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A Better Idea for College Loans
One of my former students who graduates from business school next week has already landed a job with a private-equity firm paying $240,000 next year, which I can tell you is a lot more than the salary of his former professor who's at least three decades older. My student tells me with a smile he'll be able to pay off his student debt way ahead of schedule. But that's not his real reason for taking the private-equity job. He wants to make gobs of money.
On the other hand, several of my students who will graduate next week tell me they would have liked to go into social work or into the non-profit sector or provide legal services to the poor. One had his heart set on becoming a painter. Another became passionate about archeology and had wanted to go on a dig in the Sahara. But they can't do any of these things because they have tens of thousands of dollars of debt. They need jobs that pay the rent while they repay their loans.
When they begin their university studies and take out college loans, most students don't know exactly where their interests lie. That's what college is all about — discovering what you want to do with your life. But America's increasing reliance on student loans to pay for higher education is directing millions of young people away from what they really want to do — from careers that could contribute a great deal to their communities and to the nation as a whole, but don't get them out from under their college loans.
So here's an idea that might allow more students to pursue their real interests when they graduate: Make repayment of government-subsidized loans depend on how much money they earn. Say everyone has to pay ten percent of their income for the first ten years of their full-time work. And then the loans are considered paid off.
My student who's landed that private-equity job would pay ten percent of his income for ten years, which would be a hefty sum. My students who go into social work or become artists would pay ten percent of theirs, which would be far less. The private-equity guy would in effect subsidize the social worker and artist. And why not? This way all of them can follow their callings.
Robert Reich is Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He has written ten books, including The Work of Nations, which has been translated into 22 languages; the best-sellers The Future of Success and Locked in the Cabinet, and his most recent book, Reason. His articles have appeared in the New Yorker, Atlantic Monthly, New York Times, Washington Post, and Wall Street Journal. Mr. Reich is co-founding editor of The American Prospect magazine.
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12 Comments so far
Show AllThat is, Mr Reich, if one assumes that government policies in these United States are actually intended to benefit the society. I sometimes suspect that some educated elites think that to be the case.
There is a howling inconsistency in K-12 being free and college degrees costing thousands upon thousands. All the more so since the future is going to belong to those with greater mental, rather than physical, skills.
As everyone knows, if the government subsidizes something, people will consume even more than they would without the subsidy. But education isn't like cars and cheeseburgers, because the person who sold it still retains possession even as the consumer acquires it.
Robert,
Hi, cool idea in principle _ but wouldn't it just make more sense to just progressively tax people? Education should be free, or at least subsidized, affordable without loans.
In an age in which our country's economy depends more on technology, information, services and other abstracts _ rather than physical production _ an educated population with a variety of expertise is a part of our national infrastructure, as much as roads, bridges and a military. I don't know why the Right can't or refuses to see that.
I don't mean to criticize your suggestion _ just wanted to send my thoughts. Thanks for your piece, and more so, for your care for your students. I'm 43, and paying off my student loan nearly killed me.
Making it worse was the fact that, when I was finally in a position to pay it all off in a lump sum, the lending agency did all it possibly could _ including trying to get a court order to physically keep me away from the building _ to keep me from paying it all off at once.
They wanted me to keep lowering my monthly payments so I'd pay them more. In the end I had to get a lawyer to threaten them with a lawsuit, my congressman to threaten them with a Congressional inquiry, and my state attorney general to threaten to publicly rip them a new one before they complied and let me pay, as was my prerogative according to my contract with them. The United States is now a debt-based society. I'm so relived and glad I migrated to Asia and I now live in the real world. I wish you _ and particularly your graduating students _ great luck, and I pray for them. It's rough out here in the real world at the moment. Worse than I've ever seen it. May God help us. Keep up your great work and writing.
Cheers,
Zell _ jahbone@gmail.com
Law students here in Minnesota typically have $88K in debt upon graduating (http://www.mndaily.com/articles/2007/04/24/71684). Medicine is even more expensive. Getting the MBA is cheaper, but it's certainly much more than $30K. The problem is that there are lots of MBA's or JD's. You basically need a political/family connection already in place to land a job like that right out of school.
