Thank you for this deep dive. I appreciate these white middle class scenarios and would love to see them done for working class white folks as well as people of color.
I know a lot of my white family members don't understand the amount of wealth that still comes with being working class white compared to other races. My maternal grandfather was rejected when he tried to enlist in WWII due to high blood pressure. Neither of my parents have college degrees and they suffered financially for it because the goalposts shifted - as young adults in the 1970s, living wage jobs existed straight out of high school; by middle-age in the 2000s those same jobs required 4 year degrees and higher positions at the same employer required higher degrees, so suddenly "working your way up" no longer became an option.
I was able to get to where I am today because of what I call "The Loser's Lottery": fortuitous things that we benefited from at the sacrifice of others. My paternal grandfather got lung cancer from asbestos from working at a steel mill and won a settlement. My maternal grandparents owned farmland that became valuable to the County Government because it was on the waterfront and adjacent to a county park. After a long fight, they were paid fairly for it. My father worked as a correctional officer and almost died the first time at age 43 and then did die at age 52; some of the life insurance policy that my mother had for him covered my undergrad student loans.
What if those pay days never happened? Particularly with my paternal grandfather and dad - they worked dangerous jobs in order to earn a middle class income, and then said jobs turned into winning the loser's lottery at the expense of their health and lives. What if my maternal grandparents' farm was somewhere undesirable, even for developers? What if they didn't have my cousin lawyer (whose path to law school and practice was through the military?) to help them get a fair price for their land?
The reality is that we would still be working class, and I'd still be in a boatload of debt from student loans, and would feel really relieved by the loan forgiveness because it would feel like I finally won the lottery for once in a good way. Also, we'd still have more wealth than families of color because even though we suffered we still are worlds ahead in wealth.
What's hard for me is that I'm not allowed to publicly talk about "The Loser's Lottery" per my extended family, so I look much more self-made than I am.
I think about this all the time. My grandfather totally won the Loser's Lottery. Holocaust survivor, he made a bunch of money while making a lot of people around him pretty miserable because he never dealt with his own trauma. His daughter, my mom, died when I was in my twenties, and so I ended up directly inheriting a bunch of wealth which allowed me to not be in debt for grad school, and ultimately put a small down payment on a house. I feel both very fortunate to not have debt, and also super aware that it only happened because of a lot of pain and death.
I grew up ok; child of immigrants but my parents were able to work their way up in their careers sans educations and it set me and my older sister up well. My sister and I were first to go to college, but good school and with enough "know how" to figure out consolidation, etc. I had about $50K in debt that I'm still paying off and will get $20K in relief from. When I met my partner I knew they were well off but didn't realize all the ways wealth works. A few things I've noticed:
*First, the amount of strategy that goes into avoiding paying taxes. I thought everyone just paid what was due at the end of the year but for my partner's family they do things like give my partner a check every year for the maximum gift amount to avoid estate taxes when they die. Same thing for my partner's parents which means my partner gets a full salary in gifts just to start. Recently my partner's parents moved real estate holdings into an LLC that's owned by my partner and their siblings but that the parents still use for themselves for all intents and purposes; doing so was a way of off-setting taxes they would have had to pay from the success of their business. This off-set was in the mid-six figures.
*Second, my partner consistently thinks of budgeting and money in terms of their net worth. As someone with debt who had a negative net worth up until two years ago (and is only on the positive side because of 401K I can't access) I worry about money and budget in terms of what my salary covers and what I spend. My partner knows that even if salary doesn't cover spending, they don't have to worry. This blows my mind.
*Third, my partner and their family aren't bad people but consistently believe that their wealth is due to their hard work and being frugal. For example, they do a lot of things around the house on a DIY basis like not paying for a landscaper and doing it themselves. For my family, the goal was to have enough money to not need to spend time on things we could pay other people to do. I think the fact that we always *had* to do the DIY work meant that not having to do it was the goal. My dad still fixes his own car, he refuses to pay repairmen for appliance problems because he would rather figure it out on his own *and* because he can't afford to. My partner's dad recently totaled his expensive car trying to fix it himself.
*Finally, my partner consistently says that they grew up middle class. I don't think this is an instance of making $250K to live paycheck to paycheck like the article suggests but rather the mindset that allows a very wealthy family to think of themselves as just hard working americans whose hard work has paid off. In this way, my partner is very uncomfortable with student debt relief because it feels like someone isn't working hard enough.
Please don't share all of this outside of culture study, it's something my partner and I are working through and is very hard in ways that are surprising and have made me feel so completely illiterate when it comes to really understanding wealth. It seemed helpful to share.
"the amount of strategy that goes into avoiding paying taxes"-- my friend just lost her partner to a brief and brutal cancer, and sitting in the hospital with the estate lawyer, she said she was shocked at how much people are able to hide their money, completely legally. They kept their finances separate and now there's a trust for her children and she will receive an allowance out of it. When another lawyer looked at the paperwork, they offered even more ways to hide the money and avoid taxes. We both work for local government and will never make that kind of money.
Than you so much for sharing this info and the dynamic between you and your partner. Especially the business about the taxes! Yeah, that is not something that would even occur to anyone in my family even if there were the actual dollars to do so. If you don't mind sharing, do they DIY all their money management or is that outsourced? (if you do mind-no worries!)
Oh that's a good question; it's actually not clear to me. There's a weird culture of not talking about money in the family, just things being move around (checks being mailed or handed out, that sort of thing) and even the LLC thing is hard for me to understand how it happened as in was there a formal discussion and "do you kids want an LLC and a house?" or if it just happened and "hey kids, you have another LLC and a house!"
On my partner's end, they DIY all of their money management. I think they spent a lot of time reading advice from various money managers like Dave Ramsey but I also get the sense that some of the knowledge about taxes was passed down (as well as a general attitude of "don't give the government money, it's not run efficiently like a business which we would know because we own a business"). As we discuss the future, I feel like I'm at a huge disadvantage for not understanding/knowing and remembering how wealth and money works in this way.
I mean, they're not *entirely* wrong about government money being run efficiently. Haha. I am not thrilled about many of my tax dollars goes towards defense and the police. I do write off things for my freelance work, but I have an accountant/financial advisor who does it for me. And like your immediate family, for me it's more about time/energy. I'd much rather pay someone else to do it.
My guess would be that since your in-laws are business owners they either handle their business taxes themselves or pay someone to do it who also passed on tax advice, or have a lawyer. (Depending on the size of their business.) Either way, they would have a grasp of more of the tax code by default than your average household.
It's clear to me that not talking about money and they ways in which one handles it, investments, taxes, hiding it etc is part of the gatekeeping that keeps wealth inequality alive. If no one tells you and you can't afford to hire a professional, or have time to do all the reading and research yourself, how are you to know?
I am still struggling with how people just “do some research” on what to do and then know what to do. I feel like there is nothing but talk of distrusting financial advisors and yet if one has any wealth one needs a financial advisor. It’s for this reason that my husband’s parents have all their wealth in ordinary checking accounts and CDs. It’s totally insane but also I dont know what to suggest. I’m certainly not in the kind of financial situation that requires a financial advisor.
And in the end, even if I were to buy an IRA every year, that’s a woeful retirement fund compared to what people supposedly need.
Will I be working until I’m dead? We shall see depending on what secret financial situations my family have in store.
The trick with financial advisors as I understand it is to get someone who works for a flat rate, not a percentage. Mine includes financial advisement as part of the fee I pay for my tax prep.
I've been struggling for a while trying to reconcile the research of wealth building and investing with the fact that most of the books and information is provided by white cishet men who are gaming the system for all its worth and/or treating budgeting like diet culture. I've found the Bitches Get Riches podcast/website and The Rich and Regular podcast and their book Cashing Out to be very helpful perspectives. More diverse voices are finally entering the chat and I am here for it.
Now that I think about it, one question I have is how people think of taxes. My partner is the first person I know who is very strategic about taxes in ways I did not know was possible; I now think of this as a thing wealthy people do but might be very naive and grew up first gen American.
Thank you for this, truly. It's the most eloquent and concise explanation/argument for the cancellation of student debts that I've ever read. I especially appreciate your point about changing the term "forgiveness," which is the kind of puritanical, American boot-strap language that has done far too few people any few favors for too long.
I grew up in the 2000s and was example #3. I assumed debt was a lifelong choice for intellectually-minded folks, and I believed it was the best move to go into debt for a humanities degree to be able to teach. The silver lining of Covid was that my payments have been postponed until 2023. I am a literary tour guide in Paris and an adjunct teacher at the Sorbonne, where they pay us $40/hour, before taxes. Somehow the calculations don't add up. So thank you for your article. You've made at least one more person feel seen.
