Why Is This Happening? Inside the fight to obtain college at any cost with Caitlin Zaloom: podcast and transcript

Chris Hayes speaks with NYU professor Caitlin Zaloom, author of "Indebted," about the financial pressures that come with trying to fund a college education.
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By Why Is This Happening?

Why is it so expensive to go to college? Going to a four-year university and getting a bachelor’s degree is considered the most direct path to the middle class. At the same time, families in the middle class are forced to take extreme and desperate measures to pay for soaring school fees. It’s a broken system that’s taken its toll — we now have more college debt in this country than auto loan or credit card debt.

So why is the barrier into the middle class so inaccessible? Caitlin Zaloom, author of "Indebted," tells the stories of families struggling with the financial pressures that come with trying to fund a college education. In this episode, she discusses the psychic toll of this fundamental paradox, both for those who go to college and those who don’t.

CHRIS HAYES: The public universities get austerity and cutbacks and high tuitions, but the government, federally, is fine subsidizing rich people to put money into accounts that will grow for 18 years, capital gains free, and then draw it out so they can send their kids to Harvard.

CAITLIN ZALOOM: I know, It's a scandal.

CHRIS HAYES: It's so messed up.

CAITLIN ZALOOM: It is incredibly messed up.

CHRIS HAYES: Hello, and welcome to "Why Is This Happening?" with me, your host, Chris Hayes. If you were to ask me “what's a kind of representative scandal of our era?”, like “what's a scandal that perfectly embodies the through lines of America in the year 2019?” Our increasingly corrupt meritocracy, which is the topic of my first book, the yawning chasm between those at the top and everyone at the bottom, and the crazy ways in which that inequality suffuses the entire society with a kind of culture of corruption, again, the topic of my first book, you couldn't do any better than the college admissions scandal, which you probably heard about, right? A bunch of rich people, including famous actresses, got arrested because this unscrupulous huckster had set up this side line enterprise in which if you paid him, he would essentially create fraudulent records to get your kid into a top college, a selective four-year university.

Sometimes, it was photoshopping photos of someone's kid into playing water polo when they never had gotten in a pool. Sometimes, it was paying adults to go take college admissions tests in the stead of the student, which made me think of the original "Beverly Hills 90210," or "21 Jump Street." Like, did these people look like teenagers? When they showed up and walked into the room with a bunch of 18-years-olds, but they were 30, was anyone raising any red flags?

There was also some side lines that would happen, where you could game the system to get extra time for tests. That's something that actually is much more prevalent than just the universe of this particular scam. But basically, you paid this guy a lot of money, and he used various connections and various means to get your kid into a school, often through just outright quid pro quo bribery.

One thing that was interesting about this story, it was one of those rare stories, the Jeffrey Epstein story is another one, where Americans of all political persuasions rejoiced. It united Americans across the ideological spectrum in their contempt for the people that had done this. The right hates elite academia and Hollywood. And this brought them together. The left hates the insane culture of inequality and corruption that's represented by this, right?

So it's like there was someone for everyone to hate. But the craziest thing to me about the scandal was the idea that these extremely wealthy and extremely successful people were so panicked and freaked out about their kid's future, that they felt the need to do this. Like, who cares? Maybe your kid will go to a second-tier school. They'll be fine. You're a multimillionaire. What's going to happen? They're not going to vanish into the mist, they're not going to cease being.

Why are you so? What would possess you to bribe someone a $100,000 to get your kid into a school when you're fine, they're going to be fine. There's lots of good four-year colleges in America. Tons of them.

But what it showed even at the absolute upper echelon, at the top of the top, there is a sense that parents have that which university or college, which four year institution their kid gets into is the fork in the road for their lives. It is the dividing line of American life. And that sense cascades all the way down through American society.

Now, it may not be elite institutions. Not everyone is running around being like, "If my kid doesn't get into Princeton, they're doomed." But it's actually not crazy to think that one of the biggest forks in the road for your child is that they are going to go to a four year college and get a Bachelor's degree, or not.

As you'll hear in this conversation, the outcomes for those two kinds of people in this country are quite disparate. It really does make a huge difference in their life outcomes, whether they have a college degree or not. And that is a message that's sent through the entire society. This burden, the kind of crazy burden we see encapsulated in the criminal corruption of the college admission scandal, that same ethos, which is like, "Oh, my God, my kid. I got to get my kid into a school." Suffuses all of middle class life. It's the reason we now have more college debt in this country than auto loan debt or credit card debt.

Middle class families everywhere, they're not bribing people criminally, but they are taking extreme measures. They're cashing out their investment accounts, they're taking out loans they can't afford. Their kids are taking out loans, all to get them to go to a four year school. What is going on here?

Isn't it nuts that we have created a system where the ticket to the middle class is a thing that middle class families have to stress about, and hustle around, and borrow for, and beg, and plead, and patch together? Isn't that weird? That fundamental paradox, the paradox that college is the route to the middle class and the middle class can't afford it is the topic of today's conversation.

Caitlin Zaloom is a professor at NYU. She's an anthropologist, and she's author of a great new book called "Indebted: How Families Make College Work At Any Cost." And the book is the product of interviews with all these different families and all these different folks embedded in the higher education industrial complex about this fundamental way in which it has come to be the case, and you'll hear her explain this in the conversation, that literally the definition of being middle class is sending your kid to a four year college when you can't afford to.

And when I read that in the book, I thought to myself, "That's a crazy definition of middle class." And the more I thought about it, I was like, "Right, that's what my parents were." That's literally what my parents were. I went to a four year college. I was very lucky. I went to Brown University. And the only reason I went was because, as you'll hear in this conversation, this is a very common thing, I had a relative who kicked in some money so that my parents could afford it. And we took out loans, and that was the only way to make it work.

