The following editorial first appeared in the St. Louis Post-Dispatch:
Not all that long ago in the American experience, a million was a big number. Then it was a billion. Today the word “trillion” is thrown around casually.
The number is so big and so hard to comprehend that it has a certain cachet. Deficits and debts seem to matter when trillions of dollars are at stake. When they were in the billions, not so much. Which was a mistake.
Which brings us to the latest trillion-dollar-baby: America’s student loan debt.
The Federal Reserve Bank of New York reported last month that the debt owed by U.S. college students has topped $1 trillion for the first time. That figure doesn’t even take into account the loans owned by parents on behalf of students.
This number is not just the result of inflation or population growth but of a fundamental shift in U.S. policy toward helping our next generation reach for the same dreams the previous generation had the opportunity to achieve.
Students are borrowing twice what they did a decade ago, partly because states have reduced their support for higher education. In the meantime, with ever more kids wanting to get in and willing to borrow to pay for it, colleges keep raising prices.
In 1984, tuition was less than 25 percent of the overall revenue for the nation’s colleges and universities, according to association known as the State Higher Education Executive Officers. By 2009, tuition accounted for 37 percent of higher education revenue. The same study found that per-student state appropriations for public colleges and universities was lower in 2009 than at any time since 1984.
America’s middle class is being priced out of an opportunity to succeed.
But smart kids know that their lifetime earning potential is significantly increased by obtaining a college degree. So they saddle themselves with debt to keep alive the hope that comes with an education. That hope is being crushed by bills that outpace post-graduation jobs, if the jobs even exist.
So it’s not hard to understand why, in many cities, a major source of the anger fueling the Occupy Wall Street movement comes from students seeking student loan relief.
Slowly but surely, the threads of the tapestry of the American dream are being pulled away. First came the homeownership bubble, which in some ways contributed to the original Tea Party anger. Now comes the student loan debt bubble.
About two-thirds of graduates with a bachelor’s degree have student loans, according to the College Board, with the average debt about $24,000. The promise was that you’d get a good job coming out of school, so you could handle that. But not if no one’s hiring. Not if you’re working at Starbucks.
Congress, President Barack Obama and state legislatures must get beyond the political battles of left and right and see what is happening to the next generation of Americans. Most of them don’t yet have any political allegiances, only a desire to start building their own nest egg.
Obama reached out to the students dragged down by debt last week. For six months, beginning in January, borrowers with both federal loans and federally backed loans can consolidate them at a sightly lower interest rate.
It’s a modest start, but far more serious work needs to be done.