Thank you so much for this deep dive into thinking about student loans and debt and wealth. It got me thinking about bankruptcy. I faced a number of things in the last decade that someone with access to wealth would have been able to weather, but I could not, not without taking on a significant amount of credit-card debt. Other debts rose, and I ended up in a position where my only option was to declare bankruptcy. I was shamed for this - by my lawyer, repeatedly; by the judge at the hearing - and it was painful. But looking back on it now, bankruptcy happens to some people, and some people get help from their folks. All the messages about bankruptcy, worth, failure etc exact shame from people who do not have wealth. (I'm now on the other side of that experience, thank goodness, but still wealth free.)
Thanks for sharing this personal story with other folks. I've dealt with bankruptcy in my family and I think it's one of those words that we need to de-stigmatize, because it is the direct result of predatory lending and a broken healthcare system in a country that we were only ever taught to be proud of versus critical. Here's to subverting the polite conversations of old with some Real Talk at the dinner table.
Someone replied to AHP's tweet about Pell grants with the comment that they didn't know if they had a Pell Grant or not and that their parents had a low six figure income in a low COL area. Honey, if you don't know if you have a Pell Grant or not you probably didn't have one, even without mentionning all that other information
That's the great question I think Americans are facing in this era: how to cultivate a space for a discussion that bursts bubbles. It's a conundrum, and one that I truly think must happen face-to-face. But that requires an infrastructure of patience and understanding, and most importantly, time, none of which are afforded to most Americans.
Thank you for this. I've been thinking about wealth since your prompt the other week and I keep coming back to time as the thing that underlies a lot of wealth: how much time someone has to dedicate each day to work they wouldn't otherwise have to do; how much time someone has to spend feeling anxious about what they might do if something goes wrong with their health; how much time people lost when their houses were taken during the financial crisis. For many, the accumulation of wealth takes time—often more time than we've got. Inherited wealth, generational wealth—these things are like time machines or fast-forward buttons. You do such a nice job of here of measuring wealth in a number of subtle ways, time being one of them (both inter- and intra-generatiinallu). In a lot of ways, time is all we've got, which is why, I suspect, we are always asked to trade it for money. The way debt consumes our time is frightening. Wealth frees up people's time and allows them access to other people's time. I think you make such a strong case for debt forgiveness but also, in some ways, for rethinking inherited wealth altogether, which I really appreciate.
From your lips to the ears of every person persisting in the fiction that they, or their parents, got where they are on hard work and good character alone. Thanks for the clear narrative and thorough explanation.
One time I think about the racial wealth gap is when I look at GoFundMe's posted by people I know. Not the flashy ones that are going viral. The everyday ones people put up to get help with things a little bigger than they can handle. Extra medical bills but not, you know, kids with cancer attention-getting ones. Unexpected extra bills as a kid goes off to college. That kind of stuff that gets crowdfunded in our wretched system. And even where the dollar needs are fairly similar, I watch my white friends get more donations than my Black friends, and I think it's because white people have a lot more wealth in their networks. Even though my Black friends went to elite colleges and have middle-class jobs.
Absolutely fantastic. Glad you took whatever time you needed for this! I was swamped with work and couldn't engage in the subscriber "wealth" thread and was sorry to miss it, but really glad that you hit here on what I think often gets overlooked in these discussions, which is how land ownership plays into building wealth. The Homestead Act has been glossed over in sepia-tinted stories about U.S. history for so long that few have looked at its origins in theft, much less how it could guarantee a chance at wealth for descendants. And on top of that, if you go further back there's more research coming out tracing today's wealthy and/or powerful families and finding that a lot of them have been wealthy and/or powerful for centuries. Why? Because some royal granted them land in return for services, or allowed them to enclose (steal) land that had been part of the commons belonging to everyone. Which impoverished everyone else and made them dependent on the landowner, who could extract wealth from people as well as land. And it's nice to think this is ancient history but *we're still living with the consequences.* It matters.
And also I love how "your parent pays for" or "your parent gives you" covers so much. When you don't have this (which neither my spouse or I have), you can get really taken aback realizing how much your friends who *do* have it have a lot of things so much easier.
Re: the Homestead Act / generational landed wealth -- in NM (I think especially northern NM), a lot of folks had land grants from Spain and Mexico prior to the US's 1847 annexation of the New Mexico Territory. Those land grants were supposed to be honored by the US following the annexation, but, in subsequent years (and through various nefarious means), white folks and the US government itself seized that land (I believe a lot of this is Forest Service land now, which is especially awful in view of recent Forest-Service-caused fires in northern NM). So, even in a context where you might expect significantly more generational wealth (/landed wealth, in particular) among POCs, white folks / structural racism have taken that away (and, obviously, this is to say nothing of Native land in NM, which Spanish / Mexican land grants obviously violated).
So many threads and layers to this, isn't there? It's a little simplistic to put it this way, but sometimes it feels like almost all wealth comes down to someone at some point taking land and/or resources and/or their own bodies from someone else and saying, "This is mine now."
TOTALLY THIS. Marx called it "primitive accumulation," and his primal scene was the "enclosure of the commons"--when the Tudor monarchy just took a whole bunch of land that used to belong to the people and said, "now this is the private and belongs to the crowd." (I don't mean for that to sound soapbox-y! Just got excited by this very clear statement of what is essentially theft and appropriation as the origin of capitalism.)
YES! Don't worry about being soapboxy, this is literally the thing I go on and on and on about all the time ... glad to know others think about it, too!
It strikes me that the zero generation - the one that went to college and leapt into homeownership on the GI bill and rode the post-war boom to solid, middle-class security - that generation was supported by wealth. It was just national wealth. Well, for the white folks, at least.
I would love to see immigrants included in the conversation. How do they finance their childrens’ education? If you are new to the U.S., how do you accumulate wealth, period, let alone enough to put your kids through college?
I can give one (fairly privileged) immigrant perspective. My parents came to the US in the late 80s. At that time, because they spoke English well, my dad was able to get a degree and find a good job with the state government and my mom cleaned houses, then worked at the library, then worked her way up in a fashion company (the boss there was the husband of the woman who managed her at the library, all informal networks). They were able to secure a mortgage for a small apartment in an affluent neighborhood with excellent public schools for my education. I lived overseas with my grandparents until I was old enough to attend elementary school. I ended up in a top college with full need-based tuition, graduating only with 15k in debt. What got me was law school and then being unemployed but I paid down a total of about 80k eventually, about two years after securing full employment. I had to get a lot of money from my parents for living expenses during the year I was unemployed but they never had to pay much to support my grandparents or extended family overseas. We aren’t white but we have white-level healthy debt. My family is now fairly wealthy by my standards but we still buy most things on sale and try not to buy things or eat out, but we have many rental properties.
To give some context, lot of immigrant debt is informally borne by the immigrant networks. My dad had to borrow money from his hometown association when he landed in the US I believe, particularly for things like rental deposits, as they all came from overseas with pretty limited assets. This happens in many Asian immigrant communities and then the immigrants owe debts internally to the associations instead of to US institutions. This can be a double edged sword for many reasons (anyone who doesn’t pay their debt may be ostracized in the community but doesn’t go bankrupt, for example). I wonder if there is good reporting/writing on this, it’s a well-known phenomenon.
I was unaware of the immigrant networks you talk about, and I'd definitely be interested in any of that good reporting/writing you mention if anyone can direct me there. (I'll share links here if I find any.)
I’ve read a lot about community financed business investment, but I was wondering whether the same structure is in place to cover college debt. My mum was first generation, and her parents opposed her going to college right after high school, because they needed her to work. She went later in her 30s and then got another degree in her 60s, but never got as far in her education as she would have liked.
Some of this doesn't apply to me: my family immigrated to Australia (a somewhat similar system) in the 1930s (dad's side) and the 1960s (mum's side), and there were opportunities for immigrants to accumulate wealth. But one thing that made a huge difference for both sides of my family in the decades before the 21st Century was the networks of immigrants that existed and which banded together to help each other out. eg. childcare for each other, low-interest loans without going through the banking bureacracy, business deals and agreements for the ever-growing immigrant sector, etc. 'Family' to my mum and dad's generation (70-90 yrs old) wasn't just 'parents, uncles/aunts, cousins' - it was a whole network of Chinese immigrants now resident in Sydney in the 60s and 70s. Those opportunities to band together have largely fallen by the wayside in the last two decades. It might be that as western countries not only acquired but began to accept immigrants as 'their own people' that the collective formed from an identity based in the origin country began to fragment.
