The Education Center recently released a report titled Drowning in Debt: The Emerging Student Loan Crisis. The study found what students already know all too well: college costs are skyrocketing. With tuition rates soaring and financial aid funding not keeping pace, more students are having to take out loans to pay for college.
In fact, about half of all students at four-year public universities are borrowing money for school, even with many colleges receiving government subsidies to control tuition hikes. This at a time when students’ “unmet needs” (which is the difference between the total cost of college and the sum of the expected family contribution) has increased well beyond the maximum amount of money available from subsidized federal loan programs.
To fill this gap, multi-billion dollar private lenders have stepped in, offering high interest rate loans to students. Having little choice, students are taking the bait. During the 2003-04 school year, just 5% of undergraduates borrowed private loans; that number has since tripled to 14%.
Report Finds What Students Already Know- Loan Debt is Out of Control, July 9, 2009
Historically, there were two ways that most Americans moved into the middle class financially (culture is a differant if related issue). You got a good union job, say at a steel plant or an automotive factory, and worked hard. In the mid-twentieth century, too, lots of the children of these union workers took the second path through college and into professional life.
The first stage in the desrtuction of class moblity (the first to be complete) was the destruction of the unionized industries, and the huge shift of Capital overseas. We’ve gone from about 1/3rd or more unionized to 1/10th. (Most of that is in the public sector.) I can tell you from experience that the children of Wal-Mart associates struggle with the idea of college.
We’ve created an entire culture of people who are struggling just above the povery level. Millions of people without healthcare, millions of people underemployed or unemployed, the cost of food and housing continuously rising, and even if you have a job, it’s a dead-end and your wages rarely if ever go up.
It’s the sameenviroment that my father came out of in Mississippi in the 1930s and 40s. Not many people in his family even thought of college. He did, mostly becuase of the G.I. Bill; he pushed his kids to go to college too, and although he wasn’t completey successful, he had the help of grants and reasonbly cheap tuition. No more.
Now the second path into a middle class status is on the way out. As someone once said to me, tuitioin and fees are bascially a form of unregulated regressive taxation. If the legilature won’t fund your programs, you can always raise money by forcing students to pay more for their education. Every four or five years, you have fresh marks.
If you believe in the market, this isn’t a problem; student loans can take up the slack. That means another tax on wages paid out over the course of 20 or 30 years. It’s an worse deal if wages and salaries are stagnant or non-existent. It’s a horrible legacy. New programs might lesson debt, but we need a debt forgiveness program too.