A grim narrative: A generation filled with economic crises with government there to solve them.
I recently wrote a piece via Turning Point USA on student loans and debt. As Millennials, we do care about these two topics. It’s important for us to know we are responsible for that bill. We will have to work and pay down that bill. Move that interest rate below 1% they say. Subsidize it. That will solve everything!
*Cue the #dontraisemyrates hash tag on twitter.
Of course, not all have felt that way. Some are finally addressing rising costs as the main concern, not rates.
The Senate might pass a bill that pegs loans to the yield on a 10-year treasury note, leaning more towards a market focus. And wouldn’t you know it, the government is reaping a $184 billion “profit” from the deal through 2023. I wonder where that “money” will go. However, our market rates are manipulated by the Federal Reserve. Thus, some would argue, including myself, those rates are really not true market rates. Do we know what money is again, just a piece of paper thrown gleefully around to anyone willing to take it?
Shouldn’t we instead focus on the root cause of our problems and question further subsidization of our costs?
What happened to the marketplace, full of consumers (students, parents, private lenders, and employers) determining what education is actually worth. What’s wrong with that? Maybe our current education is overpriced compared to the benefits we receive. As consumers, we should hold Universities accountable. And as we have seen, it’s almost impractical for government to enact a cost benefit analysis in most situations, for “only in government is any benefit, no matter how small, considered to be worth any cost, however large.”
If you examine the current system, it appears government doesn’t lend money to students, it lends money to Universities. Universities seem to have no incentive to cut cost, but they sure love to build new buildings and add new amenities to attract all those federal dollars. Even if helping lower income citizens obtain education is our focus, then means testing, or higher rates and higher aid, has done the opposite effect. There continues to be higher costs for everyone.
Student debt at graduation has risen 200% since 1993, but our median income has decreased 1% (not that income need always rise). And in 2011, two-thirds of student debt comprised 60% of their annual income on average.
I suppose I’ll look back on all the articles and posts to see exactly what students were pining for and what politicians actually gave us when the next “bubble” pops. Can you imagine what 16.7 trillion in student debt will look like by 2030? Unimaginable considering that’s more than our current national Gross Domestic Product (GDP).
Student debt has and will continue to decrease our opportunities. We don’t have the flexibility to start businesses or families. We pay back debt instead of saving for the future. We are less mobile. And we are paying for it now, and will increasingly pay for it in the years ahead (15% of the workforce with outstanding student loans are currently late on making a payment). Surely that amounts to more stress, more frustrations, and places tremendous burdens on our generation’s productivity. Perhaps, too heavy to bear.
Instead, I want our generation to have every opportunity available. We need positive influences, mentors, and leadership. We need private and public leaders who can teach us responsibility and accountability, at least for those of us willing to put in the effort to learn. Maybe we “can’t always get what we want.” But we can and should try.
So, how do we “do” that exactly? It’s too much to ask for a short blog post. Although, one of my colleagues had some great ideas here (federal tax credits on interest, major risk evaluations, etc.). YAL and other organizations have started the conversation, let’s keep it going.
But let’s not make the mistake and buy into the “saving the economy” dialogue from our leaders when it blows up, provoking a Student Fairness Bill that attempts to solve a problem government largely is responsible for. Don’t let us prove that we are all too stubborn to spot crises, bound by inaction, before they inevitably “necessitate” government action. We know better.
What do you see happening with student debt and what can we do about it?
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