But yeah, that was my experience. I'm a middle class guy. My parents were from a middle class household, and they couldn't afford it, and they scrimped it together. But think about the insane distortion, not just in a financial sense, not just in a policy sense, but in a psychosocial sense. Think about the psychic toll that this fundamental paradox is taking on the nation, the effects it has, both on folks that don't go to college, right? For missing the cutoff of the middle class, folks who are in the middle class. And then as the college scandal shows, all the way to the very top.

It's insanity cascading up and down the system, and that's the status quo we have, and that's exactly what Caitlin Zaloom explains so well.

So I wanted to start with, how did you start on the project, how did you get interested in this?

CAITLIN ZALOOM: I'm an economic anthropologist, and I've studied finance and the culture of finance for many years. But it wasn't until I had one of my very closest students come into my office in tears, because she was about to graduate tens of thousands of dollars in debt, that I realized that the project that I should be doing to understand what finance was doing to us, was actually right in front of me all along.

CHRIS HAYES: What was that conversation like?

CAITLIN ZALOOM: This is a student who had everything going for her. She was incredibly smart, incredibly brave. She was an incredible activist. And what she faced in that moment was not only the debt, but also having to take a job that would allow her to pay the debt, that would really limit her choices.

It was actually a job helping companies outsource other people's jobs outside the boundaries of the United States.

CHRIS HAYES: Wait, so she had this crisis of conscience when she came to you, because she had a certain set of politics and idealism and activism. She's a very good student, and she's go this debt, so she has to get this job. And her first encounter with the real world is going to be that she launches out of campus activism into working for a company that is helping to outsource people's jobs?

CAITLIN ZALOOM: Exactly.

CHRIS HAYES: That would make-

CAITLIN ZALOOM: Not a choice that you would wish on anyone.

CHRIS HAYES: That would make me break down, yeah.

Okay, so then you realized, "This is the most proximate thing that finance does in my world." Right? You're a college professor?

CAITLIN ZALOOM: That's right. And actually, for this student, that confrontation had started many, many years earlier, actually. It began with her mother, who as a single mom, raising her three kids, tried to manage her own credit, because she looked forward to the moment when she would launch all of her kids off to school, but she knew that she wasn't going to be able to do it on her income. She was going to have to take on debt.

And so, Kimberley's mom had actually already started this process of putting together college and debt even longer before she ever enrolled.

CHRIS HAYES: In fact, ordering her life, ordering her life decisions, ordering her household around the central project. I mean, really, the central project of producing the capacity to pay for college.

CAITLIN ZALOOM: That's right, absolutely. That was incredibly important to Kimberley's mother and to, I mean, so many parents everywhere, to get their kid to college. I mean, in part, because they know that college today is more important than ever. If their kid will have shot, they pretty much have to have a college degree. But it's even more than that, and it was for Kimberly's mother too, because she wanted her incredibly talented wonderful daughter to be able to realize her talents.

CHRIS HAYES: So then you embark on this project, where you talk to a whole bunch of folks about what? How do you conceive of the project in these interviews you're doing with people about college and debt?

CAITLIN ZALOOM: I talk to 160 different people, students and parents, oftentimes from the same family. So it's a study of what happens between them, between parents and students, when college is such a major goal and it is going to cost them so very much.

Starting from that point, I end up talking to them about all kinds of things, how they spent money on their kids growing up, how student and their parents think about their futures, what they want for each other and themselves, and where they think that it is possible for them to go.

CHRIS HAYES: Everything you're saying and one of the things that recurs, the themes that recur in the book, is that the relationship between a parent and their child in college ends up touching on the most intense deepest intimate parts of what being a parent, or a child is, right?

CAITLIN ZALOOM: Absolutely. Yeah, it is all about the dreams for children and for those young adult’s own selves. I mean, more than anything, parents and students, really, in the most fundamental way, want these young adults to be able to realize their potential, so that's what college is about for them. And potential, means so many different things.

CHRIS HAYES: But that's a human desire as opposed to a job market desire, but the two get very conflate ... I mean, right? I mean, it's like, "I want to realize your potential." What does that I mean? "I want you to follow your bliss, or I want you to be a documentary filmmaker if you want to be a documentary filmmaker, or I want you to be able to pull down a salary that enables essentially a comfortable upper-middle class life." But those two things aren't always the same thing.

CAITLIN ZALOOM: Not at all. I mean, one thing that is interesting in my conversations was that it was very, very rare to have parents say that what they wanted for their child was a high income.

CHRIS HAYES: That's interesting.

CAITLIN ZALOOM: Yes, so, I think-

CHRIS HAYES: So when parents talk to you and when they talk to themselves and when they talk to their kids, what they think they want for their kid, because I'm not really sure that they're being honest, or they know themselves enough, but what they're saying is they want something deeper and more soulfully meaningful than a salary?

CAITLIN ZALOOM: That's right, that salary is not what they believe is the moral heart of parenthood. So when they talk to me, that's the version of themselves as parents that they want people to see. And that for means for them, helping their children with these bigger goals about realizing their talents and cultivating their skills. And really being able to take themselves where they want in life, rather than just making money.

CHRIS HAYES: So I want to talk about where we're out right now vis-a-vis college and debt. But before that, maybe I wonder if you can talk to us a little bit about the history that comes before this moment? Because so much has changed, and it's something you talk about in the book.

What was it like 20, or 40 years ago in terms of middle class families and the relationship to the cost of paying for college?

CAITLIN ZALOOM: Yes. So the cost of college has been rising steadily since the 1980s. But starting in 2000, it started to go up at a much, much more rapid rate, which means that the parent of today's college students really did not have the same experience inside their families that they are now having with their own kids, so there's already this real general disconnect.