Interesting, and true from my own observations. My husband's parents both emigrated from southern Italy to Canada in the late 1950s, along with most of their siblings, cousins and many others from the same area. It was (honestly) like half the town picked up and moved to Canada (and specifically southern Ontario and the Toronto area). His uncle was the first one in the family to come over, and once he established himself, he sponsored his siblings. He bought a house (which was my husband's first home, as a toddler) and had family & friends living with there, paying rent and sharing expenses, people sleeping in every room (one bathroom!). When my father-in-law had saved enough money for a down payment, he bought a house nearby. They continued to have relatives and friends living with them there too -- I think my husband was in university before it was just him, his brother & his parents living there.
I'm not sure about the lending networks -- although, come to think of it, I know my father-in-law held mortgages for a couple of people over the years -- but for sure they looked out for each other, went to each others' weddings, formed social clubs, supported each others' businesses, employed each others' kids, etc. When my father-in-law died a few years ago, we had more than 600 people show up at the funeral home in one afternoon to pay their respects. Many of these people have done very well for themselves and their children (and some very, very well).
Oh, my goodness! I know the Italian communities in Toronto and Windsor are very close knit. I have some friends in both cities who are always happy to connect me with people they know. I see this in the Greek and Lebanese communities, too - the networks of family and extended family and trusted friends.
I only learned about the loan networks in the last couple of years when I asked mum how she survived in the late 80s when my dad walked out and left her with significant debt in their shared business name when the interest rates were nearly 20%. She said she took a loan with a group of wealthy Chinese businessmen in our community (I think one was her sister-in-law's father, so a family connection there), who would charge her a little over half the commercial interest rate. That was another connection for me in the 'wow, my family and life have been really lucky' chain.
My internist trained in Shanghai. She emigrated to the U.S. and was required to study for four years before she could practice medicine here. Not only was she raising her family, she was taking care of elderly parents, too.
This happened to my uncle. He had to re-do his entire medical training to re-qualify as a doctor in the US. What made it work was my aunt who gave up her career to raise the kid and move around to support him. After a long time it paid off and they became wealthy. Eventually he tired of filling out medical paperwork and now he’s working in the home country as a highly paid consultant! It’s interesting how things come around.
I've been contemplating this after AHP's Friday thread about wealth because my parents were immigrants who came to the U.S. as WWII refugees around 1950. Although they arrived in the U.S. with very little, their good fortune began with the fact that refugee immigrants at that time had to be sponsored by someone in the U.S.--the sponsors were supposed to help the newcomers get settled, mostly with advice and practical knowledge, but the assistance was often also of a material nature. My parents' families good fortune included the fact that they were white and Protestant, which of course made it easier for them to "fit in," as well as literate and educated to some degree.
Their immigrant community networks weren't as financially robust as what MYu describes, but the communities in some cities did, for example, establish their own credit unions. But networking in terms of employment opportunities is something that still happens in the community among the kids & grandkids of the original immigrants.
However, unfortunately I don't know many details about how my mother's parents and my father managed to accumulate what they did--enough for both my and my sister's college costs to be covered in the mid 1990s and enough for occasional gifts of cash or stocks later.
My parents came to the US in the 70s & 80s from China, poor w/ high school educations and have remained poor to this day (when I filled out FAFSA I remember their income was no more than $30k/year combined). I still have no idea how they were able to buy a house in San Francisco with minimum wage salaries in the early 90s but they did. Due to their income, I qualified for Pell Grants & other grants from my private college from 2004-2008 and even graduated early so I could save everyone a semester's worth of tuition & living expenses. I believe my parents still paid a little bit for tuition via monthly payments and all in all, I left w/ $20k in debt and dutifully paid it off within a few years thanks to some big increases in salary by job hopping in tech.
I guess my example is that my parents have not accumulated wealth other than their home. They have no 401ks or brokerage accounts and rely on Social Security checks and part time jobs with the city so they get free healthcare. But I've been thinking about this a lot in light of the $10-20k student loan debt cancellation. I know in my heart my parents hold no resentment towards me for not suffering as much or needing to work as hard as them to only earn minimum wage because of the sacrifices they made for my advancement. So I'm absolutely thrilled for people who the debt cancellation will help!
This is interesting because in my mom's family, my grandfather's culture of origin was very down on women being educated as marriage was seen as the most important thing and that lack of support for my mother's education reverberates through to today.
Love how this puts into perspective the aspect of "all the background things" that we don't think about, don't realise, can't see until someone points it out to us - and then we might resist the idea that where we are is due to a very large dollop of luck in being born into a family that had the opportunity to be *stable* in ways that many other people and their families didn't.
This is excellent writing, as usual, and you further clarified something I already (mostly) understood so my understanding is deeper and richer.
I was fully example #2 (private not public, with a lot of need based grants from the school as well as Pell). I paid off my UG loans while in a grad program that provided a fellowship for the cost of the program and a job for living expenses. My spouse, who has the kind of quiet family wealth you’re talking about, paid for much of our living expenses, and we used the available public loan money to float some improvement costs for our home (which we purchased in our LCOL area) and paid back.
It seems like a large portion of the problem in the third scenario hinges on the sentence: “You think, because everyone and everything has told you as much, that the best way to set yourself on a path to success is to go to the very best college you got in.” Without that, might that person have gone to community college and been just fine?
Similarly, in the second scenario a big part of the problem is that, if they foreclosed on a house during the recession, then they had a home that they couldn’t afford. Might they have bought a more affordable home and been just fine?
In both cases, a big part of the problem is the desire to keep up with the Joneses, overextending our finances to the point that we are in trouble. In this case, a better solution might be to make finance and budget courses a mandatory part of high school education, teaching the scenarios you outlined above as possibilities so the right decisions can be made and those outcomes avoided.
I still think community college should be free for all, but I have a feeling that if we implement that without adding financial education, people will keep making the same mistakes, splurging for unaffordable schools and houses and getting themselves major into debt just because that’s what they think they should do.
I think that there's an approach to other people's financial decisions that often uses our own experiences and wisdom, often gleaned through experience with wealth, but not always. The advice to "not major in something you weren't sure would pay the bills" is often the advice to people with significant loans, but even becoming a teacher, or a social worker, or a librarian, or a pediatrician won't actually cover the amount of debt it requires to obtain that certification. Re: foreclosure — yes, some people leading up to the Great Recession bought houses that they ultimately could not afford. But they were targeted by companies who made it their business to convince families that they *could* afford them. What's more, many families weren't foreclosed on because they bought too big of a house, but because they refinanced or bought into "reverse mortgages" (and, again, were targeted as potential money makers for various institutions) and jumped at the chance to take money out of their house, even if it raised their mortgage, so that they could cover other debt, like medical bills. I think the overall point is that it's very easy to judge other people's financial situations on a day to day basis, without thinking about the pool of factors that lead to them. And as for financial literacy courses — who will they be directed to? Will they teach lessons for people with and without wealth? Will students even know which lessons they should listen to, since we're so skilled at not talking about our own wealth?
So true, for some jobs, the education isn't affordable. Is it even ethical for a school that costs $50,000 a year to offer a social work degree? Perhaps that training should exist as a paid apprenticeship within the social work system?
I do think financial education would help people know when they can or can't afford a house, or when entering into a reverse mortgage or refinance scenario is a bad idea. The same is true of school loans. Some understanding of math and how these loans will play out over time would be extremely helpful. And if we make that knowledge available in high school then, for the most part (with some caveats), that will help everyone, not just the wealthy, make financial decisions that will impact our futures.
I agree that giving more young people more access to financial education would be broadly helpful, and it's something I've been thinking about since my own graduation from high school. But I also think that considering practical questions (like those AHP offered above and more) is really vital to thinking about what kinds of problems financial education can solve, and for who.
What is included in this class? Sure, learning about the basics of loans and interest helps everyone. But do you focus on going to college? Affording a house or family? Starting a business? Do you focus on generalities, or your local situation? Should your answers to these questions be different based on the population of students you serve at your high school? If they should be, is that equitable, or serving your students adequately?
If you choose to focus on any of these, how do you get high school students to care about things that are years down the line? Even in my twenties, I still have a lot of difficulty with choosing and making long-term plans, and I believe a lot of teenagers are in this boat too. Long-term planning is a huge part of making financial decisions, but I think it's often something we expect people to learn implicitly, when maybe being more explicit about it would be a helpful part of this education.
How do you engage students who (right now) don't want to buy a house, or have kids, or stay in (or leave!) your area, or know what they want to do with their lives? If they don't care about these things, how do you make them care about this class? I always found that the less I cared about a class, or understood it as relevant to my life, the less likely I was to engage enough to learn its material in any long-lasting way. Like, education in chemistry was "available" to me and one of my mandatory years of science education, and now I know zero chemistry. Not all high school education is retained.
