Student Loans, The Indentured Servitude of the 21st Century

I have seen the student loan crisis up close from both sides of this polemic. First, as an extremely young student who was “sold” the only way to get an education—in addition to joining the U.S. Army and working throughout my degree—I was able to earn my first degree.  And then later as a university professor who witnessed the student loan industrial complex rise, especially in its abetting the marketing campaigns for graduate programs from the 1990s onward.  Such marketing strategies were personalized to arouse anxiety within the public, targeting the insecurity of individuals who “only” had a Bachelor’s degree.

Over time, the advertisements from the 1990s morphed from employing emotional tactics to getting people “back to school” to “fulfill” themselves and even recasting adolescence where getting a graduate degree can be “fun” for those working full-time. Adult education courses soared and universities were expanding their degree programs to include some of the Ivy League institutions, where the focus is on getting those already in full-time jobs or in between careers to spend their money.  Some programs are more honest about what degrees mean today: to have greater connections in a certain field which will augment the individual’s ability to procure a job.  In short, graduate programs have fed two illusions simultaneously: that everyone should have a Master’s and/or PhD degree and that graduate school is a job training program. 

Study the dynamic closely enough and it becomes clear that graduate school has become a Ponzi scheme where each devotee sells others on the “scheme” or becomes a cheap source of labor for the very university which awarded their degree.  Now universities can cut down on their advertising budgets with the plethora of testimonials to be found on Youtube devoted to “how to get into an Ivy League school” as well as university-based advertisements which use their own students to provide their stories as part of their program’s advertising campaigns. Universities have tapped into the ultimate capitalist dream: to recruit students who can and will pay for a degree and who can be enlisted as salespersons for that institution! 

Sitting in the D train in the early 1990s I would note the publicity cards in New York City’s subway system which read, “Feeling unsatisfied with your life? Get a Masters degree!”  These adverts became as common as those for Dr. Zizmor’s dermatology clinic, with the main difference being, in the mind of my twenty-six year old self, that somehow Dr. Zizmor was a business and these universities places of learning. I failed then to see then how universities were very much a business until much later in my career when an Assistant Professor of Comparative Literature and Cinema Studies at the Université de Montréal. 

During my second semester at this university during the early 2000s, I witnessed the intake of dozens of new graduate students in a small department which trained future academics.  Shockingly, the numbers of graduate students being enrolled were easily double, if not triple, the number of jobs available in the entire country each year for which close to a thousand people would be applying for each university position.  At one of my first faculty meetings, I asked why we had such a high intake of graduate students annually when it was physically impossible that these students would obtain academic jobs after their degrees.  I was stared at for mentioning what I would later learn was the elephant in the room: that graduate students had become the new cash cow for universities, especially for those departments or colleges struggling for revenue. 

In recent years around the university system in countries from the US to the UK and beyond, the focus in recruitment has shifted from domestic graduate students to wealthy international students such that in the UK there are 300,000 at any one time bringing in £5bn to the British economy annually.  And over 50% of Oxford University’s graduate student body are international students who pay higher fees than British students.  There has already been sufficient evidence provided which demonstrates that UK institutions have been sidelining lesser paying British students to capitalize on the positions available to wealthier foreign nationals who are able to pay the sometimes £35,000, whereas British students’ fees are capped at £9,250.

And just like American students, their Canadian counterparts are entering into the student debt glut as well, with 77 percent of Canadian students regretting their student loans.  Although tuition fees in Canada have risen over 40 percent since 2006 with with an average undergraduate education costing $6,373 for the 2016-17, the fees in Canada are far lower than in the United States, where an undergraduate education at New York University, an institution where I did one of my degrees and taught for many years, today hovers at $50,000 annually—and this does not include room and board, transportation, books, and other necessities.

Given the increase of student loans at universities across North America, I was also unsurprised when just a few years into my tenure-track position at the Université de Montreal, the university stopped using the word “student” to refer to students, but instead began employing the word “client” (customer) in much of its correspondence to us.  This has become a pattern in universities across the English-speaking world which seek to empower students with some sort of superficial hold over the institution, while ultimately bilking these students year after year.

I witnessed more and more students each year signing up for loans, hopeful that the gamble would pay off. A large percentage of these undergraduates surprisingly went on to continue on to their Master’s degree in the very same university, same department where they had done their undergraduate studies, a practice largely frowned upon in North America.  It seems that for the sake of economic interest, rules were truly made to be broken. 