Public universities, in particular, were way cheaper. Private ones were too. That meant that their families didn't have to stretch nearly as far to make college available to them.

CHRIS HAYES: Yeah, I mean, state universities even in real terms, right? Were one-fifth, one-seventh of what they are now, right? I mean, when people talk about free college as a policy position now, there were something close to that a generation ago through the public university system than exists now. It wasn't that far from free.

CAITLIN ZALOOM: So many states had systems where the higher education was effectively free, or so low-cost as to be not a stress on any families. I mean, the University of California, of which I am a graduate, was like that. But then not only in California, but all across the country, state university began to get more and more and more expensive, and now, are more expensive than ever.

Actor Lori Loughlin, and husband, fashion designer Mossimo Giannulli leave federal court in Boston on April 3, 2019.Brian Snyder / Reuters file

CHRIS HAYES: When you look at, you know, you can construct these charts that show the real cost increases of things over time, and the two things that always shoot up the most are healthcare and higher education, while things like electronics actually go down, right? In real terms, as do clothing, right?

You can buy things cheaper than you ever have been able to in American life. Things that we used to repair, we just buy a new one, because a toaster costs seven bucks.

When I was a kid, I remember thinking when a kid, and a toaster broke, it was like, "Oh, we got get a new toaster." That's an expense... But on the other end, right? These things that are pillars of middle class life are really expensive.

What is driving that cost increase in college?

CAITLIN ZALOOM: Right. There are many different answers to this question. And so, it's on the public side, state legislatures have been hacking away at appropriations for their colleges and universities for decades, but particularly in the wake of 2008.

I mean, so today, we're just realizing that when state legislatures withdraw the support for public universities that means that those public universities have to get money from somewhere. They still have to make education possible, they have to pay professors, they have to make their buildings nice enough so that they don't fall down. And that means that they charge students more.

CHRIS HAYES: Part of the story is that it's hard to get productivity improvements in higher ed, right? So the reason your toaster is cheaper is because it got outsourced to people making-

CAITLIN ZALOOM: Pennies.

CHRIS HAYES: ... pennies for an hour, right? In Shenzhen, right?

CAITLIN ZALOOM: Uh-huh.

CHRIS HAYES: So that's why that got cheaper, and you can't do that with your sociology professor, right? So that's part of the story. Although, yes, you're nodding your head, because there's some ideas that maybe you can.

CAITLIN ZALOOM: Well, yes, I mean, one of the big changes that has gone along with the increase in costs to students is also that universities have become much dependent on adjunct labor. So actually, you can pay your sociology professor way less, because you don't actually have to hire that sociology professor on a permanent basis most of the time, so-

CHRIS HAYES: It's the higher ed version of that-

CAITLIN ZALOOM: Yes.

CHRIS HAYES: ... of some sort.

CAITLIN ZALOOM: Mm-hmm.

CHRIS HAYES: So part of it is that, and part of it is the sort retrenchment in austerity of the state governments in terms of the amount of money they're supporting. What role does the role of finance itself play in that cost increase? It's always struck me there's an interesting chicken and egg question, which is like, if there's cheap available student loan credit for everyone, then colleges can get away with charging more in the same way that during the financing bonanza of 2006, 2007, people could charge more for homes because everyone could get a loan.

CAITLIN ZALOOM: Right. That has a name, the Bennett Hypothesis. There is, as far as I can tell, not a lot of evidence for that, which is why it's called the Bennett Hypothesis, and not the Bennett Fact. It is also the case that federal loans don't actually cover for students the full cost of college, and that is the primary engine of lending in the United States. There are other ways, like parents can borrow parent plus loans, they can go to the private market, but it does mean that the onus for paying for college comes through finance, and that does go to the universities. From my perspective, what is really troubling is that colleges and universities are taking advantage of parents' and students' willingness to sacrifice for education, that they think education is so important, so critical for young people's futures, that they are willing to pay anything for it, including doing things like drawing down retirement savings. So, one way that families pay for college is that the parents just take the money that they would have put into their retirement and they put it toward their kids' futures.

CHRIS HAYES: I want to get into the idea of a four-year college degree and what exactly that means today. And we'll talk about that right after this break.

A four year college education costs a shocking amount of money that is essentially out of reach without some real pyrotechnics for what a middle-class family is. So there's two parts to that I want to talk about. One is, when we talk about a four year college degree, we should put that in context. Right?

CAITLIN ZALOOM: Yes.

CHRIS HAYES: I don't know what percentage of Americans in a given cohort are graduates of four-year college degrees, but it's about half, I think, somewhere in the neighborhood of that. What is the meaning of a four-year college degree in America?

CAITLIN ZALOOM: Well, one thing it means today is that you are on the right side of the dividing line between people who have a shot, and the people who are going to be exposed to jobs that are volatile and low paid and inconsistent and which leave them with very few choices.

CHRIS HAYES: The labor market is bifurcated is what you're saying. There's a labor market for folks with college degrees and a labor market for folks without college degrees, and they're sort of distinct thing.

CAITLIN ZALOOM: They're totally distinct things, and I would argue that it is the major dividing line in American life today.

CHRIS HAYES: Why?

CAITLIN ZALOOM: Because, for people who do not have a college degree, the kinds of jobs that they will have access to do not give enough stability to really live the kind of life that is at the heart of a American promise.

CHRIS HAYES: Right. The promise of a stable American middle0class life, which, again, this is a little cliché, but it's true of, if you have a UAW job without a college degree and you can work in a car factory and you can make enough money that you can send your kids to college, go on vacation, maybe even have a small little cottage on a lake. And I've met many auto workers for whom this is true.

