Thursday, March 30, 2006
Ideally, this could translate into support in 2008&beyond for candidates who offer a new New Deal to American workers: portable, affordable health care benefits, a federal living wage, and a retirement system that really works, protecting the most vulnerable workers while fairly distributing resources among the generations. Oh, and reining in of the predatory credit industry that drives so much misery. This is the largely economic progressive vision shared by groups like ACORN, Jobs with Justice, Jobs for the Future, and many others. The "new generation" I referred to means not only groups I talk about in the book, like Working Today, TechsUnite, Young Workers United, but a whole cohort of college-educated progressives who came up through programs like Union Summer, or were exposed to union organizing by graduate students on their campuses. They believe in social movement unionism as an outlet for progressive action.
Of course, this progressive dream runs smack up against America's precarious strategic and financial situation: the record deficits, growing trade imbalances, outsourcing, losing ground in education, and demographic shift. It could be that the New Deal analogy is all too apt: it could take an economic collapse to spur a radical expansion of economic protections.
In the long term, I believe that America will finish out the century as a great power, but not the Great Power.
I'm a 28 year-old grad student in Chicago. I'm at Northwestern University's Public Policy program (still living at home, naturally). I'm also a Legislative Aide for the Illinois House of Representatives. I was curious as to where you see the whole Generation Debt scenario headed in the long-term. It goes without saying that this generation may very well end on the losing end of history as we shoulder the Boomer's retirement costs and are out-educated by India and China. How do you see the prevailing politics of the under-30s turning out? Do you think there will be a rebellion against a welfare state that's able look after their parents' generation only at an astronomical cost to themselves? You mentioned "a new generation of labour organisers and advocates" coming up. Who are they?
Wednesday, March 29, 2006
Tuesday, March 28, 2006
The protests are believed to eclipse in size the demonstrations that occurred during the anti-Proposition 187 campaign in 1994 and even a famous student walkout for Chicano rights in 1968.
"It was my dad's and grandfather's sweat and tears that built the city of Los Angeles," said Marshall High School senior Saul Corona, whose father came to the United States illegally before getting a green card. "People like them did things no one else wanted to do because they wanted me to have a better future."
The protests appeared to be loosely organized, with students learning about them through mass e-mails, fliers, instant messages, cellphone calls and postings on myspace.com Web pages. By contrast, the massive rally Saturday that drew 500,000 people to downtown Los Angeles was highly organized, with demonstrators urged to wear white and bring American flags.
Congress created the Student Loan Marketing Association as a government-sponsored enterprise in 1972 because policy makers at the time feared that banks alone would not have enough money to meet student demand for loans. Sallie Mae, as the entity soon became known, was directed to use U.S. Treasury funds to purchase government-backed loans from banks, providing the banks with money to make more loans.
By the 1980s, Sallie Mae was doing so well that it no longer needed direct federal financing to purchase loans; instead it turned to Wall Street. Because of its implicit backing from the government — lowering the risk of defaults because the government would cover nearly any losses — it was able to raise enormous amounts of capital at low interest rates to buy and service student loans. In the process, it racked up tremendous profits.
Sallie Mae's assets multiplied eightfold during the early 1980s and early 90s, as federal student-loan volume soared.
But the financial success also attracted more scrutiny. Reports that the top officers of the Congressionally chartered corporation were pulling in seven-figure salaries led to charges in Congress that Sallie Mae and other loan providers were getting fat off the loan program, at the expense of students and the government.
The Clinton administration and Democrats in Congress pushed to remove banks and other lenders from the federal loan program altogether. Congress approved legislation in 1993 to gradually replace the guaranteed-loan program with direct lending, in which the Education Department provides loans directly to students through their colleges.
Sallie Mae's livelihood was suddenly threatened, and the company's leaders knew that its future depended on cutting ties with the government, so that it could diversify the products it offered. In 1996 the Clinton administration and Congress granted Sallie Mae its wish, allowing it to gradually become completely private.
Some of those who were involved in the Clinton administration's deliberations, however, believe that the government seriously misplayed its hand.
Thomas R. Wolanin, a longtime Democratic aide in Congress who served on a government committee that examined the possible sale, says he felt throughout the discussions that the administration was "giving the store away."
"My basic feeling," he says, "was that we were allowing Sallie Mae to privatize with very little financial return to taxpayers for the benefits they had received as a government entity, and without harnessing them to some public purpose."
