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Why We Deny the Student Loan Crisis

There is a scientific explanation for the reason people deny problems like the student loan crisis.

Written By: Michael P. Lux, Esq.

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Duke University released a study showing that when people find the solution of a problem to be objectionable, they tend to deny the existence of the problem.

The researchers called this behavior solution aversion. The example they used was that because people don’t want to accept the necessary solutions to address global warming, they deny that it exists.

The idea of solution aversion could shed some light on the student loan crisis. Despite some overwhelming evidence about the existence of several issues, people continue to deny them because they don’t like the necessary solutions. If a problem has an ugly but necessary solution, people will deny the problem exists.

Problem: Some college students were misled into taking student loans.

The Ugly Solution: Forgiveness of the student loans for the people who colleges misled.

The Denial: They took out the loans. Why should taxpayers pay them back?

The Facts: There have been multiple lawsuits brought by the federal government alleging that schools inflated employment and graduation statistics misled people into taking out student loans. Several schools have shut down or been forced to pay large civil settlements.  Looking at tactics such as pain points recruiting demonstrates the depths that some of these companies were willing to go.

As noted by the government in a Court pleading, one college did the following:

  • defined a “placement” as any job that lasted one day, with the promise of a second day;
  • paid employers to temporarily hire graduates from the school;
  • falsified placement information;
  • aggressively recruited through persistent telemarketing;
  • subjected consumers who visited its campuses to high-pressure sales efforts;
  • had “career services” that included distributing job postings from Craigslist

Finally, the logic of the blame the students denial is flawed. It assumes that either the loan holders or the taxpayers must foot the bill for the debt. What about the other parties involved? Why should lenders continue to profit on loans that were fraudulently induced? Should for-profit schools be allowed to keep the profits?

The bottom line is that people have been preyed upon by colleges or lenders using despicable tactics. To call the students who fell victim to these tactics anything other than victims is to deny reality. Helping them shouldn’t be a question of economics… it is about right and wrong.

Problem: Student loans are hurting the economy.

The Ugly Solution: Find a way to lower the cost of college.

The Denial: 30 years ago, student debt existed, and it didn’t hurt the economy… it is no different today.

The Facts: The cost of college has outpaced inflation, wage growth, and expected earnings from a degree. Due to this high cost, student debt is higher than ever. It now totals nearly two trillion dollars. In recent years, it has surpassed both auto loans and credit card debt. Studies have shown that student debt hurts the housing market. Applying the lessons of the Great Recession, there can be no doubt about the connection between the housing market and the strength of the economy.

Problem: We gave out bad advice to a generation of students.

The Ugly Solution: Realizing that college is not the best solution for everyone and redefining success for high schools and their students.

The Denial: Higher education is the key component of the American dream.

The Facts: When a high school senior becomes a college freshman, many people benefit. A high school’s college placement statistics go up. A college gets another student. Parents can be proud of their success raising a child.

The problem is that not everyone needs or benefits from a college education. This push to college saddles many young people with debt they cannot afford from programs they didn’t need. The fact is there are many great jobs that don’t require a college degree. Passing on college doesn’t make someone dumb, lazy, or a disappointment. For some, it could be a very wise decision.

Problem: Congress will never address the issues associated with the student loan crisis.

The Ugly Solution: Students and borrowers need to get active to force these issues to be addressed.

The Denial: I’m broke. Therefore, I have no influence in D.C.

The Facts: Politicians at their worst may only care about money and power, but to have a seat at the table, they need votes.

Voting costs nothing, takes little time, and is the only way the people can truly assert their authority over those in power. If student loan borrowers showed up at the polls in record numbers, their needs and issues might finally get the attention they deserve.

About the Author

Student loan expert Michael Lux is a licensed attorney and the founder of The Student Loan Sherpa. He has helped borrowers navigate life with student debt since 2013.

Insight from Michael has been featured in US News & World Report, Forbes, The Wall Street Journal, and numerous other online and print publications.

Michael is available for speaking engagements and to respond to press inquiries.

3 thoughts on “Why We Deny the Student Loan Crisis”

  1. Public colleges raising tuition and other costs 5-10% a year every single year was and is simply unsustainable and is complicit in the problem. For 30 years inflation has come nowhere close to these numbers, so the fact that the costs continued to rise meant that the money to pay for it had to come from somewhere else. Any discussion about modifying student loans has to also include discussion about the underlying problem, which is the cost of what the loans are paying for.

  2. My kids are 4 and 7 years away from college and I am so worried. We have saved up some money but not nearly enough. I secretly hope they want to become plumbers so they will have a trade and less school debt but one actually wants to be an archeologist so I see this issue becoming very real for us soon.

  3. If the students who are affected do not stand up and pressure Congress, who should? It is very similar to our country’s voting participation. You cannot complain when you do not participate.


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