And when you go to Detroit, and you talk to people who are auto workers, it's this amazing world that they built up there, Walter Reuther, where it's all these people who don't have college degrees but are very, very hard workers and incredibly, in many cases, totally brilliant and incredibly astute technically and keep these factories running. They built this world in which they have the things that I, as a kid growing up in New York, were only had by doctors in Manhattan.

CAITLIN ZALOOM: Right.

CHRIS HAYES: That was what the UAW built, and that was in some ways the promise. Right?

CAITLIN ZALOOM: Right.

CHRIS HAYES: You could be an American and work hard and not have a college degree and have these things, by and large, and when we talk about the hollowing out of manufacturing, really what we're talking about is the number of people in this country without a college degree who are going to have access to that life.

CAITLIN ZALOOM: That's right. That's right. Yes.

CHRIS HAYES: Vacations, good healthcare, a nice house, good schools, and you can pay for your kid's college. That's not reachable for people that don't have college degrees, by and large.

CAITLIN ZALOOM: Without a college degree, you are excluded from that deal.

CHRIS HAYES: Which itself seems deeply problematic.

CAITLIN ZALOOM: Yeah.

CHRIS HAYES: Well here's my question to you, right? There's some people who argue that it isn't in so far as everyone should have a college. I guess this is a sort of interesting question, right? There's this debate, is should it be the case that everyone has a four-year college degree? Then there would be one labor market. And then there's people who argue that actually the four year college degree is just doing this signaling. It's just doing this class signaling anyway. And if everyone had a four year college degree, we'd find some other way to bifurcate the job market.

CAITLIN ZALOOM: We don't necessarily have to have a bifurcated job market to the extent that we do now. What you were describing certainly was not a bifurcated job market. There were all kinds of paths to a stable and prosperous life. Today, because college does put young adults on the right side of that dividing line, it has become ever more important for families to get their kids to college. It becomes an absolute utter 100% essential because they know that without that their kid is going to be really disadvantaged.

CHRIS HAYES: So when we talk about middle-class families, that's the meaning of that four-year college degree, right?

CAITLIN ZALOOM: Yeah. Well, that's one of the meanings.

CHRIS HAYES: What are the other meanings of that four-year college degree?

CAITLIN ZALOOM: Well I think that there are lots of meanings that are outside this very strict economic definition, because college is a place where young adults can really explore what they want to do. Whether it is being a documentary filmmaker or becoming a dentist, whatever it is that they think that they want to do.

CHRIS HAYES: This is a riff I've done before, but it's also Rumspringa for a certain kind of class. When you say experiment, it's also a place for people to do a lot of drugs and they do a lot of drinking.

CAITLIN ZALOOM: Sure. But good for them.

CHRIS HAYES: No, no. I'm not judging them.

CAITLIN ZALOOM: Got you. Yeah.

CHRIS HAYES: I'm just saying that part of the meaning of it is this ritual where we take... you know what I mean? And it's like, you go off and you find yourself and you have romantic relationships, and these very intense friendships, and you're away and you cook for your... There's all this stuff around what it means to particularly go away to college, which is very, to me, and you write about this in the book, is class infused.

CAITLIN ZALOOM: It is class infused. It's a place where those young adults can really decide where they're going to take themselves and each other and all of us. So I think that what's important about that moment of experimentation is not only that they have the freedom to do goofy things like get up at noon or go to class in their pajamas, or whatever it is that they do. But it's an opportunity for lots of different kinds of people, young adults, to come together in this space and learn to live together. It's part of an essential democratic experiment that is at the heart of education and has been part of American educational philosophy at least since John Dewey.

CHRIS HAYES: The idea of instantiating this community of young people that are together in one place, because that's not essentially like... I studied abroad in Italy. And in Italy, it's just not done that way. Everyone basically lives at home and commutes, everyone. The idea that you go away and you live in some dorm, and we should be very clear, and you again write about this in the book, millions and millions of commuter students, and millions and millions of community college students who you talk about in a different... there's a different framework there because of precisely the class items you're talking about.

CAITLIN ZALOOM: That's right.

CHRIS HAYES: So you're saying that that part of it, the going away and all these people being in a place, there's actually a democratic educational aspiration embedded in that, that you think is really important.

CAITLIN ZALOOM: Absolutely. And it's an important ideal, and it's part of the reason why-

CHRIS HAYES: That's interesting.

CAITLIN ZALOOM: ... it's important to think about these four year colleges and residential colleges is because they actually bring an ideal to life on those campuses.

CHRIS HAYES: An ideal of lots of bong hits. I'm being slightly cynical here, but it's only because I think that I have some weird... I went to Brown, so my parents spent every last penny they could have and then I got help from other relatives and my parents are exactly in the class that you describe, you have a great definition of what it means to be middle class, and my parents fall squarely in there. This was a big deal and an enormous stretch for me to go to Brown University, where I remember the first week of orientation just like all these kids not going to class, sleeping through class, and doing a lot of drugs, and me being like, "That class cost like $5,000. What the hell are you doing? Of course you're going to go to that class."

I think there's some part of me that's like, "Did I really need to go away for those four years? Was that some elite indulgence?" And it's interesting to hear you make this affirmative case for it. No, actually it's not in the lead indulgence. What you're saying is this actually should be a universal thing that a lot of people, the majority of people are doing as a kind of enterprise.

CAITLIN ZALOOM: Right. Well the idea is that a school, whether it's a college or a grammar school or a high school, should be a model democracy.

CHRIS HAYES: Right.

