Monday, September 14, 2009

I Owe, I Owe, It's Off To Work I Go

The Wall Street Journal is reporting that college students are borrowing more

than ever to pay tuition. In just one year borrowing increased by 25% to $75.1 billion.

Sixty-six percent of college students borrow to afford to attend a university. In 1997 that

number was 58%. Today the average debt is $23,186 versus $13,172 in 1997. This is the

average; but if a student attends schools like the University of California, University of

Michigan or the University of Washington, the four year total could easily be $80,000;

and if the school of choice is USC, Notre Dame, Stanford, Duke or an Ivy, the tab could

run close to$200,000.

I have talked about this problem frequently. College students graduate and

must start paying back these debts almost immediately. If they attend graduate school,

the debt load approaches that of a first mortgage. Being this indebted has serious

ramifications. The types of jobs chosen, places to live, whether or not to have a family,

and the ability to buy a home are all affected by how much these students owe.

When I was of college age, you could attend UC Berkeley for about $1,600

a year. Today, tuition and room and board will run bout $23,000 and that is considered

a bargain. The Master Plan for California states that the cost of obtaining a higher

education should be as low as possible. When Proposition 13 was passed, the chance of

a reasonable price for a higher education went out the window. Now the situation is

even worse as year after year Sacramento tries to balance the state budget on the backs

of students at all levels, but particularly universities.

If ever there was a national security issue, this is it. Far more dangerous than

any terrorist attack and causing long term economic damage, college tuition is an issue

no one wants to touch. The main reason is that banks are making a huge profit off of

education loans and the fees that are associated with them. Not only are they lucrative,

but the banks take no risk since the government backs the loans and guarantees repayment.

We desperately need an educated work force. As more and more manufacturing

jobs leave for cheaper locales, the new worker will have to be better educated in order

to cope with emerging technology and to be flexible enough to adapt skills to new

opportunities as they present themselves. Our children have to compete with children

around the world who have access to university education at far less cost and thus gain

a huge advantage. A number of years ago, Ireland decided that it's university education

would be free. The result was an increase in university educated graduates and a work

force very desirable to employers. A number of industries including pharmaceutical

and biotech moved facilities to Ireland; and the economy heated up to the hottest in

the European Union.

The answer to this crisis is quite simple. College should be free. If you can be

admitted, your tuition is free. The benefits would be extraordinary for this nation. First,

consumer spending drives 2/3 of our economy. Imagine parents of college age students

who didn't have to pay tuition or borrow the money. Imagine how that would increase

their buying power and boost the economy. We give cash for clunkers, how about dollars

for diplomas? Second, students who graduate with low or non-existent debt would be

free to choose among numerous jobs which benefit society but don't garner the big bucks.

From teaching to social work to medical practices in poor rural areas, students would

be able to serve and accept lower salaries. Third, more students would be able to purchase

homes which would boost the home building industry, appliance makers, and furniture

suppliers. Increasing access to higher education would stimulate emerging green

technologies as well as high tech innovations which would provide more jobs to a ready

and willing work force.

I crunched the numbers and figured you could do this for about $60 billion

a year. We spent over $200 billion a year in Iraq and Afghanistan, $750 billion to bail

out Wall Street, $500 billion to bail out the savings and loan industry; and we could

close corporate tax loopholes (offshore shell companies formed to avoid paying taxes)

which could pay for a large portion of this price tag. This is very doable. Can you imagine

being the parent of children who work hard and achieve academically and know they

will be able to get a college education that won't bankrupt you or force them into serious

debt? Can you imagine the pressure that would ease? Can you imagine what a carrot it

would be for poor families to tell their children if they work hard they are guaranteed

a college education? For once, middle class families would get a benefit almost non-

existent today. This would be better than any tax break that could be offered.

The only question is do we have the will and vision to do what we need to do

for the economic and national security of this country? Only you can answer this question.

We might never be attacked again by terrorists; but if we don't solve this problem, it

won't matter. We will become a third world nation unable to compete and the terrorists

won't have to lift a finger. What do you think? I welcome your comments and rebuttals.

Please send them to

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