Monday, March 27, 2006
"The Senate and Assembly agreement includes important reforms to the Tuition Assistance Program," added Kramer. "If approved, this budget will allow part-time students to receive grants and students whose family income decreases to adjust their awards in the middle of the year, allowing TAP to better meet the changing needs of today's college students."
"Here lies the dilemma facing Congress as it attempts an immigration overhaul. Businesses say it is hard to persuade Americans to perform the unskilled jobs that immigrants easily fill. Significantly higher wages might work, but that increase would be passed on to unhappy consumers, forcing Americans to give up under-$10 manicures and $15-per-hour paint and lawn jobs."
Let's see, low prices on nonessential services vs. a just society. I'm thinking, I'm thinking...
Saturday, March 25, 2006
This is one of the best news I've gotten-- a small indication that this work is making a difference:
I heard you on Minnesota Public Radio a few weeks ago and used much of your logic in a proposal I made to our recent DFL caucus. The proposal asked that the ratio of Annual Tuition/minimum wage at UM at Duluth (UMD) be returned to the 1952 ratio (when I started college) which was: $99/$1.19. The proposal was accepted and is going to the next level (county) on 4/1.
Friday, March 24, 2006
They'd probably be laughed at. Those safeguards are not part of the way American society imagines itself, not right now.
But there must be a happy medium. After all, we do have such a thing as a minimum wage, even if it's routinely violated. We could stand to raise the floor a tiny bit without creating a nation of plaideurs (plaintive plaintiffs, pleading whiners), as my dad would say. And everybody agrees on education as a means of providing people with bootstraps--the central point of my piece.
A great commentary that ran last week on the same website, on a related note: "Wanted: a High-Road Economy."
Wednesday, March 22, 2006
Judging from the weight that Sallie Mae - otherwise known as the SLM Corp. -
throws around inside the Capital Beltway, one has to wonder if Congress has been
fooled as well. Since its privatization began in 1997, Sallie Mae has led a relentless
lobbying effort that has stripped nearly all consumer protections from student
To put it in perspective, Sallie Mae executives gave more than twice as much
to elected officials as Fannie Mae, a mortgage holding company roughly 20 times
larger. And the payoff was huge. Refinancing is now illegal (consolidation is
allowed one loan at a time, but only with the original lender). Bankruptcy is
now off the table for federal and private loans. Huge penalties and fees are
permitted on delinquent debt.
"Students from low-income families appear most likely to feel the squeeze. From 2001 to 2005, enrollment grew by 14.3 percent at public institutions and inflation grew by 14.2 percent, without corresponding increases in public funds, according to the annual study, which was released today by the association of State Higher Education Executive Officers."
Tuesday, March 21, 2006
To draw attention to rising student indebtedness, the United States Students Association and the Public Interest Research Groups held a lunchtime news conference across from the hotel where the hearing was held. Holding a sign that read "Student Debt Alert" and wearing buttons that read "Say It Loud: Grant Aid Now," students said that educational debt is forcing young people from low-income families to forgo college and is discouraging college graduates from entering public-sector jobs...."Students are entering the economy a slave to Sallie Mae," said Joshua Chaisson, a student at the University of Southern Maine.
The 19-member commission was created last fall and charged with developing a national strategy on higher-education. It is scheduled to present its recommendations to Secretary of Education Margaret Spellings by August 1.
As tuition prices have skyrocketed since the 1970s, the inflation adjusted average earnings of a graduate from a four-year institution have stayed about the same, according to Susan Dynarski, associate professor of public policy at Harvard University and research fellow at the National Bureau of Economic Research. Compared to 30 years ago, students are “looking at level earnings, but increasing debt,” she says, so “from the perspective of their parents’s generation, they’re actually worse off.”
The other presenter was Martha Lamkin of the Lumina Foundation the research of which I drew on in the book.
UPDATE: BTW, a bit of fact-checking; the reporter said I said that the US spends more than any other country on higher ed as a % of GDP. Actually I said, as the OECD reported last fall, that the US spends double the OECD average at the postsecondary level, or $20,545 per student.
Monday, March 20, 2006
and here's one with Bill Thompson of "Eye on Books" which despite the name is a radio show/podcast out of DC...the only daily author interview podcast!
Friday, March 17, 2006
With nearly 1-in-4 French youths and young adults unemployed, many fret about how they will find work, make their first down payment on an apartment, afford to start a family.
