US Student Debt and TEFL Recruitment

Indonesian long-termers will know that there have never been as many American teachers in Indonesia as Brits or Australians. In this article I’d like to suggest a likely cause for the phenomenon: student debts amongst the “Millennial” generation in the United States. Put simply, American students born in the 1980s and 1990s have started life saddled with debt, so they simply can’t afford to go to Indonesia, where salaries are low by TEFL standards. They are simply unable to service their debts on the wages the Indonesian TEFL industry wants to pay, which can be less than Rp 10 million a month ($900 on current exchange rates.) This means that many young American graduates have to pass on South-East Asia generally, and Indonesia in particular, and go where salaries are higher- typically South Korea, Taiwan, Japan or China.

Even Forbes magazine, a Right-wing publication more known for its fawning over billionaires than its interest in growing social inequality, has expressed concern over ballooning student debts and the negative consequences this is having on students and their futures. In a report from 2013 they wrote:

Two-thirds, that’s right, two-thirds of students graduating from American colleges and universities are graduating with some level of debt.  How much?  According to The Institute for College Access and Success (TICAS) Project on Student Debt, the average borrower will graduate $26,600 in the red.  While we’ve all heard the screaming headlines of graduates with crippling debt of $100,000 or more, this is the case for only about 1% of graduates.  That said, one in 10 graduates accumulate more than $40,000. In recent months student loan debt has reached a new milestone, crossing the $1.2 trillion mark — $1 trillion of that in federal student loan debt.

$1.2 trillion dollars. That is more than the total GDP of several G20 nations, including Indonesia and South Africa. Student debt in the United States is now rising by over $3,000 a second and many people see it as being on an unsustainable trajectory. In 2012 CNBC told the story of Nick and Emily, a couple of law school graduates who had a combined debt of over $250,000. Monthly repayments for the couple have been set at around $2400, meaning they effectively have a mortgage-sized loan before they even try to buy a house. Unless they have highly successful careers as lawyers, they will struggle to ever get ahead in life. It is now common to hear people referring to these student loans as a millstone around the neck of young Americans. Perhaps it is not surprising then that 7 million people have now had their credit rating trashed as a result of student debt in the United States (that’s 2% of the entire population of the country!) It is now thought that student debt is one of the major reasons why Millennials are starting families and getting house mortgages so late. It does not appear to be hyperbole to call the situation another “crisis” for the middle class- though financial institutions are making a killing out of it.

Is it any surprise when graduates have an average of $26,000 in debt that they don’t want to work for a low-paying language academy in Indonesia? The paycheck from TBI Bogor or Kelapa Gading (no more than $1000 a month) just isn’t enough to tempt students who have to pay $700 a month in repayments on student loans. There is simply nothing left to live on. If they get $2000 a month in South Korea or China (which is now quite easy to get), then they can repay their loan and still have enough money to live on. This is why you find lots of young Americans working in Seoul or Taipei, but they are rare as hen’s teeth in Indonesia.

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