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Mon November 25, 2013
Student loan scandal
Everybody pretty much hates baby boomers, the most numerous, obnoxious and self-indulgent generation on the planet. I should know: I am one. Well, if you are a college student, or recent graduate, here is one more reason to resent us: The cost of higher education.
In my time, it was possible to get a good summer job, live at home and almost make enough to cover the next year’s tuition and room and board. To make up the difference, scholarship money was far easier to come by.
I don’t remember people graduating saddled with debt. Law and medical school grads got out owing sizable student loans, but those degrees were viewed as a license to print money.
The world is different today. Once, state subsidies provided as much as 70 percent of the budgets at schools like Michigan State, say. Now, 70 percent comes from tuition and fees.
You can’t get a good-paying summer job on the line at Oldsmobile or Pontiac anymore. You can borrow money. So I now see students graduating with bachelor’s degrees owing $40,000 - $60,000 in student loans.
I’ve had them cry in anger and frustration when they realized their chances of finding a job that will enable to them to pay that back easily are about zero. One returned to bartending; another decided to borrow more to get a degree in occupational therapy. Then there are those who max out and have to drop out, with no degree but lots of debt.
Based on all the stories I had seen about borrowers in default, I assumed the student loan program had to be a money loser. Well, the Huffington Post reports the U.S. Department of Education made a huge profit on student loans last year -- $42.5 billion.
That’s billion, with a B. That’s more than the department’s entire budget. Nor is this an anomaly; they made almost $48 billion two years ago. If President Obama and Congress hadn’t lowered student loan interest rates this summer, that might have hit $50 billion.
Now, it is great to see some part of the government making a profit. But not on the backs of poor young adults just starting out. This debt has to be influencing their choices about marriage, children, how to live, the whole nine yards.
Ben Bernanke, the outgoing chairman of the Federal Reserve, is bothered by this. “To the extent that there’s a lot of student debt held by people who are not working, it’s obviously yet another drag on recovery,” he said recently. No kidding, Ben. Not to mention their lives.
By the way -- know why it was so easy for my generation to get scholarship money? Because of a little metal ball called Sputnik. In 1957, the Soviet Union launched a satellite into space, and Washington freaked out. They realized America needed more educated people. But we won the space race and our competition disappeared, and my generation decided we didn’t want to pay higher taxes.
The question is not only is that fair -- it isn’t -- but whether it is sound long-term policy to burden the futures of those kids who are trying to have one. My guess is that you know the answer.
Jack Lessenberry is Michigan Radio’s political analyst. Views expressed in the essays by Lessenberry are his own and do not necessarily reflect those of Michigan Radio, its management or the station licensee, The University of Michigan.