Also, it's not all used! I'm thinking here of my mandatory high school government class, which all students in my state take, and the comparably low voter turnout for young adults just out of high school. Even if financial education is mandatory for high schoolers, that doesn't mean they will apply it in their lives if they don't a) buy into its importance and applicability to their lives, or b) understand how to apply it to their lives. Can financial education give students something like hands-on experience, or practice? How? What kinds of situations are important to practice, or go in-depth on?
Also, again, people with more wealth are going to find it easier to make the "right" financial decisions for their long-term, because they're less likely to need to take drastic and financially damaging measures due to the kind of setback or loss that all of us can experience. Are you addressing that in this class? Or is teaching the "right" financial decisions adding more shame to students who may not be able to make those decisions, practically? Adding to that shame, again, seems like something that could easily further alienate students in this class and make it difficult to learn from.
I think you also run into problems here with our cultural ideas about finances, like the idea of keeping up with neighbors that you mention above. You can know in theory what is likely to happen if you take on a lot of debt to pay for a degree in a low-paying field, for example, but still believe (especially as a teenager with less experience in the world, who may not be thinking of all the unexpected big challenges we can face in life!) that you are likely to be an exception who finds a great deal of financial success. Are we including explicit discussions of how the ways we think about finances are influenced by our culture, or misinformed? How are you encouraging students to actually rethink these ideas? I think it takes a *lot* of work and care to cut through the all the associations of moral value, shame, and prestige we have with money, even as teenagers, and I think trying to contend with these could make for a fraught class.
There are also the general factors of difficulty in education to consider here too: where are schools getting the resources for this class? Where does curriculum come from? How often can it be updated? What gets cut to have these programs? How do you handle the inequities that will arise between less-funded and more-funded schools?
I've probably written too much here, and I'm sure some of these are questions you and others thinking about this subject in depth have already been considering. But I feel like it's important to be explicit about how *complicated* the prospect of financial education for teenagers is! Many older people in my life have the tendency to act like this is an "easy" solution to a really complex problem--and while it may be part of the solution, I really don't think it's fair to act like teaching financial literacy is easy or simple. (I'm not assuming you think it would be, just trying to build upon this and explain why I think that's important to do!)
I agree that it’s complicated and that my solution is not an easy fix. And yet, sexual education in high school has drastically reduced teen pregnancies. Are we to say that because education isn’t always perfect, and that teachers probably do inflict shame when teaching inadequately, and that making any kind of declaration about what is sexually “right” is fraught with challenges, that it wasn’t worth giving the lesson, and thus reducing teen pregnancies?
Yes it won’t always work. And there will be students who don’t listen. And deciding upon a curriculum will be challenging. But if it could increase someone’s financial well-being then, in my mind, it’s worth the risk.
I’m thinking right now how I had to choose between law school and getting an MFA, and I chose getting an MFA, believing that it was less financially sound, but something I loved. And then all my friends who finished law school the same year I finished my MFA (2006) immediately struggled because if the Great Recession, had twice the debt load I did, and many are still struggling.
I don’t think I’m some wizard or smarter than they are. I just got lucky in several ways they didn’t.
I work at a CC, and a lot of my job is thinking about how to help students get through with fewer unnecessary credits, so I’m an expert on this issue.
Community colleges are great options, but they don’t erase debt and they also carry with them their own issues. One of those is that students tend to accumulate extra credits that don’t end up helping them when they transfer (as in, the program they transfer into requires x or y that they could have taken at the two year level). We have ways to combat this: DTAs (direct transfer agreements) help but are not perfect in this regard. There’s an entire system devoted to trying to help students both complete their courses if study at the two year level and do so with fewer unnecessary credits (Guided Pathways). It’s very very challenging to change systems in this way but folks are trying.
And people still graduate with debt, or they don’t graduate at all and they have debt. A lot of the barriers for students come down to things that a wider and more complete social safety net could fix: child care, housing availability, access to reliable public transportation, etc.
I think you believe that the “keeping up with the Jones” leads people to, say, go to the best state school in the system, thereby, I guess, accumulating more debt. But *all pathways have significant debt if you don’t have money*, and in many state systems the differences in debt load between the best state school and a mid-level state school with the degree path someone wants are small.
AND don’t get me started on how sometimes private institutions have a better bottom line for you financially because they offer so much need-based aid.
One of the best things about the reforms to IDR, according to people running projections, is that almost everyone who attends CC and accrues debt will be able to pay it off within ten years. That's a real game-changer.
Two things from this: Your final point is one that my best friend -- who was a first-generation college student from a working-class family who went to an elite private college -- has often made to working-class kids she informally counsels from time to time, and it's so important and invisible to so many people.
And actually, maybe it's one point, because my mother -- a retired sociology professor at a liberal arts college -- was talking about how one thing that increases the student debt of working-class kids is lack of guidance on things like choosing majors and preparing to transfer, where they can rack up extra semesters of debt because there was no one to tell them how to get from Point A to Point B. That, yes, a lot of the time people from lower-income backgrounds take longer to get through school because they are working two jobs and maybe taking a semester or year off just to work before coming back to college, but there's also this extra drag on them that makes things even more difficult.
And the four-years often throw road blocks in the way too, wanting students to need to spend additional time at their institutions (so not allowing some classes to be taken at the CC or changing requirements). But the good advising aspect is a real issue and it becomes especially thorny when a student is looking at two or three schools to transfer to. Even with direct transfer agreements it’s hard.
I was definitely thinking about the community college thing while reading this. I would be in the second scenario, except I did very poorly in high school and then “recovered” in community college which gained me scholarships to a semi-prestigious women’s college. I didn’t graduate with my bachelor’s until I was 30 but I was a more serious student and had a better understanding of the financial situation I was getting myself into. It’s weird to think that my misfortune as a teen turned into my fortune as an adult. I didn’t get into as much debt because I didn’t have the opportunity to be sold on expensive 4 year college straight out of high school. I don’t think my mom could have paid for it even if I had done well enough at 18 to get in to a decent college. Is that luck? If so, I’ll take it.
Plus, the culture of "personal responsibility," which is built into our social policy, creates this pattern where we blame individuals rather than the social structures and policies that shape the "choices" we have access to. When no housing is affordable, and at the same time, housing is one of the primary routes to wealth accumulation (especially for those without inheritance), it's hard to avoid having a house you cannot afford. Nor can you control, for example, whether or not your job gets downsized, or whether your spouse cheats on you, or your child care provider closes leaving you having to choose between child care and employment. These are all situations that happened alongside the housing crisis, shaping what people could afford one day but not the next.
This comment put me in mind of an email a friend (whose area of sociology was gift theory and who was writing to a friend from Bible study) wrote years back:
"Many sociologists would argue that it's just never as clean-cut as 'deserving' or 'undeserving,' and I see that in my family's financial pattern as well. Another interesting point--when we give to strangers, as we are instructed to do in the Bible, we don't know their financial habits at all and simply have to trust them with our gifts. The fact that we are able to do that can lead to a kind of pattern where I give money to help a nameless person at my church, a hard-working grocery store manager who's expecting a baby and doesn't have money for formula (I've just described my sister) but am unwilling to give money to my sister because I know that she has a TiVo... In my mind, it's a weird kind of efficiency to let other strangers help my sister while I help the unnamed grocery store clerk at church--better to forgive the TiVo and get on with the business of being family."
I’m not in any way suggesting one person is more deserving of funds. I’m only saying that I think financial education would help all people to avoid major financial pitfalls. I know I wish I had that education!
I've been thinking about this since the prompt last week and its really made me reconsider some of my ideas and preconceptions. Is what I grew up thinking of as "good luck" and came to understand as privilege, more accurately described as wealth? I am squarely in the demographic described in the 2nd example ('96 HS grad) - parents were college grads with no debt, not high income or much savings but lots of home equity which allowed them to contribute to college/living expenses (I went to a private university but on a tuition waiver due to parent's employment there) so I had very little debt and my husband only had a little more and we were able to purchase a house in our mid-20s and pay off all student loans shortly thereafter. Unfortunately we have squandered a lot of the wealth we should have and now have virtually no savings for our kids who are about to be college-aged. I don't even know what to tell them. We'll help as much as we can and always be a safety net but its not going to go far. We were told go to college no matter what, and they get messages at school about going to the most prestigious school they can but I can't support either of those approaches.
Anyone want to compare notes on experiences in families where people immigrated to the US between WWI and WW2? My grandparents immigrated from Europe then and my parents were born in the 30's and never lost their Depression era frugality. I'm hugely privileged but my experience has been very different from a lot of my peers.
Thank you for this deep dive. I appreciate these white middle class scenarios and would love to see them done for working class white folks as well as people of color.
