You, Class of 2015, are the hope of the future. We, your teachers and elders, bequeath to you the Islamic State, the boat people who float the world’s oceans and global warming. But you haven’t seen the real kicker yet.
You are about to proudly assume your station as the world’s largest debtor class. With more than a trillion dollars of loans outstanding, no one else even
comes close.
You’ve got a big beef coming. No dirtier trick has ever been played on anyone.
Education, you see, should come for free.
I paid nothing for my public school education, of course. I paid nothing, either, at the public college I attended after. Nor, thanks to postgraduate fellowships, did I ever pay a penny in tuition at the private universities I went to after that. My stipends paid my other expenses. I never accrued a penny of debt for my education, and it never occurred to me that I would or should. And there was nothing particularly unusual about my case. Back then, education was viewed as society’s social investment in its own future. The idea that students would graduate tens or even hundreds of thousands of dollars in debt, a burden they would spend a good part of their working lives paying off, would have been incomprehensible.
Of course, fewer students went to school then, and minorities often found their access to education blocked. It wasn’t a golden age, just a simpler one. No one had figured out how to turn education into a racket.
As the demand for access to college grew — a function of the new “knowledge” economy that required higher and higher levels of skill and training, or at least was supposed to — governments began to subsidize education through such devices as Pell grants. They never kept pace with need, but at least they represented an acknowledgment that acquiring an education was not something that should cost you a good part of
your future.
Those days aren’t with us anymore. Starting in the 1970s, the grant model was slowly, and then more swiftly, replaced by the loan one. The federal government became the largest source of such loans — 85 percent of the total market, with a few big banks like J. P. Morgan and Wells Fargo covering most of the rest. Meanwhile, the costs of education steadily outpaced general inflation, decade after decade. There were various reasons for this, including academic bureaucratization, plant expansion and a growing interface with the military-industrial complex. The one thing that hasn’t added to your tuition bill is faculty salaries, the sole area in which academic administrators have found plentiful cost savings.
The big loan provider was Sallie Mae, which is technically the SLM Corporation . It went private in 2004 but its funder is still federal taxation. Basically, then, it is a protected middleman — sort of like the so-called health care industry, which mulcts medicare. But the Department of Education is still big-time in this business. It sets up loans at, typically, 6.8 percent these days, on money that it can access at a preferred current rate of 2.52 percent. The difference, so far, is over $100
billion in profit.
That’s right, class. The government isn’t subsidizing your education. It isn’t providing it at something like cost. It is operating the education market as a business franchise, and it’s making a killing off you. How’s that for investing in the next generation?
Shall I repeat this? Your government is
scamming you.
By the early 2000s, student defaults had already reached epidemic proportions. Accordingly, the government tightened bankruptcy regulations — for you, of course, not General Motors. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, which meant, like most legislation, precisely the opposite of its title, made it impossible for student borrowers to file for Chapter 7 or Chapter 13 bankruptcies except under the most exigent circumstances. This was followed by the College Cost Reduction and Access Act of 2007, which, you guessed it, raised penalties further for you. Student loans are now subject to wage garnishments at 15 percent for up to 25 years.
And you thought the only thing the Bush administration was up to was fighting crazy wars that turned half the world against us.
The good news is that, unlike the housing bubble, student loans are essentially in the hands of a single giant lender, which, among other things, prints money. The government could forgive all student indebtedness if it chose, or rather if one branch of it, the Congress, ordered another branch, the Executive, to do so. Granted, a trillion dollars is a lot of money. But, of course, it is only due in protracted installments, and there are plenty of cost-savings — say, on current and future “wars of choice.” Or, maybe the IRS could start collecting taxes on giant corporations it actually subsidizes instead. I don’t know — just a few wild ideas like that.
I know a lot of people don’t want the government practicing socialism. That’s not what it’s doing, though. It’s practicing capitalism on a captive market of the young — namely, you.
Debt slavery is only the beginning of the story, though. To pay off debt, you need income; to generate income, you need a job. And that is what the American economy — again with the blessings of your government, which alone among the industrialized nations of the world lacks a jobs policy, but exports work instead — is increasingly failing to provide. The story of the next generation, in other words your own, will be the replacement of specialized white-collar labor by computers and the machines they will operate. Managerial functions, too, will disappear, so bureaucrats will need to watch their hides. This process is already well underway. But, with a looming jobs deficit on the horizon — a permanent deficit, not one caused by blips in the economy like depressions — how are you supposed to pay off that huge student loan of yours?
If this doesn’t seem to compute, it’s because it doesn’t in fact, except for that small elite (formerly called the ruling class) in a position, thus far, to game the system on its own behalf. Let’s throw in a few randomizing factors like climate catastrophe and resource wars, and the future really begins to look interesting.
I guess the good news is that some countries don’t regard the next generation as something to be exploited from the cradle and actually provide public education for free through the university level. That doesn’t solve the climate problem, of course, or the coming jobs crisis. But it is hopeful, at least, that some societies don’t regard their young as a source of protein yet.
As Susanne Soederberg points out, there are some nascent groups, like the Debt Collective, which have begun to resist the student loan stranglehold. Mass resistance is always hard to mobilize, but students have led many worthy protest movements in the past. One in their own interest is by now long overdue.
It’s a good way to start your future.