They study, earn diplomas, but often are resigned to finding nothing more rewarding after graduation than unpaid internships. The most disenfranchised -- immigrant youths in depressed neighborhoods that went up in flames during riots last fall -- don't even expect those.
"The president's budget would provide $137.5-billion for health, education and labor programs in fiscal year 2007, $4-billion less than in fiscal 2006. That follows a $1.9-billion cut to these programs in fiscal 2006.Mr. Specter's amendment would return spending on these programs to fiscal 2005 levels. "
Among those spared the ax--for now--are the Perkins loan program (low-interest loans for low-income students) and GEAR UP, one of the TRIO programs to help low-income kids get to college.
Thursday, March 16, 2006
Maxed Out exposes the modern debt-style in all of its absurdities and contradictions. Nowhere are these more evident than in a journey with award-winning investigative journalist Mike Hudson, who travels to Mississippi, Pittsburgh, and New York City interviewing the victims of predatory lending scams. The most shocking discovery? The predators aren't boiler rooms or goodfellas. They are the nation's largest and most respected financial institutions! And they're not just preying on adults anymore. In 2001, FirstUSA hired two teenage high school students as walking billboards to make their cards seem "cool". FirstUSA also pioneered "partnerships" with colleges—paying them millions of dollars for access to their students' personal information, setting these kids up for ruin.Maxed Out examines an industry that thrives on making people fail, then pursues them relentlessly to death's door.
Ps. also at the fest? another doc, FIRED!
Wednesday, March 15, 2006
Unlike the real-life 20- and 30-somethings documented in Draut and Kamanetz’s books, Nate, Amber and Mark do not suffer from the machinations of greedy, government-subsidized lending corporations, decreased job opportunities and wage buying-power. They do not lament college tuition’s inverse relationship with the dwindling amount of federal aid made available each year to students.
In “Free Ride,” the men of the boomerang generation suffer only from a lack of character and self-sabotage...
As with many other recent television series that purported to reach out to our demographic but insulted our characters and our intelligence instead, it’s hard to decide whether “Free Ride” is more deplorable because it’s so offensive or because it’s so lame.
Terry W. Hartle, senior vice president for government and public affairs at the American Council on Education ... said that colleges have done a poor job in educating the public about the critical role colleges have played in enhancing "America's economic competitiveness and social well-being."
That failure has been costly, he said. Over the last two decades, state spending on higher education on a per-student basis has dropped significantly. Meanwhile, federal support for student aid is flagging, and policy makers are increasingly questioning the quality of education that colleges are providing.
Monday, March 13, 2006
Friday, March 10, 2006
...an unusual, anonymously funded plan. Beginning this June, college tuition will be free for any student who enters the Kalamazoo school system by the ninth grade -- regardless of income or need. The program, unveiled in November by the city's superintendent of schools and underwritten by a group of local philanthropists, is to run for at least 13 years.
With its commitment to the Promise, Kalamazoo is upsetting the traditional economic-development model. In the past, blighted cities across the nation signed onto various types of revitalization plans. Mainly, they focused on physical improvements -- including new public spaces, office parks and other civic amenities -- in hopes of spurring economic and social progress.
The Promise is different. By making education the cornerstone of the city's turnaround plan, Kalamazoo is hoping that other positive changes will follow.Mr. DeHaan, the developer, says the Promise already has helped fuel housing demand...Southwest Michigan First, a regional development agency, says the number of inquiries from small businesses has recently quadrupled to between 20 to 25 calls a week.
...The donors think the Promise "is the way to revitalize their city," says Dr. Brown, who is one of the few people in the city who knows their identities. They believe that "equal access to higher education for all creates a powerful incentive that will bring people and employers back to Kalamazoo."
"Seldom does justice so perfectly suit convenience. Raising the retirement age would honor the principles of productivity and self-sufficiency that originally defined the age group deserving of benefits."
Thursday, March 09, 2006
My impression of the lending industry's arguments are as follows:
1) With cash-basis accounting, the budgetary advantages of the direct loan program seem to disappear. While nevertheless reestimating a subsidy of $9.20 per $100 for FFELP and $1.70 per $100 for FDLP, the GAO has acknowledged that judging the true costs of each program is difficult. Lenders also argue that these budget estimates don't account for tax revenues recouped from the private businesses involved in the industry.
2) Many schools have left the direct loan program for FFELP over the last 10 years. Incentives provided by FFELP can make loans cheaper for students. Competition between the two types of industries makes for a better program.
3) The banks do a better job of administering and servicing loans than the federal government.