I know a lot of my white family members don't understand the amount of wealth that still comes with being working class white compared to other races. My maternal grandfather was rejected when he tried to enlist in WWII due to high blood pressure. Neither of my parents have college degrees and they suffered financially for it because the goalposts shifted - as young adults in the 1970s, living wage jobs existed straight out of high school; by middle-age in the 2000s those same jobs required 4 year degrees and higher positions at the same employer required higher degrees, so suddenly "working your way up" no longer became an option.
I was able to get to where I am today because of what I call "The Loser's Lottery": fortuitous things that we benefited from at the sacrifice of others. My paternal grandfather got lung cancer from asbestos from working at a steel mill and won a settlement. My maternal grandparents owned farmland that became valuable to the County Government because it was on the waterfront and adjacent to a county park. After a long fight, they were paid fairly for it. My father worked as a correctional officer and almost died the first time at age 43 and then did die at age 52; some of the life insurance policy that my mother had for him covered my undergrad student loans.
What if those pay days never happened? Particularly with my paternal grandfather and dad - they worked dangerous jobs in order to earn a middle class income, and then said jobs turned into winning the loser's lottery at the expense of their health and lives. What if my maternal grandparents' farm was somewhere undesirable, even for developers? What if they didn't have my cousin lawyer (whose path to law school and practice was through the military?) to help them get a fair price for their land?
The reality is that we would still be working class, and I'd still be in a boatload of debt from student loans, and would feel really relieved by the loan forgiveness because it would feel like I finally won the lottery for once in a good way. Also, we'd still have more wealth than families of color because even though we suffered we still are worlds ahead in wealth.
What's hard for me is that I'm not allowed to publicly talk about "The Loser's Lottery" per my extended family, so I look much more self-made than I am.
I think about this all the time. My grandfather totally won the Loser's Lottery. Holocaust survivor, he made a bunch of money while making a lot of people around him pretty miserable because he never dealt with his own trauma. His daughter, my mom, died when I was in my twenties, and so I ended up directly inheriting a bunch of wealth which allowed me to not be in debt for grad school, and ultimately put a small down payment on a house. I feel both very fortunate to not have debt, and also super aware that it only happened because of a lot of pain and death.
I grew up ok; child of immigrants but my parents were able to work their way up in their careers sans educations and it set me and my older sister up well. My sister and I were first to go to college, but good school and with enough "know how" to figure out consolidation, etc. I had about $50K in debt that I'm still paying off and will get $20K in relief from. When I met my partner I knew they were well off but didn't realize all the ways wealth works. A few things I've noticed:
*First, the amount of strategy that goes into avoiding paying taxes. I thought everyone just paid what was due at the end of the year but for my partner's family they do things like give my partner a check every year for the maximum gift amount to avoid estate taxes when they die. Same thing for my partner's parents which means my partner gets a full salary in gifts just to start. Recently my partner's parents moved real estate holdings into an LLC that's owned by my partner and their siblings but that the parents still use for themselves for all intents and purposes; doing so was a way of off-setting taxes they would have had to pay from the success of their business. This off-set was in the mid-six figures.
*Second, my partner consistently thinks of budgeting and money in terms of their net worth. As someone with debt who had a negative net worth up until two years ago (and is only on the positive side because of 401K I can't access) I worry about money and budget in terms of what my salary covers and what I spend. My partner knows that even if salary doesn't cover spending, they don't have to worry. This blows my mind.
*Third, my partner and their family aren't bad people but consistently believe that their wealth is due to their hard work and being frugal. For example, they do a lot of things around the house on a DIY basis like not paying for a landscaper and doing it themselves. For my family, the goal was to have enough money to not need to spend time on things we could pay other people to do. I think the fact that we always *had* to do the DIY work meant that not having to do it was the goal. My dad still fixes his own car, he refuses to pay repairmen for appliance problems because he would rather figure it out on his own *and* because he can't afford to. My partner's dad recently totaled his expensive car trying to fix it himself.
*Finally, my partner consistently says that they grew up middle class. I don't think this is an instance of making $250K to live paycheck to paycheck like the article suggests but rather the mindset that allows a very wealthy family to think of themselves as just hard working americans whose hard work has paid off. In this way, my partner is very uncomfortable with student debt relief because it feels like someone isn't working hard enough.
Please don't share all of this outside of culture study, it's something my partner and I are working through and is very hard in ways that are surprising and have made me feel so completely illiterate when it comes to really understanding wealth. It seemed helpful to share.
"the amount of strategy that goes into avoiding paying taxes"-- my friend just lost her partner to a brief and brutal cancer, and sitting in the hospital with the estate lawyer, she said she was shocked at how much people are able to hide their money, completely legally. They kept their finances separate and now there's a trust for her children and she will receive an allowance out of it. When another lawyer looked at the paperwork, they offered even more ways to hide the money and avoid taxes. We both work for local government and will never make that kind of money.
Yea...I'm struggling with being near to it because it feels so messed up yet is very very legal.
Than you so much for sharing this info and the dynamic between you and your partner. Especially the business about the taxes! Yeah, that is not something that would even occur to anyone in my family even if there were the actual dollars to do so. If you don't mind sharing, do they DIY all their money management or is that outsourced? (if you do mind-no worries!)
Oh that's a good question; it's actually not clear to me. There's a weird culture of not talking about money in the family, just things being move around (checks being mailed or handed out, that sort of thing) and even the LLC thing is hard for me to understand how it happened as in was there a formal discussion and "do you kids want an LLC and a house?" or if it just happened and "hey kids, you have another LLC and a house!"
On my partner's end, they DIY all of their money management. I think they spent a lot of time reading advice from various money managers like Dave Ramsey but I also get the sense that some of the knowledge about taxes was passed down (as well as a general attitude of "don't give the government money, it's not run efficiently like a business which we would know because we own a business"). As we discuss the future, I feel like I'm at a huge disadvantage for not understanding/knowing and remembering how wealth and money works in this way.
I mean, they're not *entirely* wrong about government money being run efficiently. Haha. I am not thrilled about many of my tax dollars goes towards defense and the police. I do write off things for my freelance work, but I have an accountant/financial advisor who does it for me. And like your immediate family, for me it's more about time/energy. I'd much rather pay someone else to do it.
My guess would be that since your in-laws are business owners they either handle their business taxes themselves or pay someone to do it who also passed on tax advice, or have a lawyer. (Depending on the size of their business.) Either way, they would have a grasp of more of the tax code by default than your average household.
It's clear to me that not talking about money and they ways in which one handles it, investments, taxes, hiding it etc is part of the gatekeeping that keeps wealth inequality alive. If no one tells you and you can't afford to hire a professional, or have time to do all the reading and research yourself, how are you to know?
And congrats on your $20K cancellation!
I am still struggling with how people just “do some research” on what to do and then know what to do. I feel like there is nothing but talk of distrusting financial advisors and yet if one has any wealth one needs a financial advisor. It’s for this reason that my husband’s parents have all their wealth in ordinary checking accounts and CDs. It’s totally insane but also I dont know what to suggest. I’m certainly not in the kind of financial situation that requires a financial advisor.
And in the end, even if I were to buy an IRA every year, that’s a woeful retirement fund compared to what people supposedly need.
Will I be working until I’m dead? We shall see depending on what secret financial situations my family have in store.
The trick with financial advisors as I understand it is to get someone who works for a flat rate, not a percentage. Mine includes financial advisement as part of the fee I pay for my tax prep.
I've been struggling for a while trying to reconcile the research of wealth building and investing with the fact that most of the books and information is provided by white cishet men who are gaming the system for all its worth and/or treating budgeting like diet culture. I've found the Bitches Get Riches podcast/website and The Rich and Regular podcast and their book Cashing Out to be very helpful perspectives. More diverse voices are finally entering the chat and I am here for it.
Now that I think about it, one question I have is how people think of taxes. My partner is the first person I know who is very strategic about taxes in ways I did not know was possible; I now think of this as a thing wealthy people do but might be very naive and grew up first gen American.
Thank you for this, truly. It's the most eloquent and concise explanation/argument for the cancellation of student debts that I've ever read. I especially appreciate your point about changing the term "forgiveness," which is the kind of puritanical, American boot-strap language that has done far too few people any few favors for too long.
I grew up in the 2000s and was example #3. I assumed debt was a lifelong choice for intellectually-minded folks, and I believed it was the best move to go into debt for a humanities degree to be able to teach. The silver lining of Covid was that my payments have been postponed until 2023. I am a literary tour guide in Paris and an adjunct teacher at the Sorbonne, where they pay us $40/hour, before taxes. Somehow the calculations don't add up. So thank you for your article. You've made at least one more person feel seen.