And for those of us occupying rather comfortable teaching positions, we were caught within the jaws of neoliberalism.   And I felt very alone in my concern about our collective interests contributing to a wider system of indoctrinating young adults into what resembled a contemporary version of indentured servitude.  It became clear to me by the end of my first year in Montreal that similar to the university structure in the U.S., the educational system in Canada was also set up to separate students by class, creating two bodies of individuals: those who would be in debt for many years and who would likely face unemployment in their field of study on the one hand, and then for the elite, lucky few, there were those who would more likely be able to land a university or CEGEP (pre-university college) position. 

Today it is a truism to state that getting a PhD in the humanities will not lead to a full-time position unless, perhaps, you were fortunate enough to go to one of the top institutions in the United States.  In their study, “Systematic inequality and hierarchy in faculty hiring networks,” published in Science Advances (2015), Aaron Clauset et al found that of 16,000 faculty members from the fields of business, computer science, and history at 242 schools, a “steeply hierarchical structure that reflects profound social inequality.” The data shows that approximately a quarter of all universities in the United States and Canada account for 71 to 86 percent of all tenure-track faculty in these three fields.  From all the universities of both countries, 18 of the most elite universities produce half of all computer science professors, 16 schools produce half of all business professors, and eight universities produce half of all history professors. Yet, students continue to enroll in the very programs from which they are unlikely to reap the benefits of their economic investment—not to mention the investment of labor, emotional energies, and time.  And counter the rationale these universities are portraying, The Economist in 2010 calculated that getting a PhD may very well lessen the individual’s earning power!

So how has student loan debt in the United States soared to $1.3 trillion this year while an alarmingly high percentage of graduates are largely unable to command a salary high enough to pay back these loans given that the delinquency or default rate is approximately 17% and the non-payment rate at 43%?  What has led to several generations of Americans suffering under the weight of student loans such that they cannot get these loans forgiven or even removed through bankruptcy proceedings? 

The fact is that all student loans used to be dischargeable through bankruptcy until 1976 when the bankruptcy code was modified so that loans made by the government or a non-profit educational institution could not be discharged during the first five years of loan repayment. After this point, only if the individual met the criteria for “undue hardship” they could have these loans discharged.  Then during the Reagan administration, the Bankruptcy Amendments and Federal Judgeship Act of 1984 changed even this caveat and from this point forward all private student loans were excepted from discharge.

Today the only option for people trying to move forward from heavy student loan debt after years of default or deferral is to engage in a credit repair program or to learn to live with the constant robocalls from lenders who engage in harassment tactics with the added difficulties of never being able to obtain a loan, buy a home, or in today’s rental market where credit reports are more and more common, default on student loans could easily result in homelessness. 

What are the choices when a 17 or 18 year-old high school graduate fathoms his or her future?  The only option for most Americans who want to get a university education is to take out a student loan (70 percent of university graduates today have student loan debt).  As science has shown that the human brain is not fully formed until between the ages of twenty-six and thirty-five, it is clear that young adults have no idea about the reality that awaits them—either within the university walls or in the years after their studies—when they sign up to five and six-digit loan figures.  To commit to such a paper for a young individual is about as easy as downloading an app to a mobile. And the consequences of this signature represent the ability of the individual to bargain one’s way forward, out of the parental home, out of impending poverty, and away from homelessness.  Who wouldn’t, after all, sign a paper saying: house+food+education?

The similarities between how student loans have been sold to several generations of Americans and how people have historically sought refuge in the New World through selling their services to get out of poverty are strikingly similar.  From the English immigrants in the 17th century who exchanged four to seven years of free labor for the price of their passage over the Atlantic to the Chesapeake Colonies (also known as the Colony and Dominion of Virginia and the Province of Maryland), the West Indies, South Carolina, and Georgia to the indenture system which resembled a form of debt bondage through which approximately 3.5 million Indians were transported to various European colonies to provide free labor for sugar plantations primarily (1833-1920).

