The average student now graduates with three and a half times more
debt than ten years ago, but still Washington wants to cut even more student
Congratulations, parents of the Class of 2009! As you read this, your child
is settling into the routines of college life: ill-timed early morning lectures,
inevitable all-night cram sessions, and the search for parties on a now fairly
While the pleasures of college life remain the same, the economic security
that a degree used to guarantee has disappeared. This fall, the Class of 2009
joins the ranks of an emerging debtor class composed of educated young adults.
The average student borrower now graduates with $27,600 of debt, almost
three and a half times what it was a decade ago. 84 percent of black students
and 66 percent of Latino students graduate with debt. And 39 percent of all
student borrowers graduate with unmanageable levels of debt, according to the
Department of Education.
After graduation, young people confront unaffordable rents in markets like
San Francisco, Atlanta, Boston, Chicago or New York, where the majority of young
adults pay between 30 and 50 percent of their income to rent.
And what income? Between 2000 and 2003, wages for college educated men and
women between 23 and 29 years of age were down 3.5 percent and 1.2 percent respectively.
In this flat, stagnant job market, most new opportunities are in jobs like burger
flipping and jeans folding. Manpower, a temp agency, is the biggest private
employer in the country. Many jobs in more desirable and competitive industries
have salaries starting in the low $20,000s that offer little by way of benefits
Add to that young people's average credit card debt of over $4,000. Set aside
your stereotypes of irresponsible youth: Over 70 percent of undergraduates use
credit cards to buy school supplies, food and textbooks. 24 percent use their
credit cards for tuition. Credit card companies are becoming the high-interest
student loan industry of last resort. When it's all totaled up, young people
spend 25 percent of every dollar earned on paying off debts and loans.
Federal policy isn't keeping pace with reality. Soaring education costs and
inflation have not been met with aid increases. Caps on federal student loans
have forced students to seek private loans, which were up from $1.1 billion
in 1995-96 to $10.6 billion in 2003-04.These loans have much higher, often predatory,
Today, the average Pell Grant covers only 40 percent of college tuition, compared
to 77 percent 25 years ago. And under President Bush, the Department of Education
revised Pell Grant eligibility guidelines, effectively excluding almost 100,000
young people from the program and reducing grant money for another 1.2 million.
This month, the U.S. Congress poured salt in the wounds: The Senate recommended
slashing $14 billion in student aid programs as part of the budget reconciliation
process. The House of Representatives proposed nearly $9 billion in similar
cuts, forcing the average student borrower to pay an additional $5,800 in already
unaffordable debt. Despite some unusual Republican dissent in the ranks, late
last night, the budget bill passed by a razor thin margin. The final bill included
$50 billion in cuts including $14.3 billion in cuts to federal higher education
funding — the largest cuts to federal student loans in American history.
(Though the reconciliation bill received much negative response from Democrats
and even a few Republicans, very few people spoke out against the education
cuts, focusing instead on issues like Medicare and food stamps.) Eighteen-year-olds
now must borrow tens of thousands of dollars to invest in themselves —
because their country will not invest in them.
Moreover, federal tax policy isn't exactly working in the favor of young people
making low wages. We can't ask our buddies in the White House to just write
off our student loan payments. We pay taxes on each and every dollar that we
make in wages, tips, and salaries. We don't have stock portfolios, houses, and
other assets to re-structure our tax liability. We bear the full brunt of life
without loopholes — but forget fairness: struggling to limit the size
of a hurricane-wrecked federal budget, Congress has made it clear that they
are prepared to treat us a good deal worse than they already have — before
they dare close the loopholes, shut down the giveaways, and trim the no-bid
contracts for the well-connected and well-off.
Parents: remember that youthful knot in your stomach as you looked at the world
after graduation and wondered about your place in it? We do that too. Only we
look at the world as twenty-somethings sandbagged with the kind of debt that,
until recently, would have taken decades to accrue. Recent surveys by the Cambridge
Consumer Index and the Education Department confirm that student borrowers are
deferring major life decisions like the purchase of a first home or marriage.
Energetic young college grads could soon invest in start-ups, emerging markets
and new technologies if we entered adulthood burdened only by our high expectations
and ideals. Educational debt hobbles the very group of risk-takers and innovators
that has historically rejuvenated the American economy when, like now, it starts
to flag. Love us, hate us, tolerate us — young people are your future.
Fail to invest in us at your own peril. Thirty years from now we won't be able
to take care of our parents if we're still living in a converted closet in a
So here's our counter-offer: We need common sense policies that relieve the
debt burden on students and recent graduates. Parents of students and recent
graduates: tell them not to cut one dime of student aid. Tell them you'll remember
how they voted and promise to hold them accountable. We'll do the heavy lifting,
but we need you to let Washington to know that you're watching and that you
care about the issue.
Work with us now to affect change, and we promise we'll never have to trade
you into the traveling circus for a week's worth of Ramen noodles or sell you
on eBay to cover the rent.
Elana Berkowitz is the editor of CampusProgress.org
— a youth-oriented online magazine run by the Center for American
Progress. John Burton is an economic policy research associate at the Center
for American Progress. Both graduated from college in 2001.
The Truth Will Set You Free
6 EASY STEPS to Burying America's Students In Debt
STEP 1: CONTROL the money supply;
STEP 2: charge interest on EVERY DOLLAR circulating;
Make everyone (including the government!) PAY for the benefit of using money
that the government issues ONLY by authority FROM THEM!
STEP 3: promise that if they LEARN more; they’ll EARN
more. (note: no guarantees)
STEP 4: make education SO EXPENSIVE that in order to LEARN
students must BURY themselves in DEBT (Repeat STEP 2)
STEP 5: Once buried, they must FIRST live their lives for
STEP 6: THEN, and only then, can they live their lives for
themselves and their families.
TOO BAD (SUCKERS!), we each have only one life to live!
PLEASE, think about it, long and hard.
He who controls the money supply, calls the shots.
He who calls the shots; decides who lives and who dies.