Thank you so much for this deep dive into thinking about student loans and debt and wealth. It got me thinking about bankruptcy. I faced a number of things in the last decade that someone with access to wealth would have been able to weather, but I could not, not without taking on a significant amount of credit-card debt. Other debts rose, and I ended up in a position where my only option was to declare bankruptcy. I was shamed for this - by my lawyer, repeatedly; by the judge at the hearing - and it was painful. But looking back on it now, bankruptcy happens to some people, and some people get help from their folks. All the messages about bankruptcy, worth, failure etc exact shame from people who do not have wealth. (I'm now on the other side of that experience, thank goodness, but still wealth free.)
100% — there's "good bankruptcy" and "bad bankruptcy" for sure
Thanks for sharing this personal story with other folks. I've dealt with bankruptcy in my family and I think it's one of those words that we need to de-stigmatize, because it is the direct result of predatory lending and a broken healthcare system in a country that we were only ever taught to be proud of versus critical. Here's to subverting the polite conversations of old with some Real Talk at the dinner table.
Excellent writing that brings a brutal clarity to where we are and how we got here. I only wish the people who NEED to read it would read it.
Someone replied to AHP's tweet about Pell grants with the comment that they didn't know if they had a Pell Grant or not and that their parents had a low six figure income in a low COL area. Honey, if you don't know if you have a Pell Grant or not you probably didn't have one, even without mentionning all that other information
That's the great question I think Americans are facing in this era: how to cultivate a space for a discussion that bursts bubbles. It's a conundrum, and one that I truly think must happen face-to-face. But that requires an infrastructure of patience and understanding, and most importantly, time, none of which are afforded to most Americans.
Thank you for this. I've been thinking about wealth since your prompt the other week and I keep coming back to time as the thing that underlies a lot of wealth: how much time someone has to dedicate each day to work they wouldn't otherwise have to do; how much time someone has to spend feeling anxious about what they might do if something goes wrong with their health; how much time people lost when their houses were taken during the financial crisis. For many, the accumulation of wealth takes time—often more time than we've got. Inherited wealth, generational wealth—these things are like time machines or fast-forward buttons. You do such a nice job of here of measuring wealth in a number of subtle ways, time being one of them (both inter- and intra-generatiinallu). In a lot of ways, time is all we've got, which is why, I suspect, we are always asked to trade it for money. The way debt consumes our time is frightening. Wealth frees up people's time and allows them access to other people's time. I think you make such a strong case for debt forgiveness but also, in some ways, for rethinking inherited wealth altogether, which I really appreciate.
From your lips to the ears of every person persisting in the fiction that they, or their parents, got where they are on hard work and good character alone. Thanks for the clear narrative and thorough explanation.
God DAMN this piece is good.
One time I think about the racial wealth gap is when I look at GoFundMe's posted by people I know. Not the flashy ones that are going viral. The everyday ones people put up to get help with things a little bigger than they can handle. Extra medical bills but not, you know, kids with cancer attention-getting ones. Unexpected extra bills as a kid goes off to college. That kind of stuff that gets crowdfunded in our wretched system. And even where the dollar needs are fairly similar, I watch my white friends get more donations than my Black friends, and I think it's because white people have a lot more wealth in their networks. Even though my Black friends went to elite colleges and have middle-class jobs.
Absolutely fantastic. Glad you took whatever time you needed for this! I was swamped with work and couldn't engage in the subscriber "wealth" thread and was sorry to miss it, but really glad that you hit here on what I think often gets overlooked in these discussions, which is how land ownership plays into building wealth. The Homestead Act has been glossed over in sepia-tinted stories about U.S. history for so long that few have looked at its origins in theft, much less how it could guarantee a chance at wealth for descendants. And on top of that, if you go further back there's more research coming out tracing today's wealthy and/or powerful families and finding that a lot of them have been wealthy and/or powerful for centuries. Why? Because some royal granted them land in return for services, or allowed them to enclose (steal) land that had been part of the commons belonging to everyone. Which impoverished everyone else and made them dependent on the landowner, who could extract wealth from people as well as land. And it's nice to think this is ancient history but *we're still living with the consequences.* It matters.
And also I love how "your parent pays for" or "your parent gives you" covers so much. When you don't have this (which neither my spouse or I have), you can get really taken aback realizing how much your friends who *do* have it have a lot of things so much easier.
Re: the Homestead Act / generational landed wealth -- in NM (I think especially northern NM), a lot of folks had land grants from Spain and Mexico prior to the US's 1847 annexation of the New Mexico Territory. Those land grants were supposed to be honored by the US following the annexation, but, in subsequent years (and through various nefarious means), white folks and the US government itself seized that land (I believe a lot of this is Forest Service land now, which is especially awful in view of recent Forest-Service-caused fires in northern NM). So, even in a context where you might expect significantly more generational wealth (/landed wealth, in particular) among POCs, white folks / structural racism have taken that away (and, obviously, this is to say nothing of Native land in NM, which Spanish / Mexican land grants obviously violated).
So many threads and layers to this, isn't there? It's a little simplistic to put it this way, but sometimes it feels like almost all wealth comes down to someone at some point taking land and/or resources and/or their own bodies from someone else and saying, "This is mine now."
TOTALLY THIS. Marx called it "primitive accumulation," and his primal scene was the "enclosure of the commons"--when the Tudor monarchy just took a whole bunch of land that used to belong to the people and said, "now this is the private and belongs to the crowd." (I don't mean for that to sound soapbox-y! Just got excited by this very clear statement of what is essentially theft and appropriation as the origin of capitalism.)
YES! Don't worry about being soapboxy, this is literally the thing I go on and on and on about all the time ... glad to know others think about it, too!
It strikes me that the zero generation - the one that went to college and leapt into homeownership on the GI bill and rode the post-war boom to solid, middle-class security - that generation was supported by wealth. It was just national wealth. Well, for the white folks, at least.
This right here.
I would love to see immigrants included in the conversation. How do they finance their childrens’ education? If you are new to the U.S., how do you accumulate wealth, period, let alone enough to put your kids through college?
I can give one (fairly privileged) immigrant perspective. My parents came to the US in the late 80s. At that time, because they spoke English well, my dad was able to get a degree and find a good job with the state government and my mom cleaned houses, then worked at the library, then worked her way up in a fashion company (the boss there was the husband of the woman who managed her at the library, all informal networks). They were able to secure a mortgage for a small apartment in an affluent neighborhood with excellent public schools for my education. I lived overseas with my grandparents until I was old enough to attend elementary school. I ended up in a top college with full need-based tuition, graduating only with 15k in debt. What got me was law school and then being unemployed but I paid down a total of about 80k eventually, about two years after securing full employment. I had to get a lot of money from my parents for living expenses during the year I was unemployed but they never had to pay much to support my grandparents or extended family overseas. We aren’t white but we have white-level healthy debt. My family is now fairly wealthy by my standards but we still buy most things on sale and try not to buy things or eat out, but we have many rental properties.
To give some context, lot of immigrant debt is informally borne by the immigrant networks. My dad had to borrow money from his hometown association when he landed in the US I believe, particularly for things like rental deposits, as they all came from overseas with pretty limited assets. This happens in many Asian immigrant communities and then the immigrants owe debts internally to the associations instead of to US institutions. This can be a double edged sword for many reasons (anyone who doesn’t pay their debt may be ostracized in the community but doesn’t go bankrupt, for example). I wonder if there is good reporting/writing on this, it’s a well-known phenomenon.
I was unaware of the immigrant networks you talk about, and I'd definitely be interested in any of that good reporting/writing you mention if anyone can direct me there. (I'll share links here if I find any.)
I’ve read a lot about community financed business investment, but I was wondering whether the same structure is in place to cover college debt. My mum was first generation, and her parents opposed her going to college right after high school, because they needed her to work. She went later in her 30s and then got another degree in her 60s, but never got as far in her education as she would have liked.
Some of this doesn't apply to me: my family immigrated to Australia (a somewhat similar system) in the 1930s (dad's side) and the 1960s (mum's side), and there were opportunities for immigrants to accumulate wealth. But one thing that made a huge difference for both sides of my family in the decades before the 21st Century was the networks of immigrants that existed and which banded together to help each other out. eg. childcare for each other, low-interest loans without going through the banking bureacracy, business deals and agreements for the ever-growing immigrant sector, etc. 'Family' to my mum and dad's generation (70-90 yrs old) wasn't just 'parents, uncles/aunts, cousins' - it was a whole network of Chinese immigrants now resident in Sydney in the 60s and 70s. Those opportunities to band together have largely fallen by the wayside in the last two decades. It might be that as western countries not only acquired but began to accept immigrants as 'their own people' that the collective formed from an identity based in the origin country began to fragment.