CAITLIN ZALOOM: And so, maybe that involves bong hits sometimes, but it also involves other kinds of experimentation. And one of the things that I think is actually interesting about how students act when they leave and the kind of indulgences they take up when they get to college is that they're doing things that they weren't supposed to do at home. They're actually breaking from their upbringing in a really strong way. And so, sometimes that has really goofy stuff.

CHRIS HAYES: Right. Sometimes goofy, sometimes destructive, and sometimes great.

CAITLIN ZALOOM: And sometimes great. But that idea that you're not going to repeat your parents life, you're going to do it in a different way, is important. And it's important not only as a class marker, which it of course is, but also as a kind of aspiration. We don't have to repeat the mistakes that our parents made. And that is an American political inheritance.

CHRIS HAYES: And this is something, when you talk about it in the book, when you talk to parents who you quote or talk about wanting their kids to live up to their potential, or flourish in these ways. So much of this has to do about autonomy. Really we're talking about essential freedom and liberty, that you're not going to just be subject to the external forces, you're going to be able to make your own life. And that's both a psychological process of development where you're going to go and learn to be an autonomous person and you're going to have more autonomy you ever had and make these decisions, but also an economic fact about the fact that you will have enough knowledge and earning potential that you're not going to have to just take whatever job is given to you.

CAITLIN ZALOOM: That's right. You're not going to have to take that job for the company that outsources other people's jobs.

CHRIS HAYES: But then that of course is the crazy paradoxical mind killing crap that these families are caught in that you document, is that they have to mortgage everything and bend over backwards and go into hock for liberty. Right?

CAITLIN ZALOOM: Exactly.

CHRIS HAYES: For freedom and autonomy, everything must be put on the auction block.

CAITLIN ZALOOM: Right. That is what we've done to young people and their families today.

CHRIS HAYES: And it takes a psychological toll.

CAITLIN ZALOOM: Oh, absolutely. Absolutely. A psychological toll on students who don't really know. They know in the abstract that they're taking on all this stuff and they're going to have to pay it back, but even during school, they know that their education is costing their family a lot of money and stress. Even if they oftentimes don't really know exactly what that means because parents don't actually often want to talk to their kids about the details of their own financial lives. They want their kids to go off and be independent and grow into that autonomy without having to carry the burden of the knowledge that their own education is really costing their parents dearly.

CHRIS HAYES: You do this really interesting thing in the book where you have a definition. One of the contentions and arguments of the book is that four year college and debt is so central, even constitutive of what it means to be in the middle class, that that's actually definitional.

CAITLIN ZALOOM: Yes.

CHRIS HAYES: What's your case for this?

CAITLIN ZALOOM: Yes. So, the middle class has a million definitions. It is one of the most difficult things to grapple with. So, for me, when I was trying to decide who I was going to talk to, and how I was going to approach this project, I decided to come up with a definition that really fit the kind of financial squeeze that people are in today. And so, I decided that middle class, when we look at it from the perspective of college and of the financial economy people have to live in, what that meant was being too rich, if we can say that, to not qualify for federal low-income grants, and not having cash to pay for college.

CHRIS HAYES: So, you have too much money to get the grants, not loans, grants that the federal government will give to families with a household income below a certain amount. Those grants, by the way, are fairly small.

CAITLIN ZALOOM: Yes. And insufficient.

CHRIS HAYES: And insufficient.

CAITLIN ZALOOM: They don't do enough. Most of the students who get those grants also have to go into debt.

CHRIS HAYES: Important point. Yes.

CAITLIN ZALOOM: Yes. So it isn't-

CHRIS HAYES: I just want to be clear. It's not like the folks who are in the bottom part of this income spectrum have it made in the shade.

CAITLIN ZALOOM: Oh, no, no, no.

CHRIS HAYES: In fact, it's the opposite.

CAITLIN ZALOOM: Totally the opposite.

CHRIS HAYES: Like they're screwed in a million ways. But as a definition of middle class, what you're saying is above that threshold but below the threshold of being able to pay out of pocket by writing a check because of what you have in your account for a four year degree.

CAITLIN ZALOOM: Exactly. Exactly.

CHRIS HAYES: And that, by the way, is exactly what my parents were. That's precisely where they were at. So we applied for financial aid and we got an aid package that had no grants but had loans. And even with that it was like, "This is tough." And then actually a family member who had access to more money and didn't have kids came in and was like, "We will help you so that you can do this."

CAITLIN ZALOOM: Right. Yes.

CHRIS HAYES: And that's a common-

CAITLIN ZALOOM: That's totally right. Among families who have some wealth somewhere in the network, they oftentimes draw on that. Particularly, if it happens to be grandparents who have some money, they will use that money to help their grandkids go to college. And in some ways that makes sense in terms of our history. The grandparents of students today were the beneficiaries of everything that made, essentially, white middle class families wealthier. So they could guarantee basically that their home prices had increased, that any investments that they had would have gone up, and they can transfer that money to their kids or grandkids. Of course, that is really not true for African American families and other minorities. So when I'm talking about this, that's a benefit of being white and multi-generationally middle class.

CHRIS HAYES: Right. This point you make in the book, there are huge racial consequences to the idea of the middle class needing to find some fix to get their kids to a four year college to stay in the middle class, because what that fix often draws upon is credit, house wealth, taking out a loan against a house, or familial or network wealth.

CAITLIN ZALOOM: That's right.

CHRIS HAYES: All of which are massively disproportionately distributed in ways in which white people have an advantage built up over generations often buttressed by government policy.

CAITLIN ZALOOM: Absolutely. Right. And so, African Americans and other people of color have the same aspirations for their kids, they want their kids to go to college. But they don't have jobs that pay as much, they have far less wealth, which also means far less wealth in their family and in their network, and their kids take on more loans and their kids face job market discrimination.

