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Generation Debt: How Our Future Was Sold Out for Student Loans, Bad Jobs, No Benefits, and Tax Cuts for Rich Geezers--And How to Fight Back Paperback – December 26, 2006
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About the Author
Anya Kamenetz received her B.A. from Yale in 2002 and writes for New York magazine, Salon, The Nation, and The Village Voice, where she earned a Pulitzer Prize nomination for her contributions to the series "Generation Debt: The New Economics of Being Young." She has appeared on the NewsHour with Jim Lehrer as a spokesperson on the employment obstacles facing youth.
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College on Credit
Let our countrymen know that the people alone can protect us against these evils, and that the tax which will be paid for this purpose is not more than the thousandth part of what will be paid to kings, priests and nobles who will rise up among us if we leave the people in ignorance. Preach, my dear Sir, a crusade against ignorance; establish and improve the law for educating the common people.
—Thomas Jefferson, letter to George Wythe, 1786
No qualified student who wants to go to college should be barred by lack of money. That has long been a great American goal; I propose that we achieve it now.
—President Richard M. Nixon, special message to the congress on higher education, 1970
Kids of all backgrounds now aspire to a college diploma. Yet the parchment’s promise to our parents, of a steady middle-class living, goes increasingly unfulfilled for us, replaced by burdens of debt. “Stella,” thirty-one, is one of millions of young people in the United States knocked down by the one-two punch of student loans and credit card debt. Here is her story, in her own words.
I was tired of living at home with Mommy. When I filled out my Free Application for Federal Student Aid [FAFSA], I found out I didn’t qualify for any grants at all, since I was working and they thought I made too much money. I qualified for $5,000 in loans each semester for two semesters. The funny thing is, I only needed about $1,000 to cover the actual schooling. The rest of the money they included was for expenses. Since I had none living at home with Mom, I got it into my young, uneducated brain that I could use the money to move out of her house and become independent.
I don’t need to tell you what a mistake that was...or what easy prey I was for all the credit companies with their tables of free pizza coupons, day planners, gift cards for music stores, T-shirts, and so on. My .rst credit card was a Citibank Visa with a $900 limit, which I maxed by taking a trip to San Diego on my semester break. Duh...
I am now 31 years old and still in debt from those days. Do I still charge to my cards? Yes. But only when I need a car repair or something that my emergency cash reserve won’t cover. I consider bankruptcy every day.
What started out as $10,000 in student loans and about $2,000 in credit card debt has ballooned to a total of $33,000.
But after all this, whom do I blame?
Myself, mostly. My mother (a single mom) next...for not teaching me about money before I took that crazy leap all those years ago. You’d think I would have learned by osmosis, watching her struggle to raise my sister and me. But some people (such as myself) don’t learn just by watching others. Some of us need it spelled out in a lecture.
I cannot save for retirement because I am too busy paying as much over the minimums as I can to the $%#@ cards in hopes that one day I will finally be debt free.
Ironically, I now work for Discover Card. What I know about money and credit now feels like a knife in my back most days. The “Oh, God, I was just like you” feeling hits me so often when I talk to our 18-year-old card members who have exceeded their credit lines and have missed payments. I want to scream at them: “RUN! Next time you see our table on campus, RUN the other way!!” I actually went home and cried recently after I had to spend $711 on a car repair.
I dream of ocean vacations, a good steak dinner, clothing that isn’t faded by numerous washings. I dream of winning the lottery or opening the door to see Dave Sayer, the Publishers Clearing House guy, standing there with the first of many checks. I dream many things, but I can’t do most of them for lack of funds. I hope you reach the right target audience, Anya. If I could help just one person avoid the nightmare that I’m living, I’d consider this e-mail I just wrote you well worth it.
Stella’s debt nightmare speaks to a massive shift in the way our nation finances higher education and thus prepares young people for life. The deal offered to kids has changed in one generation, with little public debate. In 1981, 45 percent of all federal undergraduate student aid dollars came in loans, 52 percent in grants. By the end of the 1990s, the proportion was more than reversed; loans made up 58 percent of federal financial aid, and grants just 41 percent. Nearly two-thirds of the nation’s college students are now borrowing to pay for school. Although the government doesn’t issue an official figure, studies in 2004 and 2005 put the average student loan debt for graduates of four-year colleges between $17,600 and $23,485.
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I currently have a child in high school and I watch with amazement as districts push more and more students into the college merry-go-round with little thought as to whether or not they will be able to handle the work, or even finish a degree. At the same time I have watched as programs that would be very useful to the majority of today's kids are cut because the world has become so focused on testing and keeping little "Johnny" up to speed when he should be held back.