Interesting, and true from my own observations. My husband's parents both emigrated from southern Italy to Canada in the late 1950s, along with most of their siblings, cousins and many others from the same area. It was (honestly) like half the town picked up and moved to Canada (and specifically southern Ontario and the Toronto area). His uncle was the first one in the family to come over, and once he established himself, he sponsored his siblings. He bought a house (which was my husband's first home, as a toddler) and had family & friends living with there, paying rent and sharing expenses, people sleeping in every room (one bathroom!). When my father-in-law had saved enough money for a down payment, he bought a house nearby. They continued to have relatives and friends living with them there too -- I think my husband was in university before it was just him, his brother & his parents living there.
I'm not sure about the lending networks -- although, come to think of it, I know my father-in-law held mortgages for a couple of people over the years -- but for sure they looked out for each other, went to each others' weddings, formed social clubs, supported each others' businesses, employed each others' kids, etc. When my father-in-law died a few years ago, we had more than 600 people show up at the funeral home in one afternoon to pay their respects. Many of these people have done very well for themselves and their children (and some very, very well).
Oh, my goodness! I know the Italian communities in Toronto and Windsor are very close knit. I have some friends in both cities who are always happy to connect me with people they know. I see this in the Greek and Lebanese communities, too - the networks of family and extended family and trusted friends.
I only learned about the loan networks in the last couple of years when I asked mum how she survived in the late 80s when my dad walked out and left her with significant debt in their shared business name when the interest rates were nearly 20%. She said she took a loan with a group of wealthy Chinese businessmen in our community (I think one was her sister-in-law's father, so a family connection there), who would charge her a little over half the commercial interest rate. That was another connection for me in the 'wow, my family and life have been really lucky' chain.
Thank you for sharing!
This is so fascinating. Maybe assimilation and a desire not to be seen as “foreign” is a factor.
Yes, especially in a situation where immigrants were highly educated in their home country but those qualifications did not transfer to the US.
My internist trained in Shanghai. She emigrated to the U.S. and was required to study for four years before she could practice medicine here. Not only was she raising her family, she was taking care of elderly parents, too.
This happened to my uncle. He had to re-do his entire medical training to re-qualify as a doctor in the US. What made it work was my aunt who gave up her career to raise the kid and move around to support him. After a long time it paid off and they became wealthy. Eventually he tired of filling out medical paperwork and now he’s working in the home country as a highly paid consultant! It’s interesting how things come around.
I've been contemplating this after AHP's Friday thread about wealth because my parents were immigrants who came to the U.S. as WWII refugees around 1950. Although they arrived in the U.S. with very little, their good fortune began with the fact that refugee immigrants at that time had to be sponsored by someone in the U.S.--the sponsors were supposed to help the newcomers get settled, mostly with advice and practical knowledge, but the assistance was often also of a material nature. My parents' families good fortune included the fact that they were white and Protestant, which of course made it easier for them to "fit in," as well as literate and educated to some degree.
Their immigrant community networks weren't as financially robust as what MYu describes, but the communities in some cities did, for example, establish their own credit unions. But networking in terms of employment opportunities is something that still happens in the community among the kids & grandkids of the original immigrants.
However, unfortunately I don't know many details about how my mother's parents and my father managed to accumulate what they did--enough for both my and my sister's college costs to be covered in the mid 1990s and enough for occasional gifts of cash or stocks later.
My parents came to the US in the 70s & 80s from China, poor w/ high school educations and have remained poor to this day (when I filled out FAFSA I remember their income was no more than $30k/year combined). I still have no idea how they were able to buy a house in San Francisco with minimum wage salaries in the early 90s but they did. Due to their income, I qualified for Pell Grants & other grants from my private college from 2004-2008 and even graduated early so I could save everyone a semester's worth of tuition & living expenses. I believe my parents still paid a little bit for tuition via monthly payments and all in all, I left w/ $20k in debt and dutifully paid it off within a few years thanks to some big increases in salary by job hopping in tech.
I guess my example is that my parents have not accumulated wealth other than their home. They have no 401ks or brokerage accounts and rely on Social Security checks and part time jobs with the city so they get free healthcare. But I've been thinking about this a lot in light of the $10-20k student loan debt cancellation. I know in my heart my parents hold no resentment towards me for not suffering as much or needing to work as hard as them to only earn minimum wage because of the sacrifices they made for my advancement. So I'm absolutely thrilled for people who the debt cancellation will help!
This is interesting because in my mom's family, my grandfather's culture of origin was very down on women being educated as marriage was seen as the most important thing and that lack of support for my mother's education reverberates through to today.
I second this!
Love how this puts into perspective the aspect of "all the background things" that we don't think about, don't realise, can't see until someone points it out to us - and then we might resist the idea that where we are is due to a very large dollop of luck in being born into a family that had the opportunity to be *stable* in ways that many other people and their families didn't.
This is excellent writing, as usual, and you further clarified something I already (mostly) understood so my understanding is deeper and richer.
I was fully example #2 (private not public, with a lot of need based grants from the school as well as Pell). I paid off my UG loans while in a grad program that provided a fellowship for the cost of the program and a job for living expenses. My spouse, who has the kind of quiet family wealth you’re talking about, paid for much of our living expenses, and we used the available public loan money to float some improvement costs for our home (which we purchased in our LCOL area) and paid back.
It all absolutely snowballs and builds.
It seems like a large portion of the problem in the third scenario hinges on the sentence: “You think, because everyone and everything has told you as much, that the best way to set yourself on a path to success is to go to the very best college you got in.” Without that, might that person have gone to community college and been just fine?
Similarly, in the second scenario a big part of the problem is that, if they foreclosed on a house during the recession, then they had a home that they couldn’t afford. Might they have bought a more affordable home and been just fine?
In both cases, a big part of the problem is the desire to keep up with the Joneses, overextending our finances to the point that we are in trouble. In this case, a better solution might be to make finance and budget courses a mandatory part of high school education, teaching the scenarios you outlined above as possibilities so the right decisions can be made and those outcomes avoided.
I still think community college should be free for all, but I have a feeling that if we implement that without adding financial education, people will keep making the same mistakes, splurging for unaffordable schools and houses and getting themselves major into debt just because that’s what they think they should do.
I think that there's an approach to other people's financial decisions that often uses our own experiences and wisdom, often gleaned through experience with wealth, but not always. The advice to "not major in something you weren't sure would pay the bills" is often the advice to people with significant loans, but even becoming a teacher, or a social worker, or a librarian, or a pediatrician won't actually cover the amount of debt it requires to obtain that certification. Re: foreclosure — yes, some people leading up to the Great Recession bought houses that they ultimately could not afford. But they were targeted by companies who made it their business to convince families that they *could* afford them. What's more, many families weren't foreclosed on because they bought too big of a house, but because they refinanced or bought into "reverse mortgages" (and, again, were targeted as potential money makers for various institutions) and jumped at the chance to take money out of their house, even if it raised their mortgage, so that they could cover other debt, like medical bills. I think the overall point is that it's very easy to judge other people's financial situations on a day to day basis, without thinking about the pool of factors that lead to them. And as for financial literacy courses — who will they be directed to? Will they teach lessons for people with and without wealth? Will students even know which lessons they should listen to, since we're so skilled at not talking about our own wealth?
So true, for some jobs, the education isn't affordable. Is it even ethical for a school that costs $50,000 a year to offer a social work degree? Perhaps that training should exist as a paid apprenticeship within the social work system?
I do think financial education would help people know when they can or can't afford a house, or when entering into a reverse mortgage or refinance scenario is a bad idea. The same is true of school loans. Some understanding of math and how these loans will play out over time would be extremely helpful. And if we make that knowledge available in high school then, for the most part (with some caveats), that will help everyone, not just the wealthy, make financial decisions that will impact our futures.
I agree that giving more young people more access to financial education would be broadly helpful, and it's something I've been thinking about since my own graduation from high school. But I also think that considering practical questions (like those AHP offered above and more) is really vital to thinking about what kinds of problems financial education can solve, and for who.
What is included in this class? Sure, learning about the basics of loans and interest helps everyone. But do you focus on going to college? Affording a house or family? Starting a business? Do you focus on generalities, or your local situation? Should your answers to these questions be different based on the population of students you serve at your high school? If they should be, is that equitable, or serving your students adequately?
If you choose to focus on any of these, how do you get high school students to care about things that are years down the line? Even in my twenties, I still have a lot of difficulty with choosing and making long-term plans, and I believe a lot of teenagers are in this boat too. Long-term planning is a huge part of making financial decisions, but I think it's often something we expect people to learn implicitly, when maybe being more explicit about it would be a helpful part of this education.
How do you engage students who (right now) don't want to buy a house, or have kids, or stay in (or leave!) your area, or know what they want to do with their lives? If they don't care about these things, how do you make them care about this class? I always found that the less I cared about a class, or understood it as relevant to my life, the less likely I was to engage enough to learn its material in any long-lasting way. Like, education in chemistry was "available" to me and one of my mandatory years of science education, and now I know zero chemistry. Not all high school education is retained.
