May 31, 2006

Dubya's administration gives under-30s the shaft.

It's about to get much harder for college students (and their parents) to pay their education costs. On July 1, the interest rates for federally backed Stafford and PLUS student loans will be taking going up two points, which works out to an increase of about 40 percent for students and 30 percent for parents. Currently, the interest on loans to students is 4.7%; in July, that rate will be 6.8%. Similarly, parents who are now paying 6.1% interest on education loans will be paying 8.5% in July.

These increases are another example of how Dubya and the GOP-led Congress are making low and middle-income families pay for the escalating budget deficit, instead of taxing corporations and the wealthy. In order to help rein Dubya's deficit in, Congress voted earlier this year to eliminate the current variable-rate loans and replace then with cheaper (for the feds, anyway) fixed-rate loans. The new fixed-rate loans will add to the crushing debt burden that the average student acquires while getting a college education.

All of this is a good introduction to an interview that AlterNet's Laura Barcella recently did with Tamara Draut, the author of the book Strapped. In that book Draut looks at how government policies since the late 1970s have made it much harder for students and young adults to enter — or keep from falling out of — the middle class. Largely under the influence of supply-side economists, the feds and states have retreated from the post-World War 2 promise of cheap or free higher education, while at the same time failing to ensure the creation of an adequate number of full-time jobs that pay a living wage and come with benefits.

Here's part of the interview:

LB: Can you give us a brief overview of why exactly "getting ahead" has gotten so much harder for young people today?

TD: Today's generation of twenty- and thirty-somethings are experiencing the fallout of a three-decade-long shift in our culture and politics. A generation ago, three factors helped smooth the transition to adulthood. The first was the fact that there were jobs that provided good wages, even for high school graduates. A college degree wasn't necessary to earn a decent living. But even if you wanted to go, it wasn't that expensive, and grants were widely available.

The second was an economy that lifted all boats, with productivity gains shared by workers and CEOs alike. The result was a massive growth of the middle class, which provided security and stability for families.

Third, a range of public policies helped facilitate economic mobility and opportunity: a strong minimum wage, low college tuition and generous financial aid, major incentives for homeownership and a solid safety net for those falling on hard times. Simply put, the government had your back. This world no longer exists. The story of what happened is well-known.

As the nation's shift to a service-based economy accelerated, the new economy dramatically changed the way we lived and worked. Relationships between employers and employees became more tenuous, as corporations faced global competitors and quarterly bottom-line pressures from Wall Street. Increasingly, fringe benefits like health care and pension plans were only provided to well-paid workers. Wages rose quickly for educated workers and declined for those with only high school degrees, resulting in new demands for college credentials.

As most families saw their incomes stagnate or decline, they needed two full-time incomes just to stay afloat, creating new demands on working parents. Getting into the middle class now required a four-year college degree, and even that was no guarantee of the American dream.

While adults of all ages have endured the economic and social changes brought by post-industrialization, today's young adults are the first to experience its full weight as they try to start their adult lives. But the challenges facing young adults also reflect the failure of public policy to address the changing realities of building a life in the 21st century. Government no longer has our back. As young adults today are working to get into the middle class, they're being hit by a one-two punch: The economy no longer generates widespread opportunity, and our public policies haven't picked up any of the slack....

LB: How have the Bush administration's policies affected the lives of Generation X (and Y) for better or -- more likely -- for worse?

TD: The policies of the Bush administration and Congress have made the future look even grimmer for young people. The soaring national deficit and debt will be our burden to pay. Three rounds of tax cuts have further constrained our nation's ability to get serious about shoring up our investments in education and health care. Most recently, Congress made major cuts to financial aid for college, including raising the cost of federal student loans. The Bush administration has taken the creed of selfish individualism to new heights -- and the public good has suffered as a result.

A comparison of my experience as a young adult certainly bears out Draut's thesis. After I graduated from high school, I was able to attend community college almost for free. As I recall, the fees were about US$ 180 per year, which was not very much money even by 1970s standards. When I transferred to a public university, I paid all of $1800 per year in fees, almost all of which was taken care of by state and federal grants and scholarships. I did have to take out a small federal student loan, on which I paid (I believe) 1.5% interest.

Even before I had my community college degree, the minimum wage jobs I worked were sufficient to allow me to move away from home into a series of shared houses and apartments, and to live at a decent — although somewhat frugal — standard. Quickly, though, I was able to get a union job with the telephone company, where even my starting wage was almost twice the minimum.

At the end of my college years, I'd worked myself up to the top of the phone company's pay scale, which allowed me to live by myself and save money besides. And I was able to pay my small student loan burden off ahead of time.

Since then, as Draut points out, the miminum wage has dropped through the floor, good jobs &$151; especially for young people without a college education — have almost disappeared, and student grants have been replaced by high-interest student loans. I have no idea how anyone under 30 can survive under these conditions, let alone get ahead.

You'll find the full interview with Tamara Draut here. I recommend it highly.

Via St Petersburg Times and AlterNet.

Posted by Magpie at May 31, 2006 01:11 PM | Economy | TrackBack(1) | Technorati links |

a shitty economy and bleak job prospects will ensure a large pool / supply of young people that the government can tap into and send overseas to hold and expand the amerikan empire.

plain and simple as that.

the amerikan economy has been a war economy since the end of WWII.

go read House of War by James Carroll.

amerikan terroristic corporations have abandoned amerika - there will be more middle class bodies in red china and india for the amerikan terroristic corporations to go after - amerikans have been abandoned.

and, oh yeah, F*CK wall street and investors clamoring for their constitutionally guaranteed return on investment. F*CK 'EM ALL !!!!!!

Posted by: frowning furiously at May 31, 2006 10:44 PM

Be sure to check out this excerpt from Draut's book, which chronicles the changes in the US education funding system over the years. Looking down the barrel of my own student debt, I gotta tell you I'm pretty alarmed.

Posted by: natasha at May 31, 2006 11:06 PM

Generation Debt

Posted by: bernard shakey at June 1, 2006 09:35 PM