Daddy, can you spare a dime?
Unless you have been living under a rock for the last few years, you're probably aware that student loan debt is at an all-time high - somewhere around 865 billion dollars, last time I checked. You know what else is at an all-time high? College graduates moving back in with their parents.
This is no coincidence.
A quick poll of my fellow graduates shows that many of us are faced with only two choices: move back in with the parents until that debt has shrunk to a manageable size (or death, whichever comes first), or living in squalor while working night shifts at Denny's until that debt has shrunk to a manageable size - or death, whichever comes first. Neither are particularly appealing choices, but which do you suppose you would choose?
If you've read this column before you may have ascertained that I myself still live with my parents, and believe me, I'm not complaining. I'm grateful for the extra year or two to save money and work overtime at those coveted, yet unpaid, internships that are so important to a resume in today's bleak job market. But the other day as I sat on my childhood bed, patting myself on the back for being so fiscally responsible, I came across an article maligning the state of the economy - and my part in its collapse.
Apparently by moving back home, I've been "depriving" the economy. Not only that, but I'm depriving a potential landlord, local businesses, and probably Ikea and Williams Sonoma. Shame on me, and shame on all of my friends! Instead of buying new crockery and a bedroom set, we're struggling to find some footing in the economic climate our elders set us up with.
Yeah, I take full responsibility for that.
Tens of millions of American students are graduating with "mortgages" on their diplomas. The average debt burden is a bit above $25,000. That's the average. Too many students are entering the job-less market with six-figure obligations to Sallie Mae and the other big players in the student loan game.
I say "game" because, far too often, universities - and in particular the for-profit players who have entered the industry in the last couple of decades - are luring "customers" into programs they will never complete and for which no careers will be waiting at the other end of the road. The loan default rate for the for-profit schools is dismal, indeed, while many of them would go bankrupt overnight, were it not for the federal-loan dollars they garner. (As someone recently said, they aren't "for-profit," they're "for subsidy.")
This situation would be sufficiently shameful, if it only impacted our college kids and recent grads. But I predict more dire effects from the student-loan bubble, which is predicted to top the $1 trillion mark by year's end. We endured the savings-and-loan debacle in the early 1990s. Then came the dot-com meltdown in the early 2000s. Next, and most severe, was the sub-prime mortgage/derivatives disaster from which our economy is still staggering. Wall Street traders (or should I say "traitors"?) have pillaged pirates' fortunes in successive financial scams for which we hapless middle-class taxpayers have shouldered - and which the younger generation will shoulder for decades to come - the expense.
Meanwhile, "the millions in salaries and bonuses going to executives at for-profit college companies came under scrutiny Monday as the ranking Democrat on a House of Representatives oversight committee issued a demand to the chief executives of 13 higher-education companies to provide documents on pay details so the committee can 'investigate how the structure of your executive-compensation packages affects the performance of students educated with taxpayer funds.'" (Chronicle of Higher Education) Yes, the CEOs of the for-profit colleges across the country are gainfully employed, even if many of their students and alums are not.
My personal opinion: every high school kid with the brains to complete college should be able to attend… go just as far as her wits and ambitions will carry her (doctor, lawyer, Indian chief)… and graduate debt-free.
That's not just the right thing to do for our younger generation. It's the smart thing for Uncle Sam to do, if he wants good citizens and productive contributors for 21st century America.