Also, it's not all used! I'm thinking here of my mandatory high school government class, which all students in my state take, and the comparably low voter turnout for young adults just out of high school. Even if financial education is mandatory for high schoolers, that doesn't mean they will apply it in their lives if they don't a) buy into its importance and applicability to their lives, or b) understand how to apply it to their lives. Can financial education give students something like hands-on experience, or practice? How? What kinds of situations are important to practice, or go in-depth on?
Also, again, people with more wealth are going to find it easier to make the "right" financial decisions for their long-term, because they're less likely to need to take drastic and financially damaging measures due to the kind of setback or loss that all of us can experience. Are you addressing that in this class? Or is teaching the "right" financial decisions adding more shame to students who may not be able to make those decisions, practically? Adding to that shame, again, seems like something that could easily further alienate students in this class and make it difficult to learn from.
I think you also run into problems here with our cultural ideas about finances, like the idea of keeping up with neighbors that you mention above. You can know in theory what is likely to happen if you take on a lot of debt to pay for a degree in a low-paying field, for example, but still believe (especially as a teenager with less experience in the world, who may not be thinking of all the unexpected big challenges we can face in life!) that you are likely to be an exception who finds a great deal of financial success. Are we including explicit discussions of how the ways we think about finances are influenced by our culture, or misinformed? How are you encouraging students to actually rethink these ideas? I think it takes a *lot* of work and care to cut through the all the associations of moral value, shame, and prestige we have with money, even as teenagers, and I think trying to contend with these could make for a fraught class.
There are also the general factors of difficulty in education to consider here too: where are schools getting the resources for this class? Where does curriculum come from? How often can it be updated? What gets cut to have these programs? How do you handle the inequities that will arise between less-funded and more-funded schools?
I've probably written too much here, and I'm sure some of these are questions you and others thinking about this subject in depth have already been considering. But I feel like it's important to be explicit about how *complicated* the prospect of financial education for teenagers is! Many older people in my life have the tendency to act like this is an "easy" solution to a really complex problem--and while it may be part of the solution, I really don't think it's fair to act like teaching financial literacy is easy or simple. (I'm not assuming you think it would be, just trying to build upon this and explain why I think that's important to do!)
I agree that it’s complicated and that my solution is not an easy fix. And yet, sexual education in high school has drastically reduced teen pregnancies. Are we to say that because education isn’t always perfect, and that teachers probably do inflict shame when teaching inadequately, and that making any kind of declaration about what is sexually “right” is fraught with challenges, that it wasn’t worth giving the lesson, and thus reducing teen pregnancies?
Yes it won’t always work. And there will be students who don’t listen. And deciding upon a curriculum will be challenging. But if it could increase someone’s financial well-being then, in my mind, it’s worth the risk.
I’m thinking right now how I had to choose between law school and getting an MFA, and I chose getting an MFA, believing that it was less financially sound, but something I loved. And then all my friends who finished law school the same year I finished my MFA (2006) immediately struggled because if the Great Recession, had twice the debt load I did, and many are still struggling.
I don’t think I’m some wizard or smarter than they are. I just got lucky in several ways they didn’t.
I work at a CC, and a lot of my job is thinking about how to help students get through with fewer unnecessary credits, so I’m an expert on this issue.
Community colleges are great options, but they don’t erase debt and they also carry with them their own issues. One of those is that students tend to accumulate extra credits that don’t end up helping them when they transfer (as in, the program they transfer into requires x or y that they could have taken at the two year level). We have ways to combat this: DTAs (direct transfer agreements) help but are not perfect in this regard. There’s an entire system devoted to trying to help students both complete their courses if study at the two year level and do so with fewer unnecessary credits (Guided Pathways). It’s very very challenging to change systems in this way but folks are trying.
And people still graduate with debt, or they don’t graduate at all and they have debt. A lot of the barriers for students come down to things that a wider and more complete social safety net could fix: child care, housing availability, access to reliable public transportation, etc.
I think you believe that the “keeping up with the Jones” leads people to, say, go to the best state school in the system, thereby, I guess, accumulating more debt. But *all pathways have significant debt if you don’t have money*, and in many state systems the differences in debt load between the best state school and a mid-level state school with the degree path someone wants are small.
AND don’t get me started on how sometimes private institutions have a better bottom line for you financially because they offer so much need-based aid.
One of the best things about the reforms to IDR, according to people running projections, is that almost everyone who attends CC and accrues debt will be able to pay it off within ten years. That's a real game-changer.
LOVE THIS.
Two things from this: Your final point is one that my best friend -- who was a first-generation college student from a working-class family who went to an elite private college -- has often made to working-class kids she informally counsels from time to time, and it's so important and invisible to so many people.
And actually, maybe it's one point, because my mother -- a retired sociology professor at a liberal arts college -- was talking about how one thing that increases the student debt of working-class kids is lack of guidance on things like choosing majors and preparing to transfer, where they can rack up extra semesters of debt because there was no one to tell them how to get from Point A to Point B. That, yes, a lot of the time people from lower-income backgrounds take longer to get through school because they are working two jobs and maybe taking a semester or year off just to work before coming back to college, but there's also this extra drag on them that makes things even more difficult.
And the four-years often throw road blocks in the way too, wanting students to need to spend additional time at their institutions (so not allowing some classes to be taken at the CC or changing requirements). But the good advising aspect is a real issue and it becomes especially thorny when a student is looking at two or three schools to transfer to. Even with direct transfer agreements it’s hard.
I was definitely thinking about the community college thing while reading this. I would be in the second scenario, except I did very poorly in high school and then “recovered” in community college which gained me scholarships to a semi-prestigious women’s college. I didn’t graduate with my bachelor’s until I was 30 but I was a more serious student and had a better understanding of the financial situation I was getting myself into. It’s weird to think that my misfortune as a teen turned into my fortune as an adult. I didn’t get into as much debt because I didn’t have the opportunity to be sold on expensive 4 year college straight out of high school. I don’t think my mom could have paid for it even if I had done well enough at 18 to get in to a decent college. Is that luck? If so, I’ll take it.
Plus, the culture of "personal responsibility," which is built into our social policy, creates this pattern where we blame individuals rather than the social structures and policies that shape the "choices" we have access to. When no housing is affordable, and at the same time, housing is one of the primary routes to wealth accumulation (especially for those without inheritance), it's hard to avoid having a house you cannot afford. Nor can you control, for example, whether or not your job gets downsized, or whether your spouse cheats on you, or your child care provider closes leaving you having to choose between child care and employment. These are all situations that happened alongside the housing crisis, shaping what people could afford one day but not the next.
This comment put me in mind of an email a friend (whose area of sociology was gift theory and who was writing to a friend from Bible study) wrote years back:
"Many sociologists would argue that it's just never as clean-cut as 'deserving' or 'undeserving,' and I see that in my family's financial pattern as well. Another interesting point--when we give to strangers, as we are instructed to do in the Bible, we don't know their financial habits at all and simply have to trust them with our gifts. The fact that we are able to do that can lead to a kind of pattern where I give money to help a nameless person at my church, a hard-working grocery store manager who's expecting a baby and doesn't have money for formula (I've just described my sister) but am unwilling to give money to my sister because I know that she has a TiVo... In my mind, it's a weird kind of efficiency to let other strangers help my sister while I help the unnamed grocery store clerk at church--better to forgive the TiVo and get on with the business of being family."
I’m not in any way suggesting one person is more deserving of funds. I’m only saying that I think financial education would help all people to avoid major financial pitfalls. I know I wish I had that education!
I've been thinking about this since the prompt last week and its really made me reconsider some of my ideas and preconceptions. Is what I grew up thinking of as "good luck" and came to understand as privilege, more accurately described as wealth? I am squarely in the demographic described in the 2nd example ('96 HS grad) - parents were college grads with no debt, not high income or much savings but lots of home equity which allowed them to contribute to college/living expenses (I went to a private university but on a tuition waiver due to parent's employment there) so I had very little debt and my husband only had a little more and we were able to purchase a house in our mid-20s and pay off all student loans shortly thereafter. Unfortunately we have squandered a lot of the wealth we should have and now have virtually no savings for our kids who are about to be college-aged. I don't even know what to tell them. We'll help as much as we can and always be a safety net but its not going to go far. We were told go to college no matter what, and they get messages at school about going to the most prestigious school they can but I can't support either of those approaches.
Anyone want to compare notes on experiences in families where people immigrated to the US between WWI and WW2? My grandparents immigrated from Europe then and my parents were born in the 30's and never lost their Depression era frugality. I'm hugely privileged but my experience has been very different from a lot of my peers.