Author delves into college students' debt

Author Anya Kamenetz says no, that the future is far less promising for the young today, and unless America realizes that fact and acts to change it, our civilization is in danger.

“Generation Debt: Why Now Is a Terrible Time to Be Young” is a hard-hitting book about the prospects of the 68 million Americans ages 18 to 34 who make up the generation of the title. Published in 2006 by Riverhead Books of the Penguin publishing group at $23.95, the book was born from articles Kamenetz wrote for New York City’s Village Voice that earned her a Pulitzer Prize nomination.

‘A broke generation’

A Louisiana native and a 2002 Yale University graduate, Kamenetz begins the book with “I am 24 years old and I was born into a broke generation. I look around and see people who have borrowed more to go to college than they can repay, who can’t find a good job, can’t save, can’t afford basic necessities like health insurance, can’t make solid plans. Their credit card bills mount every month, while their lives stall out on the first uphill slope. Born into a century of unimaginable prosperity, in the richest country in the world, those of us between the ages of 18 and 35 have somehow been cheated out of our inheritance.”

It’s an unnerving preface, and to make her case, Kamenetz martials her own experience, dozens of interviews with her contemporaries and a wealth of data.

She offers these figures:

• Two-thirds of four-year college students are graduating with an average student loan debt of $23,300; graduate students owe an average $45,900 and law and medical students owe about $100,000;

• Three-quarters of college students have credit cards, with an average unpaid balance of $2,169; 25- to 34-year-olds have an average $4,088 credit card debt; and

• Among families making more than $100,000 a year, 44 percent of dependent students have to borrow money for school.

Kamenetz attributes the student debt load to rising tuition, lower government funding and a privatized student loan industry.

”Tuition has been rising two or three times faster than inflation for three decades,” she writes. “Tuition at public colleges, where 80 percent of American students are enrolled, went up four times more than median family income in the 1990s.”

She quotes President Richard Nixon in 1970 as saying, “No qualified student who wants to go to college should be barred by lack of money. That has long been a great American goal; I propose that we achieve it now.”

Nixon in 1972 established Sallie Mae, The Student Loan Marketing Association. Originally intended as a government-sponsored entity to provide a secondary market for student loans, Sallie Mae became a fully private corporation in 2004.

In 2005, its 21.2 percent return on revenue made it the Fortune 500’s second most profitable company in that category. With billions of dollars in assets, Sallie Mae has been widely criticized for using high interest and fees to charge students as much as 28 percent annually on loans.

Kamenetz favors the direct loan program in which the government loans money to students directly from the Treasury without middlemen. Such loans cost the government 84 cents per $100, as opposed to the $12.09 per $100 it must pay banks on guaranteed loans.

Both direct and guaranteed loan programs exist today, but only a quarter of the nation’s colleges participate in the former. If even 40 percent participated, Kamenetz says, the savings in a decade would be $17 billion.

Job prospects

Debt-encumbered college graduates today face poorer career prospects due to the proliferation of low-wage jobs in a changing economy, says Kamenetz, who gives these figures:

• Between 1971 and 2002, median annual earnings for workers 25 to 34 dropped 20 percent in constant dollars.

• In 1970, the nation’s largest private employer, General Motors, paid an average wage of $17.50 an hour in today’s dollars; today, the nation’s largest employer, Wal-Mart, pays an average wage of $8 an hour.

Kamenetz concludes that in the face of massive debt and diminishing job prospects, “It’s not too dramatic to say that the nation is abandoning its children.”

The author delineates far more economic pitfalls for Americans than can be covered here.

She also, however, offers possible solutions, urging personal responsibility, frugality and foresight for her generation and calling for the formation of “a strong, bipartisan generational movement” to press for higher education funding, fairer credit laws, a living wage, health care, savings programs, worker protections and support for young families and homeowners.

“Generation Debt: Why Now Is a Terrible Time to Be Young” is a wakeup call by a brilliant young writer. Anyone concerned about the future of America’s children, and of America itself, will find it well worth reading.

Frank Shipe is a free-lance writer and editor.[[In-content Ad]]