The future: What if this is as good as it gets?

It’s hard to listen to experts and people living in the real world and not hear the famous words of Jack Nicholson, “What if this is as good as it gets?”

What if my generation — Baby Boomers — are the last generation in the history of the United States to have a better standard of living than the previous one? What if the national dialogue started including that as a possibility?

The prediction that the war in Libya could last for years, a story that Minnesota is losing its young teachers, and today’s announcement that a lower unemployment rate masks the reality that the majority of the lost jobs may not return in this generation, feed the gloom.

But nothing matched this caller — James, from Bloomington — on today’s Midmorning segment on how student loan debt, heaped on students by colleges inflating the job prospects of graduates, may never disappear for our generation of the future.

He has $250,000 in debt, he makes $30,000 a year in a public-service job and he says, “every dream I’ve ever had of doing anything in my life is gone.”

The News Cut psyche can use some better individual stories. Have you got one?

  • Paul

    Maybe a good place to start is by defining standard of living more broadly than just inflation-adjusted wages. Think of the way that technology has enhanced peoples’ lives in unquantifiable ways in the last generation. It has enabled people to work from home and spend more time with their families, to connect and reconnect with family and friends across great physical distances, to find and discover new kinds of music, movies and art that enrich the human experience, to use machines to take over many of the dirtiest and most dangerous kinds of work, and on and on. Even if my inflation-adjusted wages are lower now than they were 20 years ago, I’d rather be alive today than in any other time in human history.

  • John Reinan

    The cost of higher ed is one of my standard rants. I started at St. Olaf College in 1976. The comprehensive fee, covering everything, was $4,000.

    St. Olaf now costs $47,000 a year — roughly 12 times as much. How can that be? The professors don’t make 12 times as much. The pickup truck they buy for the grounds crew doesn’t cost 12 times as much. They don’t pay 12 times as much to heat and light the buildings. A pound of hamburger, a loaf of bread, a gallon of milk don’t cost 12 times as much.

    According to the Bureau of Labor Statistics, inflation would make $4,000 in 1976 equivalent to $15,500 now. That means my alma mater has increased in cost at 3 times the overall rate of inflation.

    Can anyone explain this to me?

    And let’s also not forget that student loans are just about the only financial obligation that can’t be erased in bankruptcy. So our nation’s colleges and universities have ratcheted up their prices and made sure they ALWAYS get paid back.

    P.S. I graduated with $5,000 in loans and paid them back at $58.16 a month for 10 years.

  • Chris

    The US is going to have to ease up on its draconian student loan policies. The loans need to be more easily dischargeable in bankruptcy. We’re going to have multiple generations for whom there is no feasible way to engage in entrepreneurial endeavors. Most young people here are going to be saddled with debt-for-life long before they’re capable of appreciating the consequences of that choice (and nonpayment of which quickly multiplies the liability), and will have no means of insuring they remain healthy–unless they’re working full time for an employer that will provide health insurance.

    It’s time we start directing bailout wealth to human citizens of this country rather than multinational financial institutions. We need to strike a much more thoughtful balance between encouraging higher education and permitting people to start over and try something new.

  • Noelle

    John Reinan – hello to a fellow Ole! I’m a 2007 St. Olaf grad. Here’s a good opportunity for comparison: I graduated with approximately $60,000 in student loan debt. I’ve hardly touched the principle balance since I’ve spent most of the last few years paying interest.

    I was lucky to find a job after college, though not in my field. I have health insurance, very generous PTO, and work downtown so I’m able to use public transportation as my primary way of getting to work. However, I’m a minority among my fellow recent grads, and count my blessings every day. Despite all the positives, my husband and I have very little leftover after each paycheck to put into savings, so the usual “grown-up” stuff, like buying a house, having kids, etc. are far from our financial reach at this point.

    While my experience at Olaf was wonderful, I often wonder how it would have been had I chosen a more humble educational path. At 18, I had no idea how much $30k in tuition REALLY was when I was signing up for loans to cover the balance.

  • Penny

    What about paying students to go to school?

    Wouldn’t you want your future society run by well educated, well rounded individuals? Going to school and getting the most out of an education is a full time job (if you take a full load of classes).

    Why not pay students to go to school? The system in place does not work as it is.

  • Tyler

    Chris, my opinion is that we need to take step farther back than just reworking the student loan system. I, too, went to St. Olaf, but it was just assumed I would go to college after high school. This assumption is what saddles so many young people with debt. Every parent needs to sit down and have a looong conversation with their child about what they want in life. Personally, I wish I had taken a year or two off in between high school and college – or at least had someone ask me why the hell I wanted so much debt.

    It will be interesting to look back in 50 years and try to figure out what the tipping point was that changed the status quo in the U.S. Was it 9/11? The Great Recession? The rise of Facebook? The popularity of the iPhone and ubiquity of smartphones/mobile communication?

    Our world hasn’t shifted this dramatically since the Industrial Revolution. And it seems like now, as then, the bulk of the population at the bottom of the social ladder is suffering severe reductions in living standards.

  • lindsey

    I’ve got a better story: I’m an “adult” student attending Augsburg’s weekend college for my undergrad in elementary education with a middle school science specialty. Although tuition is still really expensive (around $12000 a year for full time, including books and fees), it’s about half of what the “traditional” students pay, for the same education on a schedule that allows for a regular work schedule (classes are evenings and weekends). I could’ve gone to MCTC for my generals for much less money, then transferred to Augsburg for my degree, but I honestly don’t think I would’ve stuck to school the way I have if it hadn’t been for the EXCELLENT standard of education and support that I’ve experienced at Augsburg. I believe my education is worth every penny I’m paying.

    I spent ten years after high school going to the school of life- traveling the world, working with kids in various settings, nannying in Alaska and in Minneapolis, and finally coming to the realization that the life I want (family, stability, benefits, retirement) isn’t possible without a degree. Teaching was the logical choice, and despite being in my third year of college and seeing the recent escalating attacks on educators by (excuse the generalization, but it mostly fits) Republicans, I am looking forward to engaging middle schoolers in the field of science. I am still optimistic.

    I made some choices with student loans my first two years in college that I wouldn’t make now (taking out my max allowed loans, including private loans, so I could pay off credit cards, which of course didn’t happen), but I’ve also made choices to take advantage of some really good public programs that will eventually erase most of my debt. By taking TEACH grants, I’ll have $16000 of my education paid for by serving 4 years in a low-income school in a high-needs field (science), another $17500 in federal loans forgiven for serving 5 consecutive years in the same setting, and the rest of my federal loans forgiven after ten years of service and repayment through the College Cost Reduction and Access Act of 2007. After ten years of serving low-income students, hopefully making a positive impact on their lives, most of my student loan debt will be gone.

    I plan to have a college fund for my children, but I will also make clear to them that taking time off between high school and college is one of the best decisions that I’ve made with my life, and I will encourage them to do the same. I will tell them to have adventures, make mistakes, fall in love, experience heartbreak, see the world, and do things that make them stretch farther than they thought they could before stepping into the “real world” of career, family, and debt. Why spend the money on higher education unless you’re sure of what you want out of it? In the mean time, the college fund will continue to grow. Also, as an adult paying my own way, my grants are based on my (meager) income, so school costs less than it would’ve if I had gone to school based on my parent’s income.

    Listening to James’s story on Midmorning was heartbreaking. I hope that by sharing his story so candidly, he will make many young people rethink their path through higher education, and that he will be connected with someone out there who can help him find a way to pay off his debt and someday retire.

  • Chris

    Frankly, the easy availability of student loans is the cause of higher-ed inflation. But it’s an illusion that the money comes cheap, because the true cost to the individual borrower is not appreciated on the front end. The schools bear no risk for the education failing to prove a worthy investment, while the student bears it all. And the government actually comes out *ahead* when student loans go into default: they sell the loans to collectors, who get to tack on fees, costs, and penalties, which are also nondischargeable.

    The schools must be compelled to bear some of the risk of unfavorable outcomes for their students. I think they should be on the hook for some portion of defaulted loans (or maybe there’s another way to naturally limit the market for student lending).

    The effect would be to reduce the availability of loans and curtail the availability of higher ed for some people, but the current level of availability is premised on an imbalance produced by borrowers’ relative naivety. They’re only just barely old enough to sign contracts, and they’re being asked to agree to something that could burden the rest of their lives.

    The whole system is broken.

  • Jon

    Bob, The baby boomer’s raised my generation.

    The baby boomer’s taught my generation how to take out a loan for something you can’t afford. The lesson doesn’t seem to have been taught very well, as so many people in my generation and later, aren’t doing so well with money.

    Sure there is a recession, but even before that, seems like there was a lot of people in gen X with piss poor credit…

    Baby boomer’s them selves were also raised by a group of people, mostly ones who lived through the great depression… I suspect that those of us living through the great recession will be teaching our kids a very different set of lessons around money management then what the baby boomer’s taught us.

    And I’m not just blaming everything on the baby boomer’s cause I just got my social security statement in the mail yesterday.

  • Kassie

    I just stopped paying my loans. My payment was $450 a month for the next 26 years. I applied for forbearance and stopped paying. I intend on keeping them in forbearance as long as possible because I can just not afford them and afford my house. I can’t sell my house because I’m totally underwater, so the loans don’t get paid.

    Something has to happen. I know tons of people who have their loans in forbearance and have no way to pay them.

  • Jack

    Fortunately I do not have a student loan to pay for the specialized master’s degree that I am working on – my employer is paying for the majority of it. That has been a saving grace as the education fund is still there for my child.

    I do regret that I didn’t check out the pay scale of the position that I would be able to move into with the degree and no experience. Turns out that it is substantially less than my current salary – ironically by almost as much as the total tuition for the program.

    I feel fortunate that my soon to be college aged child is now talking about living at home and going to the local public college. He’s watched enough “Til Debt Do Us Part” with me and seen what overwhelming debt can to families. Educating our children is key to ensuring their future financial success.

    He’s learned that my bachelor’s degree from a small public university hasn’t held me back from a successful career.

  • Joey

    The problem seems to be that a college degree is worth so little in today’s market. Maybe if we didn’t require everybody to go to high school, we could raise the quality of our schools so that a diploma meant anything, and a college degree much more.

  • Prepared Parent

    To John the St. Olaf grad: a straight-line calculation of inflation doesn’t capture two significant elements of the increase in college tuition: the cost of health care (which has increased even faster than college tuition) and the cost of adopting new technologies. Colleges simply do more, provide more, and keep pace with more change than was the case a generation or two ago. It costs more than inflationary money to do so.

    I can’t think of any good reasons for someone to go $60K in debt for an undergraduate degree. We need a greater measure of self-control about college selection. For a student seeking a solid, general undergraduate degree, there are literally hundreds of community colleges and four-year colleges and universities that will provide it at a wide range of price points. Only vanity drives an average student to aspire to a name-brand college he or she can’t afford.

    For the undergraduate with a well-formed sense of what he or she wants to do, selecting the very best program in that field truly makes borrowing to attend a specific school an investment. Most 18-year-olds don’t have that sense.

    We also need parents to accept the responsibility to SAVE.

    I have two children in college at the moment. Through 20 years of saving (no, we don’t have a cabin, a boat, or such toys) and a small bequest we didn’t spend, one child was able to chose between two name-brand schools with different financial aid practices. She would have had the same excellent educational opportunities at either school. She selected the one that will allow her to graduate with no debt, literally free to make career choices she would not make if she graduated with loan repayment over her head. The other child has a very specific career goal, and was fortunate enough to get into the best university program in that field. He had the same resources as his sister, and is taking on a modest level of debt (the federal subsidized amounts) to make it work. We presented it to him as his own investment in his future, and he made the choice on that basis. Both made good decisions.

  • http://norwegianity.wordpress.com Mark Gisleson

    I’m surprised there aren’t more news stories about this, but the TRUTH is that Americans used to heavily subsidize education. When I started at Iowa State in 1971, tuition was $600 a year. (That’s $3450 in today’s dollars.) Obviously the cost of maintaining a huge state university was much greater than the tuition charged (in today’s dollars ISU’s 1971 tuition revenues were about $65 million a year, and that’s for a much larger and nicer campus than the UM’s).

    Americans subsidized higher education because it assured us of our future preeminence in countless fields. A preeminence that has gone in the crapper thanks to the “eat your seed corn” mentality of our MBA Republicans.

    Modern day so-called conservatives believe it takes a village full of suckers to make a millionaire, and that’s pretty much how it has played out. It takes hundreds of crushed hopes and thousands of broken dreams before one person can steal enough to become a billionaire.

  • 4!

    “Modern day so-called conservatives believe it takes a village full of suckers to make a millionaire”

    EXCELLENT POINT, MARK

  • Lisa

    I graduated from college about 5 years ago, and actully had modest students loans ($12,000) that were mostly from my study abroad experience. I basically stashed away what money I could to pay my tuition and lived off pasta roni. I paid off my loans within three years of graduating because I put half of my tax refund into them each year and then continued paying the original amount so I was able to overpay them.

    However, I do realize I was lucky. I found a decent job (customer service) which, while not glorious gave me benefits and paid the bills, and allowed me to move to a much better position in the same company. Also, I think tuition at the U is about twice what it was when I went there, so If was doing it over again today I probably would have at least twice the amount of loans.

  • Anderson

    All I can say is, I am forever indebted to my family for putting me through college. My fiance, unfortunately, had no help. We both went to the University of St. Thomas, a HUGELY expensive institution these days. Looking back, I really had no clue what I was getting into, and neither did my fiance. He still says that he would go back and not go at all. If we both had debt, we would combined be in the hundreds of thousands owed. And together, coming out of four-year institutions, are pulling in a combined 50,000, a paltry defense against the onslaught of monetary pressures for two young adults. In no way am I complaining. I simply know that if I cannot afford for my future children to go to University, I will have a very large talk with them, and encourage them to look into other options. In reality, nothing is worth this amount of debt.

    Something must be done!