They Did It!

The House voted almost 2-to-1 to raise the Pell Grant by $260. and a whole lot of other nice budget gestures. “It’s almost like, ‘Pinch me, pinch me,’” said Cynthia J. Littlefield, director of federal relations at the Association of Jesuit Colleges and Universities. “Given how long we’ve been working for this, this is almost anticlimactic, but happily so.”

Onion on the Student Loan Interest Cut

"I can't wait to tell my loan officer that I'll be paying back my loan two weeks earlier than my previously stated goal date of never."

Pell grant Looking up

The house will vote tomorrow on raising the maximum Pell Grant, the nation's largest need-based college aid grant, by $260 to $4310. The grant has been frozen for the past four years even as college tuitions have increased year after year.
The PIRGs call this "a major step in the right direction." (Student advocates want it up to $5100, a figure that's been floating around, or even better, to restore its 1980s buying power, which would put it around $7200).

Rep. Miller points out how they're planning on paying for it:
"To pay for this increase in the Pell Grant scholarship, Chairmen Obey and Bird have eliminated earmarks from the budget altogether. Chairmen Obey and Byrd will be the first to say that earmarks can be beneficial. But because the process for awarding earmarks is fundamentally broken, many earmarks were just plain pork. Until reform of the earmark process is complete, this resolution makes the difficult but appropriate choice. It says taht the new Democratic Congress is more interested in helping students than it is in reckless special interest giveaways."
Amen to that.

Union Futures

A new short piece for TomPaine.com about new kinds of unions--and the death of the old.

"your dream job? If the answer is "yes," you are probably in a union. That's the finding of a nationwide marketing survey of over 37,000 workers released on January 25. The respondents most likely to report that they were in their dream jobs were police and firefighters (35 percent) followed by teachers (32 percent.)

By coincidence, on that same date, the Bureau of Labor Statistics released a report showing yet another severe drop in U.S. union membership—from a steady 12.5 percent in 2004 and 2005 to 12 percent in 2006. The remaining stronghold of unionism, with a 41.9 percent membership rate, is local government workers. As the BLS points out, "This group includes several heavily unionized occupations, such as teachers, police officers and firefighters."

I got an good email response:
"The future of unions is in open source. The old-guard unions are dead, but the principles of organizing are still valid and fit in well with our democratic traditions."

The writer started microunions.com to help people form small, independent unions. I talk about the open-source union idea in Generation Debt and specifically about Washtech in the Pacific Northwest area.

Young and Already Overcoming Debt.

Here's a clip from the ABC news show "Money Matters," which aired live today and in various places around the country this afternoon.
The sound guy in the newsroom told me his daughter owed upwards of $80,000 from Rutgers and he was sick of paying off her credit cards too.

Goodbye, Horatio Alger

Good story in The Nation about college degrees, class and social mobility.

"In sum, the dirty little secret is that the central role of college in getting a good job is now probably reinforcing a class society, not leveling it."

NPR : "Still Paying Off That Student Loan"

Listen here. " I'm 43 years old and I owe tens of thousands of dollars in student loans."

The next segment comes off this report: "Of the students accepted at their first-choice university who did not enroll, a third said they could not afford it."

House Votes for Cheaper Loans: 356 to 71

They're taking it from the greedy and giving to the needy. IF you start school in 2007, the average student will save $2300 in interest payments, estimates the PIRGs.

Novel Idea: Educate People for Good Jobs

San Jose Mercury-News:
For years, California's 6 million public school students have been given a clear message: If you want to succeed in life, go to college.In reality, almost one-third of the state's high school students will drop out. Nearly another third will graduate without the credits needed to attend a four-year university. And many will go on to college but fail once they get there, unsure of what to study or how to make classes translate into a good job.

Now, after years of playing second fiddle to college-track course work, vocational education in high schools is emerging as one solution to many of these problems.

Student Loan Interest Rate Cuts: Who Pays?

