The Phenomenon of Student Loans
THE deputy chairman of the Planning Commission that has just been wound up, when asked on one occasion about the exorbitant fees that private educational institutions, whose weight in the education system has been increasing at an astonishing pace of late, were charging, replied that it did not matter, since students could always study on loans. He was simply articulating the neo-liberal position that since education enabled one to increase one’s earnings, the acquisition of education was like the acquisition of an asset. And such acquisition, as in the case of assets, should be left to the interaction of buyers and sellers in a market. Education therefore should become a commodity and should be privatised; and just as one borrows from a bank to acquire an asset, likewise one should borrow from a bank to acquire education. What is more, for the State to fund education which increases the recipient’s earning capacity is merely to subsidise the recipient. Since this recipient as a result of the education would come to have a much higher income that the average citizen, subsidising such a recipient amounts to subsidising a more affluent citizen of society at the expense of less affluent ones. This is both unwarranted and constitutes a waste of social resources. It follows that a system of privatised education where the rich can afford to send their children without loans to universities and other institutions of learning, but the poor have to take loans to send their children to such institutions, is not as invidious as it sounds: the poor children too, like the rich children, will have their earning capacity enhanced as a result of the education and hence be able to pay back their loans. Commoditisation of education, privatisation of education and loan-funding of education constitute therefore the three inter-related reforms that should be introduced into the system at the earliest. And they are being introduced with a vengeance, with even student loans coming into vogue in a big way. ELIMINATING THE SOCIAL ROLE OF EDUCATION The most obvious problem with this argument is its conception of education. It sees no social role whatsoever for education and is therefore fundamentally “anti-social”. The role of education in producing considerate human beings, its role in developing a humane society, its role in “nation-building”, its role in ensuring that the hard-earned rights and freedom of the people are not snatched away from them, its role in defending egalitarian and democratic values and institutions, in short what, following Antonio Gramsci, one can call its role in producing the “organic intellectuals of the people”, which is so vital for people who are exposed to domestic and imperialist exploitation: all these recede to the background. What gets emphasised instead is the production by the education system of a group of persons who would act as foot-soldiers for international capital. In fact, education can become a commodity only if the person, into whom this education enters as an input, in turn becomes a commodity, i.e., only if the person into whom this education enters is saleable in the market; and this saleability in today’s world is determined above all by whether the person in question meets the requirements of globalised capital. The commoditisation of education amounts in effect therefore to a substitution of the role of education as a vital social necessity, for defending the people inter alia from imperialism and exploitation, by its role as an input for turning out products to meet the demands of globalised capital. The point here is not whether education prior to commoditisation was fulfilling its social role adequately; it certainly was not. But the need then was to reform it in a manner such that it could do so, not to abandon its social role altogether, and thus go back on the conception of education that was an integral part of the entire anti-colonial struggle. Likewise, the point is not whether the use of State resources to educate persons who then use this education entirely for personal gain, usually through migrating abroad for more lucrative jobs (so that the advanced capitalist countries are handed over gratis a pool of trained manpower), constitutes a waste of social resources; of course it does. But then the point is to reduce this waste by insisting on a minimum period of service within the country for all persons who are educated through the State-funded system, and not to privatise the system altogether which eliminates the entire social role of education. Commoditisation not only eliminates the social role of education; it also does away with all creativity, all sensitivity, indeed all thought. Commodities after all are packaged and homogeneous entities, not thinking and critical entities. Commoditisation therefore produces unthinking mediocrities. All this has been much discussed and need not be repeated here; but there is an additional problem with loan-funded education which goes beyond the general problems associated with the commoditisation of education. And this consists in the fact that while education, and here I am talking only of commoditised education and nothing else, increases the earning capacity of the recipient, it does not necessarily increase the actual earning of the recipient in an economy with substantial unemployment. Hence if a student who has funded his or her educational career by taking a loan, fails to find a suitable job at the end of it, then repayment of the loan becomes impossible. The same fate threatens the student in other words as threatens the peasant who takes a loan for growing a commercial crop whose output fails because of pests, or whose price crashes in the market. Loan-funded student education can threaten the nation with a spate of student suicides, much the way that it has caused a spate of peasant suicides. FALLACIOUS ARGUMENT Those advocating loan-funded student education usually reply to this point by arguing that the probability of not getting a job at all or not getting a job commensurate with the fees paid for education is already taken into account by the person taking the loan; so there is no additional danger on this score as it is already “factored in”. This argument however is fallacious, and the fallacy consists in the following. Suppose there is a 50 percent probability of getting a job after a student has completed his or her education and suppose that the amount one gets for the job is Rs 2000 (assume for simplicity that it is a once-for-all payment). Then the maximum amount that a person can borrow for the education leading to such a job, and yet hope to break even, is Rs 1000 (which is Rs 2000 multiplied by the probability of 50 percent). This is what “factoring in” the probability of employment amounts to, and those who have done so will borrow no more than Rs 1000. But a probability of 50 percent in getting a job still means that half of those who have received the requisite education remain unemployed and only half are employed. For those who remain unemployed but have borrowed some amount less than Rs 1000 for the education, there is no means of paying back the loan. Thus “factoring in” the probability while deciding on borrowing does not help an iota, when it comes to paying back the loan, for those who remain unemployed. It follows therefore that student loan as a way of financing education, even if it is available for the asking, is fraught with extremely serious consequences. In the United States where student loans have become a common means of financing education, especially for the marginalised groups among whom the parents cannot afford to pay for children’s education, and where educational-institutions- for-profit have started proliferating (which admit precisely such loan-financed students from marginalised groups), a recent study has found that a person’s earnings do not increase at all as a consequence of such education compared to what they would have been in the absence of such education. This is not because of unemployment, since unemployment affects job prospects generally, whether with or without such education; this is because prospective employers do not take such education seriously and consider it to be sub-standard and pointless (even though “for-profit” private institutions spend hugely on advertisement to entice students from marginalised groups with false propaganda about better employment prospects). In other words, students from marginalised groups borrow massively to finance their education at these profit-making universities and institutions to no purpose at all. In the USA however suicide is less common in the event of a borrower being unable to pay back a debt; people just declare themselves insolvent. But in India where much social stigma is attached to the non-payment of a debt, at least as far as the poor are concerned, the consequences of such student loans becoming a widespread phenomenon can be very serious, especially in view of the massive unemployment and underemployment that prevails. There is a further point here. If a student has to study on the basis of a loan then he or she is constrained to take up only those academic programmes where the job prospects are more promising. In other words, while education for the rich children can still be a source of joy and creativity, since they can still afford not to convert themselves into commodities, for children from poor backgrounds it becomes necessarily only a money-making business, a drudgery rather than a means of self-realization. This also means that the rich children can afford to get an authentic education, though what they make with it is a separate issue, while the poor children, i.e., precisely those who have first-hand experience of the ills of society and can take the lead in transforming it to overcome these ills, cannot. Taking these facts into consideration some have suggested that while education may be privatised, State funding of students from socially and economically deprived groups must continue. This however is an extremely unwise suggestion for what it means is that the State subsidises private money making institutions. In fact, knowing that the State will fund students from marginalised groups, these profit-making institutions deliberately jack up fees for such students, thus increasing the flow of funds from the State exchequer into their own pockets. It follows therefore that there is absolutely no alternative to a public education system. This is necessary not only for ensuring that education plays its social role, not only for saving education from the mediocrity to which commoditisation and privatisation necessarily reduces it (I am not talking here of private philanthropic institutions); it is essential also for ensuring that students from marginalised groups do get an education.