An example is the auto shop programs from when I was in high school. You could leave high school and get a job working as an auto mechanic directly from school. The programs now don't have the financing to buy the computer technology needed for these kids to actualy work as mechanics, even though the vast majority of graduating students will never go to college and will need some type of vo-tech training before they can become employable.
As is pointed out in this book, maybe we should re-examine the needs and desires of todays students to see what classes will actually beneft them. Adding classes which will allow students to work directly from school would decrease their debt loading and it would free up college space, as well as help employers get emplyees with a good solid training in a field that they want to work in.
I am fortunate enough to live in a district that is looking in that direction and is trying to figure out what classes the kids of today need to become employable in a global economy without having to become mired in debt while obtaining a degree thay may never use.
"If you look at where public resources are directed--toward the already wealthy, toward building prisons and expanding the military, away from education and jobs programs--it is easy to see a prejudice against young people as a class."
"It's hard to commit to a family, a community, a job, or a life path when you don't know if you'll be able to make a living, make a marriage last, or live free of debt."
". . . a [Social Security] tax cut for high earners today is really a massive tax increase for those whose careers are largely ahead of us."
Kamenetz does a good job describing the obstacles facing young people today. I'm a bit older than her interviewees (depending on which historian you pick, I was born in the last year of the Baby Boom or the first year of the Baby Bust). I certainly don't have much in common with the Vietnam generation. I managed to fall into some of the traps she discusses--I have a big chunk of student loan debt from graduate school, but eight years later I'm making about the same money now as I did before I got that extra degree. Facing twenty or so more years of payments, I agree with Kamenetz' message that young people should think twice before going into debt for their education.
Kamenetz does a poor job in diagnosing some of the reasons for young peoples' economic problems. She says nothing about the increase in the U.S. population. The real problem with the Boomers is not that they were especially selfish, but that there were too many of them. The preceding WWII generation came home from the war with the idea that they deserved a happy suburban family life in return for their wartime sacrifices. They assumed the party was going to last forever, and that they could invite as many new people as they wanted. The result is they had lots of kids, and also let in enormous numbers of new immigrants. Unfortunately, all those extra people have meant big declines in quality of life. The Generation X and Yers are now having to deal with reduced expectations, because there just isn't enough land or resources for them to live like their parents or grandparents.
Kamenetz misses the boat on some economic questions. She is puzzled by the recent jobless recovery, where there has been consistent economic growth but no new jobs created. The truth is that there was no recovery. The economic growth the government is so proud of giving us is nothing but the product of poor economic reporting. Economic growth is conventionally measured by GDP, which doesn't include any corrections for population growth, depletion of natural resources, pollution costs, or decline in the quality of life. More accurate economic measures such as the Index of Sustainable Economic Welfare (ISEW), show that there has been little or no real economic growth since the 1970s.
Kamenetz is too optimistic about the potential for economic growth in the future, as well. The next decade or so is likely to bring serious economic problems in the U.S., as we pass the global oil peak. For more on this, I would suggest reading Kunstler's "The Long Emergency."
Kamenetz is naive on the subject of health care. She proposes a national health care system, but that would not address the real problem. Having insurers pay for most health care costs has decoupled doctors from financial reality. The result is that a huge percentage of our health care dollars go to pay for heroic care for people who are terminally ill and in their last few months of life. Medicare has made this problem worse, by making taxpayers pay to insure people that private insurers would never be able to offer affordable policies to. I don't see any way to stop this runaway train other than to get rid of Medicare altogether. I know it sounds harsh, but the market is the best way to regulate who gets health care and who does not.
Kamenetz needs to pay attention to some of the root causes of high housing costs. One of the most important of these is the huge subsidies given to the automobile. We all love to park for free, but municipal parking requirements add enormously to housing prices. Everyone pays these added costs, including young people who can't afford a car. For more on this, I would suggest reading Shoup's "The High Cost of Free Parking."
She defends her generation from the comments about not being able to get out on their own after graduation and stressing the different experience of the previous generation.
Most of the book deals with the staggering cost of a college education and the lack of good jobs in their field. She says too much emphasis is placed on the prestige of the colleges in relation to their costs.
Interesting thought, recent graduates need to buy a lot more technology like laptop computers and cell phones that the previous generation didn't have.
In the concluding chapters she points out a little common sense is in order, get a degree you can actually use at a college you can afford, choose a career path.
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