Alert reader Marc Scheer sent me a quote from the Christian Science Monitor story that indicates confusion over the financing of the House's proposed interest rate cuts on student loans.

The bill is here if you want to read it. As far as I can tell it doesn't indicate what will happen after 2012 when the rate finally goes down to 3.4%.

Taxpayers aren't paying for it. As the bill reads, the estimated $6 billion cost of cutting loan interest rates from 6.8% to 3.4% will be taken out of government payoffs to student loan companies--Lord knows they can afford it.

The CS Monitor points out that Ted Kennedy, in the Senate, has a much more useful, comprehensive, and costly student aid package, increasing the Pell Grant to $5100 and encouraging schools to switch to the direct loan program. Remember guys, if we eliminated all government payments to student loan companies by switching to the more efficient direct loan program, that could save $60 billion over 10 years to dedicate to student aid.

Articles on Cutting Interest Rates in Half

Quick tour of major newspaper coverage of the Congressional proposal to cut interest rates in half. The vote is on Wednesday January 17th.
Wall St. Journal from Friday, January 4
LA Times from Friday, January 12
NY Times from Saturday, January 13
AP via the Boston Globe/Seattle P-I from Sunday January 14
Christian Science Monitor from Monday, January 15

Online Student Action on College Affordability

Rock the Vote, Campus Progress, the PIRGs, and several other organizations held a Day of Action on college affordability yesterday. They have a Facebook group with 36,000+ members, which is up there with the biggest political groups on that site.
Is this the beginning of a mass movement?

Minimum Wage Hike: Good for Gen Debt?

The House passed a raise in the federal minimum wage to $7.25 an hour over 5 years. On balance, I think this is great news for Gen Debt since 53% of minimum wage workers are under 25 , and according to EPI, the average minimum wage worker brings home over half of her family's earnings. The Washington Post did a great story following a 22-year-old who supports his whole family on his job at the dollar store.

On the other hand, the hike may make small business owners more leery of hiring the young and inexperienced. Robert Reich argues in The American Prospect this week that a hike will attract more people (like retirees and homemakers) to part-time low-wage jobs, giving business owners more workers to choose from; young people might lose out because of the perception that their commitment to the workplace or their responsibility is not as good.

But in the end the important thing to realize, as Reich points out, is that this is not a hike. it's an inflation adjustment.

"We've Been So Selfish"

Onion headline today: "800,000 Privileged Youths Enlist to Fight in Iraq."

"They don't have these recruitment centers where I live," said Daniel Feldman, 26, who resides in the affluent neighborhood of Brookline, MA and recently passed his bar exam. "I didn't realize you could just sign up, but now that I do, all of my friends from law school, yoga class, and temple are going to join, too. And not the Reserves either. We're talking down and dirty, right on the front lines."

Ouch. This is a really biting comment on how class and thus, access to opportunity, divides our generation. It hits home to me.
On the other hand, what the hell? It's up to us rich(er) kids with bright futures to level the playing field by dying on the battlefield? That's going to make this misbegotten war heroic? If you're guilt-stricken (and why shouldn't you be?), I would recommend joining the counter-recruitment movement to help kick predatory military recruiters out of poor schools, and tutoring some of those schools' students to help them navigate the college process instead.
Tom Tomorrow has sounded a similar theme a couple times, although he targets the Young Republicans who support the war in Iraq. Rhetorically, that is.

Senator Stafford Dies

The Vermont senator the Stafford Student Loan was named for was 93.

He believed in the notion of low-interest loans” for education, and knew that if they were offered to “young people with no credit and no visible means of support, it would have to be through a special program,” said Ellin Nolan, who worked as a senior aide to Sen. Stafford and is now the president of Washington Partners, a consulting firm in the nation’s capital.

She also praised his ability to compromise, which is apt, since the student loan program itself sometimes seems like an uneasy (doomed?) compromise between the social good of sending kids to college, the profit motive of finance corporations, and the tendency of schools to charge a lot of tuition.

