Behold the next subprime loan crisis
College students are, on average, $25,000 in debt upon graduation and face an unemployment rate between 14 and 17 percent
By Victor SanchezIn California, indeed throughout the nation, student loan debt surpasses credit-card debt, and youth unemployment hovers between 14 and 17 percent: We are witnessing the next subprime crisis of the United States. Students have demanded relief, yet we hear only the same bromides about better times to come; how we’re the future, how investment in our generation will bring national prosperity. But we are in immediate peril.
Students who are attending Allan Hancock College, Cuesta Community College, or Cal Poly face the same bleak situation students at Rutgers University in New Jersey or Florida Agricultural and Mechanical University must confront: Upon graduation with a bachelor’s degree after four years of school, on average, they will be $25,000 in debt. We are leaving school with mortgage-size loans but no houses. We live in the richest nation ever. Why is there such poor funding for education?
Our generation has been criticized as idealistic, that we ignore the fact that there simply is no money, that we fail to understand how tough economic times call for shared sacrifice, that we should recognize budgets must be cut to end this recession. Our crisis didn’t start in 2008; its origin is a combination of mismanagement dating back to Gov. Reagan’s imposition of the student fee in California. The state severely cut funding to colleges during his administration, tuition mounted, financial aid diminished, student grants withered, and students therefore had nowhere to turn but loans and debt.
We understand calls for shared sacrifice and creativity to compensate for shortfalls. What we need are bold government leaders who will achieve reforms we know are critical in California, who will challenge political taboos to accomplish practical solutions to the crisis at the national level.
The University of California Student Association (UCSA) and the United States Student Association (USSA) have pushed lawmakers to lock in sources of dedicated revenue that would provide a stable, steady stream of funding for schools. To start, corporate tax loopholes for companies that reap billions of dollars in profits must be closed at the state and federal level. Such solutions include the now-dead Proposition 24 in California and the Dodd–Frank Wall Street Reform and Consumer Protection Act. We need the Oil Severance Tax, which, if enacted, would bring the Golden State approximately $3 billion in new revenue for education. Such remedies as California AB 970 should be passed to halt student financial burdens, which since 2008 have risen more than 60 percent at the California universities. And Proposition 13, which caused California public education to sink from the top in funding to the bottom nationally, should be reconsidered.
Congress should pass such legislation as the bill by Sen. Sherrod Brown that would enable students to convert their loans from private banks to affordable public loans, thereby curtailing predatory lending and resulting loan defaults. And finally we must increase the level of Pell Grants to a true purchasing power of $13,000, instead of the current levels, which provide one third the purchasing power they had in the 1970s.
We shouldn’t be limited by what we are told we cannot have. We must instead be motivated by what we truly can achieve. There really is money available to fund education, and we have a responsibility to secure it. A change in priorities can move us toward a truly sustainable investment for our future, in which education is a right for all, not a privilege dictated by finances and debt.
Víctor Sánchez is president of the United States Student Association. He was raised in Los Angeles and recently graduated from the University of California, Santa Cruz. Send comments to the opinion editor at econnolly@newtimesslo.com.
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October 26, 2011 Opinion » Commentaries