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Thursday, March 22, 2007

Graduating with the equivalent of a mortgage
Posted by Jill | 6:18 AM
I've often had discussions...oh, the heck with it....arguments with some of my Gen-X friends about their endless resentment of baby boomers. In their eyes, we started out fine and then sold out completely, greedily gobbling resources with malice aforethought and leaving nothing for them. The other day a commenter at Washington Monthly blamed rising home prices and the subprime mortgage mess on baby boomers. Boomers are blamed for everything that isn't blamed on Khalid Sheikh Mohammed.

That there are so damn many of us may mean that we have consumed "more than our share". But then, we didn't ask to be this elephant being passed through a snake. And perhaps Gen-Xers can comfort themselves with the notion that at some point we'll all be dead and they'll be rid of us.

I was working in the Wall Street area when the Gen-Xers came of age. From my perpsective, it was the next generation, those 8-12 years younger than I am, who were the young Wall Street upstarts. When I went from working as an editorial assistant at a book publisher to working at Standard & Poor's, the people I had lunch with, instead of being the same age to a year or so older, were now, on average, seven years younger.

If you want to feel sorry for anyone, it's the kids trying to get through college now at a time when college is the equivalent of a high school diploma -- what you need in order to compete in an ever-tightening job market. At one time, families could afford college with minimal financial aid. Today, boomer parents of college-age kids have a choice: save for your own retirement (and care for your aging parents in some cases), or send your kid to college. The result is that a college diploma now comes saddled with an anvil of debt that is tantamount to a multidecade mortgage.

Bob Herbert explains:

Young men and women are leaving college with debt loads that would break the back of a mule. Families in many cases are taking out second mortgages, loading up credit cards and raiding 401(k)s to supplement the students’ first wave of debt, the ubiquitous college loan.

At the same time, many thousands of well-qualified young men and women are being shut out of college, denied the benefits and satisfactions of higher education, because they can’t meet the ever-escalating costs.

You want a recipe for making the U.S. less competitive over the next few decades? This is it.

Traditionally, one of the sweetest periods in the lives of many college graduates has been the time immediately after leaving school, when they could relax and take the measure of the newly emerging adult world. It was a time, perhaps, to travel, or to sample intriguing employment opportunities, even if they didn’t pay particularly well. Debt was not usually the overriding concern of the young graduate.

That has changed. Along with their degree, most graduates leave college now with a loan obligation that will hover over them for years, maybe decades. Student loans have decisively overtaken grants as the primary form of financial aid for undergraduates.

Two-thirds of all graduates now leave college with some form of debt. The average amount is close to $20,000. Some owe many times that.

Tamara Draut, in her book, “Strapped: Why America’s 20- and 30-Somethings Can’t Get Ahead,” tells us:

“Back in the 1970s, before college became essential to securing a middle-class lifestyle, our government did a great job of helping students pay for school. Students from modest economic backgrounds received almost free tuition through Pell grants, and middle-class households could still afford to pay for their kids’ college.”

Since then, tuition at public and private universities has soared while government support for higher education, other than student loan programs, has diminished.

This is a wonderful example of extreme stupidity. America will pony up a trillion or two for a president who goes to war on a whim, but can’t find the money to adequately educate its young. History has shown that these kinds of destructive trade-offs are early clues to a society in decline.

[snip]

The kids who graduate with enormous debt burdens — $40,000, $80,000, $100,000 or more — face a range of uncomfortable and even debilitating consequences, the first of which is the persistent anxiety over how their loans are to be repaid.

I’ve spoken recently with a number of law students who have already decided to go into corporate practice because their first choice — public interest law — would not pay enough to cover their loans. Many students have turned their backs on teaching for the same reason.

At that stage of life, you shouldn’t have to choose between a job you would love and one that you would take simply because it would pay the bills. Talk about stepping on a dream.

There are also plenty of cases of students who have postponed marriage or buying a home or having children because of their college loan obligations.

And then there are those who never see a graduation day. There’s no way of telling what talents have been squandered, or what great benefits to society have been lost, because bright students who were unable to afford the costs have been forced to leave college, or never went to college at all.


Say what you want about not being able to choose a job you would love, there's something to be said for trying to make your way in a field you enjoy before selling out. At least you tried.

Republicans have been the ones gutting the programs that have made college easier for the middle class to afford, and now you have a generation that cannot do what Republicans think is the backbone of society: get married, set up a home, and start making babies. How do you pay for children and buy a home on an entry-level salary when you have the equivalent of a mortgage hanging over your head?

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