CHRIS HAYES: Right. So, you have a compounding sequence in which the current setup we have, and this is another theme of the book, is that this rat race into the middle-class system that has been erected by what we have now. Right? You got to get a four-year degree, but a four-year degree is super expensive so you've got to find some way to make it in. Right? Even if you're middle class, definitionally. Right? What that is doing is, that set up, rather than working as an engine of equality or leveling or mobility, is actually doing the opposite. It's reifying and strengthening divisions in the society along both class and race lines.

CAITLIN ZALOOM: Yeah. In part because the way that we fund college, this vast beast that I call this student finance complex, it only ever considers families in the moment. So, one family who I spent a lot of time with, the Gates’, who the parents went to a historically black college, Mississippi Valley State University, and their son barely made it into Howard. Not entirely, he's very, very smart. He fully made it into Howard on his own merits, but he barely made it in in terms of his finances because his parents are now a social worker and someone who works with the juvenile detention system. So, they have enough income so that they look like they can afford I think it was $25,000 a year for Howard. But they just made it into the middle class themselves.

CHRIS HAYES: Right. Right. Right. Right. So it's a snapshot in time. It's like, "Okay, so you just turned 18, and what's the income the previous year?"

CAITLIN ZALOOM: Yeah.

CHRIS HAYES: So, now we have this system, the perversity here, is it's sold as this part of the framework for American meritocracy. It's become the fulcrum for your earning potential, and yet it puts everybody in a state of terrified panic, some low-level terrified panic. It is a real thing. People are, even relatively affluent people, who are where I want to be like, "You're going to be fine. Just take it down a notch. Okay? Your kids are going to be fine. They're going to be fine."

But even relatively affluent people worried about college, both getting in and also paying for it at this...it casts this insane shadow both back through time, and then it casts the shadow forward because then you graduate and the loans are going to chase you around until you're a Supreme Court justice, in the case of Clarence Thomas.

CAITLIN ZALOOM: Right. One of the amazing things about the way that we all have to pay for college today is that that low-level terror starts very early on, after our kids are born. I mean, parents start thinking about this very, very soon when their kids are young, and then they also start to get a message from the federal government and their state governments and from the financial industry that they should be doing more right in that moment, they should be saving more.

CHRIS HAYES: It is so, excuse me, f----d. This thing, about like, "save for college." It's like, listen, right now we're saving for college. I'm very lucky, I have a cable news show, and we're saving for college. But before I did this, what do you want me to save for college? We're just basically paying the rent.

CAITLIN ZALOOM: Right.

CHRIS HAYES: And the fact that we've created all these tools for savers, oh, 529, oh great, you can get a tax write-off if you're the kind of person that has an extra $10,000 lying around your bank account to put it into save. Oh, and also we won't tax you on the capital gains on it over the life of that. Well, again, that's certainly a nice thing for those of us who can afford to put money into there. That's a wonderful benefit for the government to give. So at the policy level, it's the public universities get austerity and cutbacks and high tuitions, but the government federally is fine subsidizing rich people to put money into accounts that will grow for 18 years, capital gains free, and then draw it out so they could send their kids to Harvard.

CAITLIN ZALOOM: I know, it's a scandal.

CHRIS HAYES: It's so messed up.

CAITLIN ZALOOM: It is incredibly messed up. I mean, do you know how many, do we know what percentage of Americans have 529 plans open?

CHRIS HAYES: What percentage?

CAITLIN ZALOOM: Three percent. So, and you can guess what the incomes of those people look like.

CHRIS HAYES: What? I mean, burn them down. Take them away.

CAITLIN ZALOOM: Well, I mean, the amazing thing is, is that actually the Obama administration tried to do away with them, but it was basically a bipartisan effort-

CHRIS HAYES: Totally.

CAITLIN ZALOOM: ... of Nancy Pelosi and John Boehner to make sure that that did not happen.

CHRIS HAYES: So that's what you've got. You've got ... there's a bunch of different policy proposals now to deal with this problem. Free tuition, full student loan forgiveness, which is what Bernie Sanders has proposed. Elizabeth Warren has a version of that that's slightly less comprehensive, as I understand the details of it. There are people who say something like that is as distributionally perverse as say the 529s, that you're already helping out or giving a leg up to people that don't need it. Where there are others who say, "No, a universal benefit like this actually would crack open the perverse system we've created of this only a few people get through." What do you think?

CAITLIN ZALOOM: Yeah, I agree with that, the second position for sure. I mean, if we had higher education that was free or very, very low-cost, we can get away with squashing these stupid instruments like 529s.

CHRIS HAYES: Right.

CAITLIN ZALOOM: Which really are bad public policy.

CHRIS HAYES: Right. Then a more universalist approach you think is preferable to what we have?

CAITLIN ZALOOM: Yeah, absolutely. And not only because I think that it would make economic sense down the road, I think also that higher education is a right that we should have as Americans. Not only because it is critical for having a stable job and life in a way that high school education was 50 years ago. The bar has moved. That's what you need in order to have a stable life now. But also because that's what it means to be kind of reaching for this different kind of educated citizenry that we should want as Americans and which we also used to fund.

CHRIS HAYES: So there's two things that are embedded in that, right? Because it's like one of them is, it's a policy goal or a preferable thing to have the maximum number of people graduating from four year colleges and universities. You think that as a policy matter.

CAITLIN ZALOOM: Yeah, I think that that's a good idea.

CHRIS HAYES: Yeah, and that we should come up with policy that makes that an attainable goal as opposed to the insanity that we have now in which people are going into debt.

CAITLIN ZALOOM: That's right.

CHRIS HAYES: What about this idea, right? You see this a lot of times when people talk about student debt, you'll see articles that are like, "So-and-so is $160,000 in student debt and so-and-so has $120,000."

