We crush them with debt to go to college -- and today, rates are
actually set to double. Are we out of our minds?
This article has been
corrected since it first published.
Next
time you’re watching a college graduation, as you look out over the sea
of caps and gowns, make sure you notice the ball and chain most
graduates are wearing as they march onstage to receive their diplomas.
That’s student loan debt, which at over $1 trillion tops credit card
debt in the U.S. today. The average burden is $28,000, but add in their
credit cards and they’re graduating with an average of $35,000 in debt.
It’s no wonder that people who’ve paid off their student loan debt are
36 percent more likely to own homes than those who haven’t, according to
new research by the
One Wisconsin Now Institute and Progress Now.
What
kind of society sends its young people from higher education into
adulthood this way? I’m aware I’m only talking about those lucky enough
to go to college, when roughly one-third of high school graduates don’t –
but if this is the way we treat our relatively lucky kids, the rest of
them don’t have a prayer. For many, the school to prison pipeline
functions much more efficiently than the school to college one;
California is one of at least 10 states that now spends more on prison
than higher education. According to the Federal Reserve Bank, two-thirds
of college graduates leave with some debt, and 37 million Americans are
repaying a student loan right now.
Unbelievably, interest rates
on federally subsidized loans are doubling today, from 3.4 to 6.8
percent. As Congress bickers over alternatives, even Democrats are
backing “market-based” plans that aren’t as bad as GOP ideas, but aren’t
good either. I hope they can find a way to lower interest rates, but
the real scandal isn’t the rate hike. The real scandal is that we take
for granted that young people must go into debt – at whatever interest
rate – to pay for college.
Of course, the truly lucky kids – those
blessed wealthy members of the Lucky Sperm Club – sail through higher
education without debt. But today, even upper-middle-class kids are
having to take out loans, as the average annual cost of a four-year
public university soars above $22,000, while private schools are over
$50,000. Who the hell thinks this is a good idea?
* * *
I
used to find it endearing when President Obama talked about how he and
Michelle finally paid off their student loans after he was elected to
the Senate. But in a way, the president’s folksy anecdote helped
normalize what should be outrageous: that we expect young people to go
deep in debt, well into middle age, to get a good education. Of course,
the Obamas’ story should come with an asterisk, since much of their debt
was built up paying for Harvard Law School, and clearly, that paid off
for them. The assumption that students should borrow money to pay for an
undergraduate degree, and that the only debate is over how high their
interest rate should be, is seriously crazy.
As David Dayen explained in this great Salon piece,
we shouldn’t even call them student “loans,” because you can’t
refinance them, and you can’t get out from under them by declaring
bankruptcy. It’s more like indenture. There’s no statute of limitation
on collecting student loans, and lenders can garnish wages, tax refunds
and even Social Security checks. Back in 2007, now-Sen. Elizabeth Warren
asked: “Why should students who are trying to finance an education be
treated more harshly than someone … who racked up tens of thousands of
dollars gambling?” Nothing’s changed, although Warren is part of a
limited number of people in Congress who are trying.
In the survey
of 61,700 student loan holders recently completed by One Wisconsin Now
and Progress Now, students with bachelor’s degrees took an average of 19
years to pay off their loans, at an average cost of $117,000. Their
average monthly payment was $499. And this isn’t a brand-new problem: Of
the $1 trillion in student debt, 60 percent is owed by people over 30.
It wasn’t always this way. The postwar American economic boom had at its heart
an intentional, comprehensive program of making higher education much more accessible.
In 1946, 2 million Americans attended college or university,
representing only one in eight college-age students; by 1970, there were
8 million undergraduates, one in three in that age group. And the
balance of enrollment shifted to public institutions: In the ’40s, more
college students attended private colleges; by 1970 three-quarters were
enrolled in public ones. Graduate enrollment spiked, thanks to expanded
research funding, from 120,000 in 1946 to 900,000 in 1970.
States
competed to expand their public university systems – and many were free,
or close to it. The stellar University of California system was tuition
free (though there were fees) until Ronald Reagan became governor in
1967; so was the City University of New York system for a long time.
CUNY was from the start an “experiment,” in the words of co-founder
Horace Webster, in “whether the children of the people, the children of
the whole people, can be educated.” It was a contentious experiment,
with its admission and tuition policies shifting back and forth over
many years, but the egalitarianism at its heart, and through much of its
history, can’t be denied. And that was true of most public university
systems. Late in the game, when I graduated from the University of
Wisconsin in 1980, I was still paying less than $400 a semester. Now
it’s amost 15 times that, at $5,500 a semester; the annual cost to an
in-state student (including room, board, books and other fees) is
$24,000.
