The K-Shaped Student Loan Story

Not all borrowers are in crisis.

A while back, I wrote a story called There Is No Student Loan Crisis. In that article, I argued that use of the “crisis” was extreme, and the entire situation was vastly overblown.

There was some truth to that article, but there was also some lack of awareness on my part.

With the pandemic leading to suspension of federal student loan payments and interest since March 2020 and continuing through at least September 2021, I’ve had some time to rethink my position.

Plus, I’ve had some verbiage added to my financial lexicon: “K-shaped”.

This phrase has been most often used by the Biden administration to describe the bifurcation of financial benefits as the country recovers from the vast swath of economic ruin wrought upon the populace by the pandemic-induced lock downs, but it also accurately describes the similar splitting of financial benefits received from the use of student loans.

In both cases, the end result has been that those who needed the help the least received the most benefits.

• In the case of the economic recovery, most of the financial gains in the stock market has gone to the top 10% of earners, as they hold 84% of shares.
• In the case of student loans, the borrowers who took out the most money are overwhelmingly those who acquired some form of postgraduate education (e.g. JD, MD, MBA, PhD).

The increase in lifetime earnings dwarfs the relative increase in student loans taken out to achieve their degree.

Meanwhile, the borrowers with the least amount of loans, typically $22,000 or less, are overwhelmingly those who received an associates or certificate (or did not finish their program) and make a much lower salary.

Student loan forgiveness might work, but even then, the highest borrowers (and by proxy, the highest earners) will receive most of the benefit.

Doctors with six-figure debt get the whole $50,000, while the cashier with $10,000 in loans only gets that $10,000 benefit. Sure, the cashier’s relative situation improves the most, but the biggest absolute benefit goes to the doctor.

The Takeaway

I’m not much for blaming my problems on the economic construct that the government has created for us, but I’ll be damned if I can’t just shake off the data and see the results of our current system.

More for the haves.

Less for the have-nots.

And the cold-heartedness of it all it what gets me. It has gone from “more for me” to “less for you”. There’s spite involved that has gotten worse over the years.

The lesson for me has been this: no one is going to save you.

More to the point, there are forces out there, be they laws, policies, or just outright individual assholes, that are actively trying to keep you from moving up the socioeconomic ladder.

Stay strong. Stay smart. Stay in the fight.

Related Stories

• Student Loans Cost the Government Billions of Taxpayer Dollars.
• Could Cancelling Student Loans Actually Save Money?
• Student Loan Borrowers Just Got a Friend in the White House
• Will Student Loan Forgiveness Actually Work?
• How I Still Have $135,000 in Student Loan Debt (Even After 21 Years)

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This article is for informational purposes only, it should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.