CAITLIN ZALOOM: Yeah.

CHRIS HAYES: And then it's like, they did an M.A. in writing and then they went to try to be a dentist or whatever and it's like, well, yeah, yes, you're going to get a lot of student debt if you go to two different grad programs. And there are all these people who always say, "Look, the median amount of student debt is way, way, way smaller than that." The media tends to focus on people that are from relatively affluent backgrounds that are highly educated that took out a lot of debt because those are the people that are socially proximate to the folks writing articles. But that's not what the actual student debt crisis in America looks like.

CAITLIN ZALOOM: There are a couple of, I think, important issues there. I mean, one is that the average undergraduate four year student debt is about $30,000. So, when we're talking about those students and those students alone, that's the number to keep in mind. But even focusing on that number alone, doesn't really take in what the cost of college is doing to families because it isn't only that students graduate with $30,000 in loans, it's also everything that the parents had to do in order to get them there, which is a totally different number, which has nothing to do with that $30,000.

Students pull a mock "ball and chain" representing the outstanding student debt at Washington University in St. Louis, Missouri on Oct. 9, 2016.Paul J. Richards / AFP-Getty Images file

CHRIS HAYES: Right. So if they, for instance, drew out of their retirement funds with a penalty, by the way, so they're lighting some money on fire, that doesn't show up in that 30,000 figure, but that's an enormously destabilizing action that was taken for the family's financial future.

CAITLIN ZALOOM: Absolutely. So I think that when we talk about the student loan crisis, we almost always focus on the young adults, and we should, I mean, that's important, but the picture is bigger than that. And so, one of the I think really important messages that I try to get out and [inaudible] is that we have to be thinking about this as a family achievement, a family goal and also what college does to families multi-generationally.

CHRIS HAYES: The economist argument is like, "Look four year college is a good thing, just the way that houses and the vast majority of Americans take out debt. They buy a house, they take out debt, they pay interest, they pay a loan, and then they have a house. And actually that's how everyone finances investments." If GE is going to build a new factory, they don't pay in cash, they take out a loan and they use the loan to build the factory and then the productive stuff they get from the factory helps pay back the loan. In this case, the productive stuff of the factory is your brain. So why does it why is it such a bad thing to use the wonders of modern structured finance to basically pull future income back in time to pay for tuition that you then pay later?

CAITLIN ZALOOM: Right. Well, first of all, I just wanted to pause on the contorted nature of that definition that you had to give, which was a perfect definition, but which by its nature is putting you into all of these incredibly weird timeframes.

CHRIS HAYES: Right.

CAITLIN ZALOOM: Like when you're 18, you should be projecting to when you are in fact 40 and earning a lot of money, and then looking back at your 18 year old self to say, "All right. I'm now going to sign these loans because when I'm 40 I'm going to look at this and it's going to be fine."

CHRIS HAYES: Right. Right.

CAITLIN ZALOOM: That timeframe is very strange. I just want to point that out because in some ways we take it for granted too often and really that isn't how the students and parents that I had talked with make decisions at all.

CHRIS HAYES: Yeah. Yes, we do. It's not how they're thinking of it.

CAITLIN ZALOOM: It's not how they're-

CHRIS HAYES: Well, this is key. One of the big findings in your book is they're not thinking about it the way GE thinks of a factory.

CAITLIN ZALOOM: No.

CHRIS HAYES: The economic analysis of this and the argument from economists who defend the system is, "It's not that different. You're making an investment."

CAITLIN ZALOOM: Right.

CHRIS HAYES: But what your fieldwork shows is that's not how people are thinking of it.

CAITLIN ZALOOM: No, that really is not how people are thinking of it at all. Families are getting the message that they should be thinking of it that way all the time as an investment like with what we were talking about with the 529 plans, you should be putting money away because you need to be saving for this investment. But that isn't what parents and students value, necessarily, in education or it's certainly is not the only thing that they value, this potential for future income. It's a whole lot of other things and in particular, it's the ability of these young people to kind of live their lives as they intend.

CHRIS HAYES: Right.

CAITLIN ZALOOM: Right? And that does not mean thinking about what they are going to be, then thinking about when they're 40 and in their role as a future accountant.

CHRIS HAYES: One of my takeaways from the book is that the sort of inequality, financialization of the American economy and the shrinking middle class like all come together at college debt.

CAITLIN ZALOOM: Yeah.

CHRIS HAYES: It's where all these things ... it's the engine of the reproduction, in some ways, of the thing that we have. This incredibly stratified society with a shrinking middle class in which we don't have a sort of broad middle class. How do we undo that?

CAITLIN ZALOOM: That is going to take a really big change. I mean, if we can focus on college, which I think is incredibly important, then making college less expensive does all kinds of things that are good.

CHRIS HAYES: Right. It's a place to start.

CAITLIN ZALOOM: And all the way to- yeah, to making tuition free because that would allow young people to move into their adult lives without their education, which is supposed to give them independence, being the very thing that shackles them to a debt they have to repay.

CHRIS HAYES: And you feel strongly that the distributional consequences of that would be good as opposed to just essentially helping the people who are already doing okay.

CAITLIN ZALOOM: Right. Well, I don't-

CHRIS HAYES: Because that's the big argument.

CAITLIN ZALOOM: Yes. I don't dispute the math that the upper middle class would benefit from having free tuition. That is true. Of course the upper middle class already benefits in other ways, like from having 529 plans and tax cuts and-

CHRIS HAYES: Right. Although three percent of households, I don't even know if that's the upper middle class. I mean, we were maybe talking about-

CAITLIN ZALOOM: I didn't say which three percent. It wasn't ... but anyway.