My responses are as follows:
1) "Cash basis accounting is inappropriate for financial institutions making long-term commitments." ("Student Loans: A Budget Primer", Center on Federal Financial Institutions, 11/8/05) I have yet to find a source, not in the direct employ of the student loan industry, which claims that FFELP costs the government less than direct lending.
2) The direct loan program is restricted by law from offering the same incentives as FFELP. While these incentives have influenced schools to switch, and they do make loans cheaper for students, federal legislation could reverse these conditions with a stroke of the pen.
3) I agree. I have it on good authority that the student loan program is professionally and efficiently administered by the professionals in private industry, and those who have come from private industry to the FSA. The creation of the FSA was an attempt to bring these best practices into the federal government, and I believe that FDLP can do just as well with political will behind it.
2) I read a Blog by Amy Baldwin (Charlotte Observer) about your book Generation Debt. I haven’t read it, but I am tempted to. (I will probably have to wait till tax season is over) I just wanted to give you my first thought of classifying our generation like that. I think it is completely wrong. From what I have gathered, your book talks about how bad (financially) our generation has it. That is sucks to be us.
I should write a book to counter yours, called “Generation Entrepreneurs”, and talk about how great our generation has it, how much we have already contributed to the capital economy, and prelude to the great things we are going to do. (My only constraint is my writing skills match Tarzan)
Republican legislation to kill competition for the 30 million people who hold student loans did not get that much attention in December. Most people have been focused on how Congress raised interest rates on these federally guaranteed loans. But this action to restrict competition is potentially more far-reaching, and more damaging to students, and to efforts to reduce the federal budget deficit.
It happened two ways: First, Congress maintained a law called the Single Holder Rule, which says that once you have your student loan from one company, you cannot change companies. Second, once you refinance the loan, you cannot do so again, no matter if a different company offers better rates, longer terms or better service.
Imagine if someone tried to get away with that in the home-mortgage market. They would either go out of business or go to jail for price-fixing -- or both.
Then Congress went one step further. Led by Congressman John Boehner (R.-Ohio), then head of the House Education Committee and now House majority leader, Congress took the single most anti-competitive provision in all of American law since the wage and price controls in the early '70s, and made it worse. Congress effectively banned anyone from locking in low rates for longer terms.
The people at the largest student lender, Sallie Mae, were ecstatic. They had beaten their competition -- not in the marketplace but in the lobbying place.
Wednesday, March 08, 2006
Tuesday, March 07, 2006
A California judge has ordered the University of California to pay $33.8-million to former students who accused it of breach of contract when it raised tuition over the past three years despite an apparent pledge not to do so. The class-action lawsuit represents a rare victory for students in litigation over tuition increases.
or maybe lose...The financial impact of the judgment on the university system and how to recoup the money will be considered by the regents after all appeals are exhausted, Mr. Vazquez said, but the ruling could mean further tuition increases for professional students.
Monday, March 06, 2006
1) As many as 45 million American jobs may be vulnerable to offshoring, including high-skilled service jobs, as communications technologies improve. The returns to a college education have stalled since 2000.
2) Education is not enough to stem the flow of jobs overseas. The lower cost of labor overseas may ultimately be more important.
3) Bush's support of education has been "anemic." The growth in financial aid spending since he took office is entirely attributable to the fact that more students qualified; average aid per student hasn't budged. The purchasing power of the maximum Pell Grant has declined from 42% of the average public U cost to 33% since 2002.
Sunday, March 05, 2006
and U-Wire, which goes to colleges all over the country. (Note, there is a typo in this one; the Higher Education Act passed in 1965, part of the War on Poverty.)
Also, there was a great article in the Chicago Tribune on student loan debt. People are really catching on to this problem!
Thankfully, the liveliness of Kamenetz's mind mitigates the bleakness of her portrait. A 24-page bibliography reveals her as a wide and careful reader, and she performs an energetic if procedural diagnostic on the decried, double-crossing system.
Thursday, March 02, 2006
Wednesday, March 01, 2006
Moneypants is a great site built around an online tool designed to help 20somethings manage their finances. I don't feel the need to (read: I am not organized enough to) have everything tracked like this but for a certain kind of person it could work great. Plus they have a lot of cool content on the site including interviews and True Confessions.
PS: As a commenter pointed out, the budget tracker on the site is a pay service, which makes it, hmm, a little less appealing to people who are watching their spending very carefully. But I still think it's a good place to look around.