USA Today Huge Series on Gen Debt

USA Today, America's largest-circulation newspaper, is doing a huge series on Generation Debt issues. The website has lots of spunky cutouts and graphics as well as links to financial calculators and other financial advice.

From My Email Inbox

This quote happens to be very relevant to my thinking process right now:

Anya-

I think this quote is both relevant to your book and pretty amusing. Thanks for writing your book. Hopefully it will spur more people into action.

"The test of a first-rate intelligence is the ability to hold two opposed ideas in mind at the same time and still retain the ability to function. One should, for example, be able to see that things are hopeless and yet be determined to make them otherwise." -F. Scott Fitzgerald

Cutting Interest Rates Report

USPIRG's Higher Education Project just released a new report looking at what the Congressional proposal to cut interest rates in half will mean for students. The interest rate cuts will benefit students with subsidized Stafford student loans.

About 5.5 million students have those loans with most coming from low and middle-income families. 75% of traditional-age students with sub Stafford loans comes from families with $67,000 or less in family income. (for perspective-the median 4-person family income in the US is $65,000)

The interest rate cut will save the average borrower about $4,420 over the life of their loan. Because the cut will be phased in over the next five years a student starting school in the fall of 2007 would save $2,280 over the life of their loan.

Student Debt Sex Slave??

I found this SF Gate story on Kottke's roundup of 2006's best links, and was intrigued/horrified by the headline in part 2:
A Youthful Mistake
You Mi was a typical college student, until her first credit card got her into trouble...

"Less than a year earlier, she'd been a college student in South Korea, only to be tricked into leaving her home by sex traffickers offering promises of a high-paying hostess job. Desperate for a way out of her $40,000 debt, You Mi bit. Now, she was at the end of yet another 15-hour shift of forced sex."

Deets on New Congress Cutting Yr Student Loans

I just got this press release from George Miller, your man on the House Education & Labor Committee. They are planning to cut student loan interest rates as part of the Democrats' "first 100 hours of Congress" gimmick. For some reason, they are doing it in five steps:

On Wednesday, January 17, 2007, the House of Representatives will consider legislation to cut interest rates in half on federal college loans. Specifically, the legislation will cut interest rates on need-based federal loans for undergraduate students from 6.8 percent to 3.4 percent in five steps: to 6.12 percent in 2007; 5.44 percent in 2008; 4.76 percent in 2009; 4.08 percent in 2010; and 3.40 percent in 2011.
Once fully implemented, these cuts will save the typical borrower - with $13,800 in need-based loan debt - approximately $4,400 in interest costs over the life of his or her loan.

I liked this part:

Why making college more affordable for America's students is a top priority
With the cost of college skyrocketing in recent years, there is no question that our nation is facing a serious crisis in college affordability. ..This is the first time in America's history that an entire generation has had to go deeply into debt in order to attain a college degree.

Many would-be students - as many as 200,000 per year, according to past estimates from the U.S. Department of Education - choose to delay or forego attending college because they can't afford it. This is unfair to them and, because college graduates open businesses and create jobs, it is bad for our economy
and our country's future.

Cost of Elder Care--Benefits of Education

I'm back from 2 months traveling in Thailand, Cambodia, Laos and India and I'll hopefully be writing soon about my experiences. Needless to say, terms like 'education' and 'opportunity' mean very different things to the much younger populations of those countries than they do here.
A pair of Page One stories in the New York Times the last 7 days illustrated two major Generation debt issues: health care and education.
"Elder Care Costs Deplete Savings of a Generation,"
is about many of our parents bankrupting themselves to care for our longer-lived grandparents. "“I have a panic attack at least once a day,'" says one grown daughter. "'It’s frightening to think about our generation and what’s going to happen to us.'”
Then again, "A Surprising Secret to a Long Life: Stay in School,"
suggested that extra education all by itself increases lifespan.
Yes, there's an irony here: we in GenDebt face living longer without the means to pay for it. Still, an important reminder that the debate about paying for higher education is about the public interest and quality of life, not just economic gains.