CHRIS HAYES: Right. Yeah.

CAITLIN ZALOOM: But it's a very small number.

CHRIS HAYES: Right.

CAITLIN ZALOOM: But I think that changing the balance so that education itself did not inflict a burden on young adults is really essential. And if that means that there are going to be some upper middle class families that benefit, that's okay. Education is more than simply paying. Also there are lots of goods that we don't require someone to use only after they present a tax return.

CHRIS HAYES: Yeah.

CAITLIN ZALOOM: And we don't have anyone stationed at the entry to public parks to say, "You can use this public park, but if you make more than $125,000, you got to give us five bucks."

CHRIS HAYES: Right.

CAITLIN ZALOOM: And which is essentially what we're doing with college too, there are things that are public goods, and I think that education is an essential part.

CHRIS HAYES: One of my takeaways from the book is that the psychological barrier is so enormous in that there's a huge strata of American life in which it's just not a thought that you can go to a four year college, that's just too expensive. And in some ways that is precisely what the private colleges have preyed on. We should note here that there's amazing community colleges throughout the country that do totally incredible work and that are in some ways some of the most important institutions in American life right now because they are providing in some ways, they're kind of filling the hole that has been left a little bit by what four year colleges used to be as they have kind of gotten more expensive. Community colleges really are incredible. But so much of class structure ends up being about what people are taught to expect and what they're taught to be entitled to.

CAITLIN ZALOOM: That's right.

CHRIS HAYES: And it does strike me that it would be really good for American life if just the mental expectation of what was achievable was changed, altered radically in a way that now it's not, right?

CAITLIN ZALOOM: That's absolutely true. And just to get back to community colleges for a second, community colleges aren't necessarily an end. So for, for instance, in the University of California system, if you go to a community college for two years and do well, you can transfer into the University of California.

CHRIS HAYES: Right. And in fact that's in many places precisely the goal. Right?

CAITLIN ZALOOM: Right.

CHRIS HAYES: Yeah.

CAITLIN ZALOOM: And so opening up that horizon is really, really important. And that's what the University of California is, that's what the Michigan schools were, it's what CUNY was here in New York City. It meant that those kids who didn't think that they could afford or they knew that they couldn't afford much, could dream about going to college.

CHRIS HAYES: I got to say, I did a commencement address at the Honors College of CUNY last summer, and it was one of the awesomest events that I've ever been at. It just is-

CAITLIN ZALOOM: CUNY's amazing.

CHRIS HAYES: It's amazing. And it's just it sort of was this vision of like what it should be like. The incredible diversity, the class backgrounds of the folks there who are getting this great education, this publicly accessible education, this low-cost relative to what has happened. And it just made me realize like, man, you could never start this now.

CAITLIN ZALOOM: No, right.

CHRIS HAYES: Not in a billion years could you run for mayor or governor and being like, "We're starting the CUNY system." Get out of here.

CAITLIN ZALOOM: I know. Which makes it all the more important to defend its mission and to kind of try to return it to its roots.

CHRIS HAYES: Right.

CAITLIN ZALOOM: And, I mean, the public university systems in this country are engines of mobility in ways that are just utterly and completely fantastic. I mean, you look at schools like the University of California- Irvine. They are bringing students from families that make very little money, and kind of launching them into the world with amazing educations that they have cultivated together in this place, into lives that they never would have imagined possible if they only took the perspective of where their parents lived and worked.

CHRIS HAYES: Caitlin Zaloom is a professor or associate professor of social and cultural analysis, NYU. Her book is called "Indebted: How Families Make College Work at Any Cost." It is out September 3rd, so if you're listening this, you can pre-order it right now, and I recommend you do. Thanks a lot, Caitlin.

CAITLIN ZALOOM: All right, thanks Chris.

CHRIS HAYES: Once again, my great thanks to Caitlin Zaloom. The book is "Indebted: How Families Make College Work at Any Cost," it's actually out September 3rd, it's available for pre-order now if you're listening to this, my voice, right now. Also, if you like this conversation, you should definitely listen to our conversation with a sociologist Tressie McMillan Cottom. She wrote an amazing book of essays called "Thick Descriptions," but she also wrote a book called "Lower Ed," and in some ways it's a real tandem with Caitlin's work. Caitlin's work sort of focuses sort of squarely at the kind of middle or upper middle of the income distribution, vis-a-vis, higher ed, and Tressie's work is an incredible work about what folks do who cannot, even through various machinations, afford a selective four-year university, what they do.

What that entire universe of education below that straddle looks like, and the ways in which it can be incredibly predatory towards people who are trying to do every possible thing right, working their tail off to do the thing they're told to do to achieve the American dream. So, definitely listen to that conversation. As always, we'd love to hear your feedback, the hashtag WITHpod or email us with WITHpod@gmail.com. Like I said before, we've got some exciting news coming up that we're going to be announcing soon, so stay tuned for that. We will be announcing it here on the podcast and on the television show, All In with Chris Hayes on MSNBC, 8:00 PM. I never mentioned the show on the podcast ever, basically, but I do host a television show, and if you liked this podcast, maybe you'll like the TV show that I host, which is also fun. It's different, but it's also fun.

Related:

“Indebted: How Families Make College Work at Any Cost” by Caitlin Zaloom

"Lower Ed: The Troubling Rise of For-Profit Colleges in the New Economy" by Tressie McMillan Cottom

"Twilight of the Elites" by Chris Hayes

Thick Descriptions with Tressie McMillan Cottom

"Why Is This Happening?" is presented by MSNBC and NBC News, produced by the "All In" team and features music by Eddie Cooper. You can see more of our work, including links to things we mentioned here by going to nbcnews.com/whyisthishappening.