Let's take Reich's ideas one step further, and see if there's a way to apply them to the single-greatest expense most people ever encounter: their home mortgages.
Also, let's reexamine the whole practice of government subsidy of student loans (even as that stuff is increasingly privatizing). We don't need any more subsidies at taxpayer expense. We just need a simple law that all lenders must abide by. For instance: student loans can never be more than perhaps 2%. Someone raises it to 3%? Fine -- send them to jail.
But I agree with the previous poster's commentary: education should basically be free to the PhD level so that we can abandon our plutocracy, and return more to a meritocracy. Double- and triple-digit student loans scare off far too much potential talent, and steer good talent into the most profitable pursuits, rather than the most important.
"The private-equity guy would in effect subsidize the social worker and artist. And why not?"
Why not? Because he already effectively subsidizes them. Art is a social luxury that could not support itself at anything like its present scale in a society without significant disposable income. A person who makes a living doing art is supported by the surplus of money in a society. Thanks in part to the efforts of the private-equity dude, there is sufficient surplus value to support it.
In response to the comments from MOOK MOOK:
I seriously doubt:
a) You can pull down a $240k salary straight out of college having graduated from a school that only cost $7500/yr.
b) If you are making $228k/yr straight outta college (after the $12k/yr deduction) ..that you should get to have a pity party, when whole families with Mom, Dad and two teenage kids with after school jobs get by on less than half that on average.
c) You went to college.
d) You will avoid going to hell.
Even here on Common Dreams you hear the effects of neo fascist social Darwinism than pervades and infects our once great country. People with high paying private industry jobs are considered smarter and more worthy. Those who choose a career based on passion and personal interest instead of selfish greed are considered losers and unworthy. This is why America has fallen and is doomed.
This article presents an interesting concept. I have paid out in the past over 25% of my income and for over 10 years. My degree was in elementary education. Problem is, getting a job is like winning the lottery. Of course, my income was low doing shit jobs to survive-- cashier, cleaning, ect.. Nothing like higher education to increase one's poverty. I'm in the default line now, and Sallie Mae calls daily and I tell them, I have nothing more to say and hang up.
That choice of the name "Post-Postmodern" says a lot. If that's a voice from the world we face, someone please bring back dial telephones and manual typewriters.
I'd like to know if "Post-Postmodern" has ever visited _ or lived and worked in _ a real, full-on, officially recognized dictatorship. I have. A lot. Based on that experience, I'd like to respectfully submit that Art, or at least real Art, is ~not~ a social luxury.
It's a spontaneous, unstoppable eruption of human emotion, wisdom and new ways of looking at things. It's also a form of social and political communication, which often functions as a code to transmit thoughts and information deemed subversive.
That's why dictators hate it, and why Fascists now ruling the states have inculcated in our culture a contempt for all things aesthetic. The "art is for fairies" mentality.
And Expatincebu _ Hi from a neighbor expat in Southeast Asia. Thanks for your great call on that social Darwinism.
Cheers,
Zell _ jahbone@gmail.com
Zell May 17th, 2007 9:31 am
You nailed it, Zell!
Art IS the expression of forms of sentience as the artist understands them. As you suggested, human sensibility has no place in totalitarian/dictatorship societies. Suppression of the human spirit is essential in creating societies of "obedient" people.
Forgive all college loans now. Make sure it is a tax free benefit.
Universal Free Education for all.
Everyone involved in this debate should also take note of the fact that the best "Return on Investment" Uncle Sam ever got was the post WW2 GI Bill. It sent thousands of returning soldiers to college. Over their working lives, Thanks to the higer paying jobs that education allowed them to get, those Ex-soldiers paid increased taxes that were 10 times the amount Uncle paid for their educations.
Education: The Only Government program the makes a Long Term Profit.
What we really need is a Federal University System.
One College per state that would accept all qualified applicants and provide them with a top education for Free in exchange for agreeing to accept a Public Service Job for the 4 years following graduation.
Then, if Wall Street looks good, we wish you happiness.