Various Degrees of Debt

China, with its 1.3 billion people and plush teachers’ salaries, wasn’t a bad place to hide from the recession. Yet for me the ideal bunker was Evanston, Illinois, home to the best journalism program in the country: Northwestern University’s famed Medill School. I wasn’t ready to kiss my dreams goodbye just yet, and Medill, I reckoned, was the best way to fulfill them. Or at least it was better than China, where not speaking the language of the people or the media complicated being a journalist.

Getting accepted to Northwestern on Monday, March 15, 2010, was the first bit of vindication I’d experienced in a long while. I’m not a bum, I thought, just unlucky – until now. Because once Northwestern opened its doors for me, the journalism world, surely, would follow suit. I hurriedly called my parents and sent out giddy emails and basked in the forgotten feeling of relief.

I knew before I applied that the Medill Master’s program carried an excessive price tag. According to NU’s website, the costs would total about $84,000, roughly $46,000 of which was tuition (the rest was housing, multimedia equipment, travel and so on). It was such an outlandishly high tab that I shrugged it off. It was like the U.S. national debt, so big that it exists only in the abstract. No one could actually be expected to pay that much money – at least not for a journalism degree.

That $84,000 estimate was surely just a way to dissuade those with a mere fleeting interest in journalism. Or, better yet, a way to tax those who somehow could afford it, who in turn would help subsidize those who couldn’t.

I had gotten hardy scholarships as an undergrad, and I hoped – naively, as it turned out – that would happen again when the good folks at Northwestern sat down to divvy up their scholarship pie. And if it mattered, there couldn’t have been that many more people applying for the program who were poorer than me. At the time, I would have needed to earn considerably more money simply to reach the U.S. poverty line: Those yuan aren’t worth much outside China.

***

The term “new normal” first gained traction in the spring of 2009 and, to be fair, it had nothing to do with college or college graduates. The people credited with coining the phrase were Mohamed El-Erian and Bill Gross. At the time, El-Erian was the CEO of the bond-investment giant Pacific Investment Management Co., or Pimco, and Gross was Pimco’s co-chief investment officer.

When they first started talking about the new normal, they did so in terms designed for investors and bankers: an extended period of sluggish growth and inflationary triggers that would have repercussions on hedge fund strategies, short- and long-term equity and a bunch of other industry jargon.

“We are so focused on whether recovery will be at the end of this year or the beginning of the next that we lose sight of the more important question,” El-Erian said in May 2009. “It’s not whether the recession will be over. It’s what does the new normal look like?…When the U.S. and global economy reset after the crisis, [the global economy] will look different.”

“Growth will be stunted,” Gross said later that month. “It will be a different type of world and we have to get used to that….[There will be] long-term changes that will establish a new normal.”

By 2010, the new normal had grown into something bigger, especially to a lot of young grads. Since graduation – or leading up to graduation for those still in college – all we had known was economic chaos. The Dow had nearly halved, and national unemployment had climbed from 4.9 percent to more than 10 percent, settling at 9.9 percent by the end of ’09. It was 9.7 for the first three months of 2010, 9.9 in April and 9.6 when the Class of 2010 walked. The “reset” that El-Erian prophesized, the shift in expectations and opportunities, had apparently taken place.

To wit, in December 2009, after learning that the U.S. economy had shed a mere 11,000 employees in November, Chris Rupkey, chief financial economist at Bank of Tokyo in New York, was quoted by multiple outlets as saying, “We’re almost back to normal, 11,000 jobs away from creating jobs.”

Saying “we’re almost back to normal” after 11,000 net job losses illustrates the erosion of the notion of normal. An estimated 150,000 jobs need to be added each month simply to keep up with population growth. And that’s not counting the estimated 15.4 million people who were unemployed at the time, nor the additional 11.5 million who were “underemployed,” which, I can tell you, wasn’t that much more promising.

Getting a job to many seemed like an exotic proposition. And this, to those whose working lives started after the recession, was simply normal.

***

In April, one month after getting accepted, I learned that Northwestern was only offering $12,000 in scholarships and grants, thus leaving a $72,000 gap between what it was supposed to cost and what I was supposed to pay.

Clearly Northwestern wasn’t as eager to have me as I was to have it. Which begged, How can I possibly pay this back? At no point could I answer that question. I had skirted debt thus far because I had parents who were willing to bear it for me. They weren’t Atlas, though, and they couldn’t shoulder more education. I would be the sole proprietor of any additional red ink.

Which would have put me in good company. According to the Project on Student Debt, a nonprofit research group, the number of 2008 grads with student loan debt was up 27 percent from 2004. And it was not just the number of students, but the number of dollars: In 2004, the average debt for graduating seniors with student loans was $18,650; in 2008, it was $23,200, a 24 percent increase; it would eclipse $25,000 for the Class of 2010. What’s more, 10 percent of students who graduated from four-year colleges and universities in 2008 owed at least $40,000 in student loans, compared to just 3 percent (inflation adjusted) in 1996.

In October 2011, USA Today reported that the “amount of student loans taken out last year crossed the $100 billion mark for the first time.” Within months, America’s cumulative student loan debt broke the $1 trillion mark. I don’t know exactly what that means, other than it’s an unfathomable sum of debt at a time when a lot of the indebted were making peanuts.