Suffer the Little Children to Pay Unto Me
Student loan debt now totals $1.59 Trillion dollars, a $14 billion increase from this time last year. The average undergrad leaves school with $25,000 in debt at an interest rate of between 5 and 8%. Factor in grad, medical or law school, and the numbers become astronomical.
Apparently, we don't want them to have it better than we did.
OK, all you students in Dr. Gray's economics class, it's time for a little quiz. Grab your pencils, turn off your phones and answer a couple of questions. And notice, no Oxford comma there, thank you.
How much debt do households in America hold cumulatively? Anyone? Bueller? Yes, Americans collectively owe $16.15 Trillion dollars. That comes to roughly $58,000 apiece.
Now, class. What are the two biggest components of that overall debt? Yes, the overwhelming majority is mortgage debt. So, what is number two?
No, not auto loans. No, credit cards isn't right either. Well, as someone who had to get a degree to be standing up here, let me tell you. It's your effing student loans. And, by the way, number two is the perfect description.
That's right, kids. Student loan debt now totals $1.59 Trillion dollars, a $14 billion increase from this time last year. The average undergrad leaves school with $25,000 in debt at an interest rate of between 5 and 8%. If you went to grad, medical or law school, the numbers become astronomical. President Obama was 44 years old when he finally paid his off.
So, President Brandon decided to wave a federal wand, since 90% of student loans are federal, and forgive about $10 grand of it for single folks making less than $125,000 a year, and $20 grand for couples making $250,000 or less.
And because we are all good-hearted people who want our kids to have it better than we did, everyone is on board, right? Of course not, slick. What country do you think you live in, Denmark? This is the US of A, my friend, and everything has a party label, especially higher education.
Our Texas Railroad Commissioner said two weeks ago that this whole climate change hooey was dreamt up by a bunch of “...pot smoking, draft dodging college professors.” Of course, he and I are roughly the same age, and more importantly, were in the 1960's and '70's, and neither of us was drafted. No doubt though, our pot smoking aggregate may have differed.
Then our Lieutenant Governor, you know, the one who painted himself Oiler blue on TV and got a vasectomy live on the radio? Well, he is worried that if teachers, draft dodging or not, tell black students all about slavery and Jim Crow, they might think they have a beef with us or something. And besides, we have bigger fish to fry what with Grandpa Joe wanting Mexicans to come across in droves and take over the country. He actually said that. Dan Patrick can't seem to decide which trope about the Prez is operative at any given moment. Is he senile or deviously clever?
So, the relationship between our elected leadership and higher education is hampered by, well, a seeming lack of higher education. So the reaction to making it easier for kids to get one, and pay for it once they have, seems just below self-immolation on their priority list. The weapon they have chosen for this dual of half-wits is resentment and inflation.
So, the inflation part. The debt forgiveness will cost $300 billion dollars, which is where a lot of critics on the right stop talking. But that is over the course of ten years meaning about $30 billion a year or three-fourths of what we spend on the Justice Department, about 1% of the budget.
Bloomberg Analytics estimates we'll be looking at maybe a tenth of a point of possible inflationary increase. But counter that with $10,000 in new individual or household buying power or savings in the bank. And the relaxed repayment standards and limits on income impact of loan payments, mean that buying power is increased even more.
Then there is the two-fold resentment argument. I saw a meme that contended that this gift of mercy on student debt is paid for by all of us taxpayers. Well, yes it is, just like every other thing the government does. Building a bridge in Alabama, recovering from Hurricane Harvey in Texas, An F-35 assembled in Fort Worth, a commuter rail system in New York, a flood gate in New Orleans, all benefit from taxpayer money. The tax breaks granted to high-income earners by Republicans under the Trump administration cost the treasury income and increased the debt, but that was seemingly just aces with half the electorate.
But, here's the argument against our bumbling or sinister Presidential plan that is heard most often on Fox and in the halls of Congress, which are often interchangeable. Basically, it goes like this. “I worked hard to pay off my loans and these kids can, too.” Which, frankly, is akin to saying, my life sucked so why should yours be any better.
Even if you didn't work hard to pay off loans, they should anyway. The inimitable Judge Jeanine Pirro actually said on Fox, “My heart bleeds for those people who scrimped and sacrificed to pay their loans. Now, I didn't have any loans because my parents paid for my college...but this is a giveaway and it's disgusting.” Apparently copious amounts of Franzia is the antivenom for self-awareness.
Now, we could use a Biblical argument such as the parable of the master who forgave his servants' debts in the book of Matthew, or the animus toward charging interest and money lenders in general in both the Old and New Testaments. Forgiveness in the main seems to be a running theme throughout the book, if I'm reading it right.
But all this beats around a bush called the cost of education. Taking my home state of Texas as an example, our system of public universities was established to give the children of the middle class a shot at college for a lot less than Rice, SMU or Baylor. I went to one of them, the University of Houston in 1967. I refer you back to my last piece about being an old fart.
My dad was an electrical engineer and therefore not rich by any means. We were firmly in the middle class, shopped at Sears almost exclusively and vacationed in Little Rock at my grandparents. When I graduated high school, he and I made a deal. He would cover tuition, and I would work part time to pay for my living expenses. I pumped gas, tended bar, and then discovered radio. But we got it done because the school was affordable.
I ran my college costs through an inflation calculator to see what it would be, or should be, in today's dollars. A full year at UH with tuition and fees for all 15 hours that is considered a full load, would cost today $2800. A year at UH actually now costs just under $13,000. So, how the hell did that happen? Easy, politicians.
State university tuition was regulated from its inception right up to 2003. That year, Governor Rick Perry and the Republican Legislature were facing a budget shortfall during an economic lull. So, what to do? We could raise taxes a bit and let everyone share in the burden of running a huge state. But, we are Republicans and raising taxes is like Kryptonite. So, being the Texas Legislature, the largest floating crap game in the region, let's find someone who can cover the spread without calling it a tax. Got it! Let schools charge whatever they damned well want and we can give them less from the state, even though they are part of the budget. And the only people hurt in all this are poor and middle-class kids and their parents. And, bonus points here, we call it deregulation just like Reagan! A twofer!
That's how tuition at a state University went from an inflation-adjusted $2800 a year to $13,000. We have simply left these kids no choice but to borrow at rates roughly equivalent to a car loan. A car they can't buy, incidentally, since they have school loan payments until they are my age.
Speaking of cars, here's how inflation works in the real world. Back to the 60’s. My dad bought a nice mid-level Chevy Malibu in 1965 for $3500…
Run it through the calculator and that's around $29,000 today. A Malibu LT now costs just over $28,000. Hell, the base price for a 2023 model is $24,400. That's how the private sector handles inflation. That's because they have customers to please, and real competition. If GM went nuts and charged a ton more, Ford and Chrysler would pounce. But try UT or A&M and you'll find the tuition roughly the same.
Why did Texans let this happen to a vulnerable group of our neighbors? Why haven't we re-established tuition regulation to bring some sanity back to the cost of a state college? Why are we criticizing the very idea of helping kids, our kids, our friend’s kids get a hand up as they embark on life's journey? Many industrialized nations send kids to college for free, and we can't spot a hard-working kid some bucks on his college loan? And why is most of the criticism coming from a group who loudly proclaim their fidelity to a religious faith founded on the ultimate sacrifice?
We have lost our way.