Aaron Bady and Mike Konczal ran down the California
history in a piece about “the slow death of public higher education”
last year. With the U.C. system’s bipartisan 1960 master plan:
The
doors of the University of California were thrown open, tuition-free,
for the top 12.5 percent of high school graduates. The top 33.3 percent
could find a place in one of the California State Universities, which
were also tuition-free. Everyone else, if they so chose, could go to one
of the many California Community Colleges, which were open not only to
high school graduates but also to qualifying non-traditional students.
Perhaps most important, community college graduates had the opportunity
to transfer to one of the UCs or CSUs to finish their bachelor’s degree,
if their grades were above a certain point. In theory and to a
significant extent in practice, anyone from anywhere in California
could, if they worked hard enough, get a bachelor’s degree from one of
the best universities in the country (and, therefore, in the world),
almost free of charge. The pronounced social and economic mobility of
the postwar period would have been unthinkable without institutions of
mass higher education, like this one, provided at public expense.
I
got angry about this all over again having dinner with a friend who’s a
little older than me. He finished at the very bottom of his high school
class – and wound up at the University of Wisconsin-Milwaukee, which as
late as the ’60s had “open enrollment,” and cost $80 a semester.
College unlocked something high school didn’t; he thrived and
transferred to Columbia University and eventually got a Ph.D. That isn’t
happening for anyone today, unless their wealthy parents can buy them
into a private university.
Meanwhile, public universities are spending on new buildings,
but they’re sharply hiking tuition as well as either cutting or just
maintaining enrollment. (University of Wisconsin in-state tuition has
doubled in just the last decade.)
The Public Policy Institute of California (PPIC) found
that the share of young people enrolled in U.C. or California State
University campuses dropped 20 percent in the five years between 2007
and 2012. “You can go into any community and talk to somebody whose son
or daughter either can’t get in or can’t finish [college] because they
can’t get this or that course,” David Wolf, co-founder of the Campaign
for College Opportunity, told California Watch. “Meanwhile, they go on
campus and there’s all that fresh cement. That’s embarrassing, and it’s
wrong.”
In the 1980s, at the flagship U.C.-Berkeley, more than
half of all applicants were accepted; this year it was closer to 20
percent, as 67,000 applicants vied for 14,000 acceptances to the
incoming freshman class (of 4,200 students, unchanged in the last 10
years). Meanwhile,
both public and private aid has shifted from “need-based aid,”
which tends to go to lower-income kids, to “merit-based aid,” which is
tied to income but less directly. Not surprisingly, at Ivy League
schools and the “public Ivies” (which includes the U.C. and U.W.
flagship schools), 80 percent of students admitted come from the top
income quartile of American families; only 2 percent come from the
bottom quartile.
Astonishingly, in 2008, older people born in
California were a third more likely to have college degrees than younger
native Californians, according to PPIC; elsewhere around the country,
the difference was only 1/16th (30.9 percent versus 29.0 percent) – but
still: young American adults are less likely than older Americans to
have attended college. This has to be the first generation for whom
that’s true. We’re putting the history of American progress in reverse.
* * *
With
student debt so pervasive and crushing, of course it matters that
Congress do something to keep interest rates from rising. The House GOP
is gloating that (in a bizarre role switch) they’ve passed a plan, and
the Senate hasn’t. The House GOP plan would send students out into a
maze of “market-based” adjustable rate loans. Why should someone at age
18 have to navigate a thicket of variable rate loans, where their
interest rate could double over time? But even the compromise Obama
plan, which would let students lock in a rate once they decided on a
loan, has no cap on interest rates.
A growing number of voices,
including the Fed, are pointing to the way this debt burden is a drag
not just on the borrowers but the wider economy. That One Wisconsin Now
survey found that student debt reduces average aggregate car purchasing
by $6.4 billion a year. Young people are leaving school with the kind of
debt that was once only incurred by the purchase of a first home; not
surprisingly, it’s depressing home buying too.
That practical
economic argument is important, but almost no one is making the larger
economic argument, that expanded access to higher education is good for
everyone, period. There are proposals to reform the student loan system
to make it more like a standard loan agreement and less like indenture.
The Obama administration has expanded opportunities to have debt reduced
for those in education or other public interest careers, which is
great. But when we talk about doing big things again, when we dream
about infrastructure, why are none of our major leaders advocating for
new campuses for our state universities and colleges?
A Washington Post piece on
the interest-rate impasse noted that Obama and Mitt Romney both called
for Congress to stop the rate hike last summer, and it happened. “But
student-loan policy has drawn less attention this year now that the
presidential election is over.” Indeed. We should stop mouthing
platitudes about how “children are our future.” From preschool to
post-graduate education, we are proving the opposite is true.
(Credit: Reuters/Brian Snyder)
Joan Walsh is Salon's editor at large and the author of "What's the Matter With White People: Finding Our Way in the Next America."
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