, but we still have a long way to go before education is affordable.

Read the full post on Above the Law Redline….


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