Make Room on the Student Loan Bailout Bandwagon for President Obama
As a liberal, it took me a while to get over the centrist drivel of Wednesday’s State of the Union. For energy, we’re back to nuclear power, offshore drilling, and clean coal. While we’re at it we might as well get poor people to ride stationary bikes that power turbines. The vastly outnumbered Republican minority is sure to like that too. Health care is back to the “if you have a better idea, let me know,” stage. I’ve got a better idea: it’s called single freaking payer you alleged Democrat who was elected with a MANDATE to fix this. And there will be a spending freeze, which is awesome. Accepting the Republicans flawed macroeconomic logic is a superb way to impress no one.
Okay, obviously I’m still not over the State of the Union.
There were a few things I that I did like. It’s about time don’t ask, don’t tell, didn’t exist. I’m a huge fan of Obama’s smackdown of the Supreme Court over their potentially election shattering Citizens United decision. Too bad he can’t actually do anything about it.
There was one legislative proposal that I unequivocally support. Obama said: “In the United States of America, no one should go broke because they chose to go to college.” Ain’t that the truth?
At some point, our laudable goals of making college “affordable to every American,” morphed into making college “able to be debt financed by anybody willing to start their careers in an enormous financial hole.” During the State of the Union, Obama said that education was the best “anti-poverty” defense. But we also know that massive educational debt is also the easiest way to prevent young people from reaping the financial rewards of their hard work and the sacrifices of their parents.
Now we have the President of the United States at the “these debts are killing me” party. I’m happy he showed up. But will his plan actually help recent graduates and their families? Go make yourself a drink and then we’ll talk.
Obama proposes capping debt repayments at no more than 10% for struggling graduates. He wants to offer total loan forgiveness to students 20 years out of school, and that number comes down to 10 years out of school if you spend that time doing public interest work. And Obama proposes giving middle class families who are paying for their children to go to school a $10,000 tax credit.
I graduated from college ten years ago this summer. And let me tell you, I am stoked that in just ten more years, my college will have to stop calling me, demanding money that I don’t have. I can’t wait. I can easily keep switching phone numbers when the creditors find me for another ten years. By the time I’m 42, I’ll be free of my college debt, then add 7 years for all that crap to get off of my credit score, and you know what, there’s an excellent chance I’ll be able to own property by the time I’m 50. Woohoo! (I’m pretending that my post-graduate debt doesn’t exist. Indulge me.)
And that time would have been cut in half if I had spent the past ten years trying to give back to my community instead of desperately trying to hang onto my 2-1-2 Manhattan area code and attendant roach infested hovel. That’s an important lesson to young kids: work for your community, not for your landlord — the “lord” part of the word isn’t an etymological accident.
What these plans do is to give recent graduates hope. All throughout the campaign of 2008, Republicans and Clintons disparaged the real-world value of hope, but these programs are a manifestation of that intangible goal. It’s the government’s way of telling young people that if they try to better themselves and work hard, financial mistakes that they might have made in their teens and twenties will be forgiven. They will not have to wait until their life insurance vests to pay off a decision they made when they were 18.
That’s the upside.
The downside is that Obama’s proposals don’t actually attack the heart of the debt repayment problem. The reason why college tuition has skyrocketed (and continues to go up, notwithstanding the whole Global Economic Meltdown thing that has retarded cost growth in nearly every other aspect of the American experience), is that University presidents still have no incentives to keep costs down. I mean, Obama even said something like “and colleges have to do their part too.” What is their part? Obama didn’t say. What, do we expect colleges and universities to keep costs down voluntarily?
Once everybody who wanted to go to college could do so with an amalgam of public and private loans (good), universities lost any incentive to keep their costs down so students and families could afford to attend (really, really bad). If you come from a poor family and you get into great schools, is there any amount of money those schools could charge to make you go to someplace crappy instead? Not really, not if you can take out all the money on loan. Education is the silver bullet, right? Well guess what, university presidents know that too. There probably is some upper limit at which point a student will say, “you know what, screw Yale, I’m going to UCONN.” But you know what Yale does then? It just admits anyone of other other thousands of people on its waiting list that would love to go and are desperate to get in.
University presidents aren’t solely at fault, of course. I don’t think that I was the only 18-year-old that could have benefited from a conversation with a financial adviser — or just a basic grasp of this “budget” thing I hear so much about — before I made expensive life decisions. I’m not saying I would have gone to different schools, but I might have had a better plan for paying them back.
And that’s where you really can blame the students themselves for their own complicity in their financial ruin. How many smart middle-class kids go to expensive universities and then major in something like Philosophy, or Romance Languages, or Intellectual Masturbatory Practices? I mean, there are a lot of students out there who will graduate with no marketable skills. Many of them will end up in law school (click here to see how that works out). And many of them will end up trying to become … university professors. Professors who of course need to be paid, as they still have educational debts. Which will increase the costs for the universities trying to hang onto their best faculty. Which will lead to a rise in tuition. And now the circle-jerk is complete.
Now, the President is dealing with two wars, a jobless recovery, a health care reform plan being destroyed by spineless Democrats, and (soon) homophobes who don’t think gays can shoot straight. He’s got a lot on his plate, and I’m not expecting him to reform the system of American higher education today. Wednesday was a good first step.
But at some point, we’re going to have to take a much more rigorous look at how higher education is financed in this country. Education can keep you out of poverty, but it can also kill your chance at financial security.