FacebookTwitterGoogle+RedditEmail

Indenturing Our Young People

by

The young in America are being forced into cruel levels of debt, and this debt is already curbing their life prospects. Its economic effects are damaging to everyone. Yet with Washington frozen, the debt burdens on the young are likely to get worse.

For the young, a college education or post-high school professional training is the equivalent of what a high school degree was a generation ago. College is the necessary but not sufficient ticket to the middle class. For the nation, educating the next generation beyond high school is essential both for producing the citizens we need for a healthy democracy and for producing the work force we need for a healthy economy.

And yet college costs keep soaring, growing faster even than health-care costs. Government support for public universities and community colleges is down 25 percent since 2000. Students and their families must pay more and more of the cost. But family incomes have stagnated, failing to keep up with soaring costs of college, health care and housing.

The result is an explosion of student debt. It has nearly quadrupled since 2003, soaring to nearly a trillion dollars. Two-thirds of all students now graduate with debts averaging $27,000. The poorer the family, the higher the percentage of students with debt.

These debts are brutal; 12 percent are more than 90 days delinquent, but that figure is misleading because nearly one-half (47 percent) are in deferment (students can defer payment on their debt while in school, for example). That means nearly 1 out of 4 working loans are delinquent. Staggeringly, over 20 percent of loans for those 30-49 — in the peak of their earning years — are more than 90 days delinquent.

Because of the force of the bank lobby, student loans can’t be discharged with bankruptcy. They cannot be refinanced. They burden students for a lifetime. The feds will even garnish your Social Security to repay them.

As Slate contributor David Dayen argues, this is very much like indentured servitude that Americans suffered at the beginning of the Republic. Then impoverished workers and peasants traded years of labor for the cost of passage to the new world. For three to seven years, depending on the contract, they would labor, virtually like slaves, for masters who paid their way.

This injustice offends America’s tradition. Historically, America prided itself on its public education. We were first to provide secondary school free for all. With the GI bill, 3 million veterans received tuition-free college or advanced training. For much of the post-war period, great public universities — from City College in New York to the fabled California schools — were free or close to it. Now, as college education becomes ever more necessary, it is becoming ever more unaffordable.

These debts, racked up before beginning one’s work life, are devastating. It means that the young postpone saving. Many more must live at home, burdening parents trying to save for retirement. The young will buy a home later (if ever). They will marry later. They will accumulate far less for their retirements — even as they are expected to save more due to the collapse of pensions.

Demos, a research institution, created a model to estimate the losses. Their study found that for a young couple with B.A. degrees from four-year colleges, with median incomes and college debts for their education level, they would lose an average of $208,000 over the course of a lifetime, in comparison to a couple without college debts. Two thirds of the losses would come from retirement savings — since they would be unable to save as much while paying down their debts. One-third comes from loss of home equity, since they would either purchase a home later or be able to afford less of a down payment.

Not surprisingly, researchers at the Federal Reserve worry that the debt burdens will harm the economy, as the young put off buying cars or renting apartments or starting new families.

This is the down side of Gilded Age extremes in wealth. As the rich get richer, they rig the rules to avoid paying their fair share of taxes. Top rates go down; tax dodges proliferate. Some billionaire hedge fund operators pay lower rates than their chauffeurs.

Billion-dollar companies like GE use overseas tax tricks to pocket refunds rather than pay taxes. From 2008 to 2012, GE paid less in taxes than the smallest mom and pop store with a profit.

So instead of taxing the rich and powerful, we squeeze public investment. Government cuts back on support for universities. Students and families get the bill. The result is that an entire generation racks up deep debts or forgoes needed education.

This can’t go on. We need fair taxes to generate the income needed to make college affordable for all who merit it. We should put clear limits on the debt burden graduates must bear — and how long they must bear it. Rep. Karen Bass has a bill — the Student Loan Fairness Act – that would limit repayment to 10 percent of after-tax income and 10 years at most. Sen. Elizabeth Warren suggests students should be given the same interest rate — 0.75 percent — that the Federal Reserves gives the biggest banks (that taxpayers had to bail out).