In “The Rise and Fall of Indentured Servitude in the Americas: An Economic Analysis,” David Galenson estimates that from the 1620s through the American Revolution, between one-half to two-thirds of white immigrants to the Thirteen Colonies arrived under indentures.  Galeson traces this back to England where he discusses how the majority of all hired labor in pre-industrial England was provided by “servants in husbandry”:

[Y]ouths of both sexes, normally between the ages of 13 and 25, who lived  and worked in the households of their masters, typically on annual contracts. In view of the pervasiveness of service in husbandry as a  source of labor supply in seventeenth-century England, it is not surprising that the notion of moving that institution to America occurred to members of the Virginia Company when the results of their initial efforts to recruit a sustained flow of adult workers to their colony proved disappointing. (2-3)

Transferring this principle from England to the Americas, the system of indentured servitude developed when trying to figure out how to get masses of people over to the colonies while covering the transport costs for these workers. The solution was to make them indebted to the Virginia Company while keeping these workers under thumb while they repay their shipper: “The Virginia Company’s solution was to use its own funds to fill the gap left by this unavailability of capital from other sources—by advancing the cost of passage to prospective settlers. The Company’s advance took the form of a loan to the migrants, who contracted to repay this debt out of their net earnings in America.” (3)

Not unlike student loans, indenture to places like the West Indies, was a practice that preceded slavery and later was revived in many parts of the Caribbean after the abolition of slavery in the 1830s and 1840s.  There were two types of indentured servants: those who knew what they were signing up for, the “freewillers” who sold their services for a chance at a new start in life; then there were those who were tricked into signing contracts of indentured servitude, the “redemptionists,” who, upon their arrival to the New World, were often sold into slavery.  Indentured servitude agreements, when not betrayed by trickery, slavery, or outright kidnapping, typically took place between individuals and a shipper like the Virginia Company.  The individual agreed to sell his services for a specific period of time in exchange for passage, housing, food, clothing, and often times a piece of land at the end of the agreed terms of service.

In some ways certain indentured servants of the 19th century fared far better than the college graduate of today who is crushed by debt throughout the terms of agreement which never end, with indebtedness hanging over her head through old age for many, and no ability to even fathom owning a home.  Still, indentured servitude was a fatal tragedy for many of the those coming to the New World.  Of the 100,000 Irish workers who had been sent to work in Antigua or Montserrat between 1632 and 1660, most had been sold into slavery and approximately 50 percent of the Irish workers who were indentured servants, died before finishing their terms of servitude.  Add to this body of free labor, thousands more had been sent to Barbados by Oliver Cromwell, eager to boost British sugar production. 

During the 18th century a large number of Scottish, Irish, and German immigrants arrived in the colonies under indenture and later during the 19th century, Indian and Chinese migrant laborers were bound into servitude to replace the once enslaved Africans now freed. Many of the Indian indentured servants came from Pondicherry and Karaikal and their contracts were for a five-year period.  And by 1873, in a place like Trinidad, after the indenture was over, the former servant was offered 2 hectares of land plus £5 in cash. Keep in mind that the monthly allowance for indentured servants at this time had been ₹8 or12¢ US per month). 

What was clear during this period of indentured servitude is that this labor was essential to the colonies and provided a much-needed service in the absence of a native, working population.  In later decades, the populations of the colonies increased, industrialization and capitalism took over, and local labor sufficed in the twentieth century to do the jobs previously assigned to slaves or servants.  Yet, many scholars have debated the differences between chattel slavery and indentured servitude, mostly querying if the latter were not merely a redesign of the former.  Certainly, there is no comparison in certain terms as to the cruelty of slavery, but the lines of similarity are notable.

It is also important to remember that along with the abolition of slavery in 1865, so too was indentured servitude abolished in the U.S.  Yet, by the turn of the 20th century, indentured laborers could still be found working the land in complete servitude to the master on plantations in the Deep South and the Caribbean and the differences to slavery, although pertinent, were at times negligible

It is in this spirit that I think we need to have a long and hard look at the individual’s access to freedom without beginning their independent lives subjugated to a tremendous debt that was not really as much a choice as it was an imposition. We also must ask if we need to rethink tuition fees in the United States and allow universities and all trade schools to be places where learning is free and open to all.  After all, anything less means that we are charging humans an extremely large, lifetime fee for direct access to the job market.

Julian Vigo is a scholar, film-maker and human rights consultant. Her latest book is Earthquake in Haiti: The Pornography of Poverty and the Politics of Development (2015). She can be reached at: