The life of American students

Graduated from two of the best American universities, Carolyn Chimeri imagined she would have a more comfortable life than her parents, who never went to college.

After completing higher education, however, she accumulated a debt of US $ 238 thousand (R $ 754 thousand) and is now scarce to pay the benefits with a teacher’s salary at the age of 29.

“My husband and I fight all the time for money, thinking about how to survive, pay bills and live like ordinary people in New York,” she told the BBC.

Debts such as Chimeri’s six-digit numbers are not uncommon in the United States, where there are few free universities and about 70 percent of students borrow to pay for higher education, according to the US government.

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Official figures indicate that student debt in the country reached US $ 1.3 trillion this year – equivalent to 70% of Brazil’s GDP in 2015. This amount, according to the Federal Reserve, the Central Bank, is due for 43.3 million of people.

In Brazil, the offer of student credit is much smaller and reduced during the crisis: the largest federal student financing program, Fies, offered 222 thousand lines of credit this year, which cover less than 10% of total annual enrollments in universities.

Chimeri became indebted for the first time to majoring in history and political science at Penn State, a public university in Pennsylvania. In the US, even public universities are usually paid, with some costing up to $ 40,000 a year (in private universities, the value could reach $ 70,000, or $ 223,000).

After graduating, she took another loan for a master’s degree from Columbia University in New York, believing that her diploma would guarantee her better jobs and the chance to pay off more quickly.

She says her parents had volunteered to pay the first loan, but the global economic crisis complicated the family and made it take over.

Chimeri was hired as a teacher at a public school in New York but, even paying installments every month, says the debt has only slightly declined because of interest at 8 percent a year.

To cut expenses, she moved with her husband to his grandmother’s house and, at best, expects to clear the debts by 2030.

“I can not buy a house or start a family – I feel like I’m in my mid-20s,” he laments.

Anxiety and depression
The Student Debt Crisis NGO, which is trying to reform the student loan system in the US, has compiled several testimonials from former students with six-figure debts.

A newly formed, unemployed California attorney with $ 400,000 in debt is “anxious and depressed” at the prospect of never being able to take it down.

A former Montana student says that because of interest, the $ 30,000 loan she took to complete college in 1993 today reaches $ 300,000, though she has never stopped paying installments.

Director of Student Debt Crisis, Natalia Abrams tells BBC Brazil that some people with large debts are owed for the rest of their lives. According to her, 20% of Americans over 50 have student debts.

But she says that the most vulnerable are not necessarily the ones who owe more, and that one of the groups most affected are debtors who can not complete college. Many leave the course to work and meet some more urgent demand, such as the costs of a medical treatment or a newborn child.

Without a university degree, they are unable to claim higher salaries and fail to repay the debt, and are prevented from taking out other loans.

Abrams says that students at top US universities – such as Harvard, Stanford, and Yale – do not usually have very large debts, as these institutions are frequented by members of the American elite (able to afford them without loans) and scholarships poorer.

The most indebted, she says, are studying in for-profit universities. These institutions are minority in the US, but have been multiplying and often have lower ratings than public or non-profit universities.

For Abrams, the federal government – responsible for most student credit in the US – should not charge interest on these loans. Today the interest, defined by the American Congress, varies between 3.76% and 6.31% per year.

In Brazil, Fies interest is 6.5% per year. The Brazilian program is only offered to families with income of up to two minimum and one-half salaries (R $ 2,200).

Abrams also advocates expanding debt forgiveness programs and allowing all Americans to take their first two years of college for free at public universities.

The proposal was part of the plan of former presidential candidate Bernie Sanders and was partially incorporated by Hillary Clinton. It restricted free college tuition to students with a family income of up to $ 125,000 per year.

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Manageable debts
The American student finance system has its advocates. In a study for the Brookings Institution, a research center in Washington, University of Michigan economics professor Susan Dynarski says student debt has grown in the US because it is increasing the number of students at universities in the country.

It states that most debts are manageable and that many owe less than $ 10,000.

For Dynarski, student credit corrects a financial market failure, as private banks would not grant loans secured only by the debtor’s future salaries.

She says, however, that the current rules are harsh with new graduates, forced to take high plots as soon as they leave college and when their wages are still low. According to the professor, 28% of debtors under 21 years of age fail to pay some installments.

Dynarski advocates that the US adopt a similar model to the UK, where payments are set according to the payor’s pay and unpaid debts in 30 years are forgiven.

For Carolyn Chimeri, the teacher who owes $ 754,000, students must be better educated before borrowing that will affect much of their lives.

She says that if she knew the impact the debt would have on her day-to-day life, she would probably have gone to cheaper universities.

“It is painful to think about how my generation could be contributing to society were it not for this huge burden,” he says.