The only way this will change is if students, parents and indebted graduates make their voices heard. But all of us should demand action. It is unacceptable that the sons and daughters of America’s working families must face indentured servitude simply to get the education they need.

Jesse Jackson is the founder of Rainbow/PUSH.

 

Jesse Jackson is the founder of Rainbow/PUSH.

More articles by:

CounterPunch Magazine

minimag-edit

Weekend Edition
August 26, 2016
Friday - Sunday
Andrew Levine
How Donald Trump Can Still be a Hero: Force the Guardians to the Duopoly to Open Up the Debates
Louisa Willcox
The Unbearable Killing of Yellowstone’s Grizzlies: 2015 Shatters Records for Bear Deaths
Charles Pierson
Wedding Crashers Who Kill
Richard Moser
What is the Inside/Outside Strategy?
Patrick Cockburn
Turkey’s Foray into Syria: a Gamble in a Very Dangerous Game
Brian Terrell
What Makes a Hate Group?
Dirk Bezemer – Michael Hudson
Finance is Not the Economy
Howard Lisnoff
Trouble in Political Paradise
Ben Debney
The Swimsuit that Overthrew the State
Ashley Smith
Anti-imperialism and the Syrian Revolution
Vincent Navarro
Is the Nation State and Its Welfare State Dead? a Critique of Varoufakis
John Wight
Syria’s Kurds and the Wages of Treachery
Lawrence Davidson
The New Anti-Semitism: the Case of Joy Karega
Mateo Pimentel
The Affordable Care Act: A Litmus Test for American Capitalism?
Roger Annis
In Northern Syria, Turkey Opens New Front in its War Against the Kurds
David Swanson
ABC Shifts Blame from US Wars to Doctors Without Borders
Norman Pollack
American Exceptionalism: A Pernicious Doctrine
Ralph Nader
Readers Think, Thinkers Read
Julia Morris
The Mythologies of the Nauruan Refugee Nation
Ann Garrison
Unworthy Victims: Houthis and Hutus
Julian Vigo
Britain’s Slavery Legacy
Rivera Sun
Accountability: An Abandoned American Value
Philip Doe
Colorado: 300 Days of Sunshine Annually, Yet There’s No Sunny Side of the Street
Joseph White
Homage to EP Thompson
Kollibri terre Sonnenblume
DNC Playing Dirty Tricks on WikiLeaks
Ron Jacobs
Education for Liberation
Jim Smith
Socialism Revived: In Spite of Bernie, Donald and Hillary
Robert Koehler
The Heart of Order
David Macaray
Organized Labor’s Inferiority Complex
David Cortright
Alternatives to Military Intervention in Syria
Binoy Kampmark
The Terrors of Free Speech: Australia’s Racial Discrimination Act
Cesar Chelala
Guantánamo’s Quagmire
Andrew Stewart
Did Gore Throw the 2000 Election?
William Hughes
From Sam Spade to the Red Scare: Dashiell Hammett’s War Against Rightwing Creeps
Raouf Halaby
Dear Barack Obama, Please Keep it at 3 for 3
Charles R. Larson
Review: Paulina Chiziane’s “The First Wife: a Tale of Polygamy”
August 25, 2016
Mike Whitney
The Broken Chessboard: Brzezinski Gives Up on Empire
Paul Cox – Stan Cox
The Louisiana Catastrophe Proves the Need for Universal, Single-Payer Disaster Insurance
John W. Whitehead
Another Brick in the Wall: Children of the American Police State
Lewis Evans
Genocide in Plain Sight: Shooting Bushmen From Helicopters in Botswana
Daniel Kovalik
Colombia: Peace in the Shadow of the Death Squads
Sam Husseini
How the Washington Post Sells the Politics of Fear
Ramzy Baroud
Punishing the Messenger: Israel’s War on NGOs Takes a Worrying Turn
Norman Pollack
Troglodyte Vs. Goebbelean Fascism: The 2016 Presidential Race
Simon Wood
Where are the Child Victims of the West?
FacebookTwitterGoogle+RedditEmail