A $12,000 Cost For A Family Of Four
By JAMES K. FITZPATRICK
In recent editions of First Teachers there have been discussions of whether it would be just and sound policy for the federal government to forgive the student loans that are burdening the lives of so many young people seeking to get started in life. (Which means, of course, having the taxpayers foot the bill.) There is no question that it can be difficult to start a family or buy a first house with tens of thousands of dollars in student loans needing to be repaid.
One plan already in place is the Public Service Loan Forgiveness program. It provides for student loans to be forgiven if the young man or woman with the debt agrees to work for a number of years in government service. Both Hillary Clinton and Bernie Sanders are proposing that this idea be expanded to the point that virtually all student loans will be forgiven.
J.M. of Wikieup, Ariz., writes to offer some observations about the implications of these loan-forgiveness programs. The politicians proposing that the loans be forgiven tell us it is the compassionate and fair thing to do, arguing that recent college graduates should not be faulted because the jobs they thought would be there for them when they took out the loans, are not available.
J.M. writes to remind us that there is no free lunch.
“The topic of forgiving student loans held by the government is getting some political life again. A few numbers for perspective: The population of the United States is about 330 million people. For each billion dollars that the government spends, it puts a burden of $3.00 on each man, woman, and child in the country. The student loan burden is about a trillion dollars right now, and having the taxpayers assume the cost would put, roughly, a $3,000 cost on each person in the U.S., or about a $12,000 cost for the average family of four.”
J.M. asks why “if the college graduate can’t pay off the loan, should the average American be assumed to be able to take up the burden? The implication of this situation is that the education system is creating a product that can’t even sustain itself. In the broader context, the U.S. debt is around $18 trillion; that’s a debt burden of about $54,000 per person when they are born!”
He crunches some numbers: “If all the wealth of ‘the rich’ in the US were confiscated, it would cover only about one-third of the national debt. The ‘rich,’ those with one million dollars in net worth, already pay more than 80% of the country’s income taxes. We run the risk of ‘killing the goose that lays the golden eggs’.”
J.M. also questions the wisdom and appropriateness of the PSLF program: “Why does a Public Service Loan Forgiveness program make sense? Think of the implications of PSLF. The taxpayer is placed in double jeopardy. He first has to finance a college degree for which there is no marketable demand, and then is faced with paying the taxes to pay the public sector salaries of those whose student loans have been forgiven once they go to work for the government.
“I believe that the military has a program that rewards military service with college benefits. That is a practice that can be defended, in contrast to PSLF. The military recognizes the value in attracting people to military service — people who might not join the military otherwise — with this promise of educational benefits.
“PSLF, in contrast, offers forgiveness of college loans to those who seek government careers in fields where there is no demonstrated need for incentives to attract qualified employees. Do we really need to forgive student loans to attract future social workers, teachers, and librarians? Has anyone demonstrated that to be true with empirical studies?”
J.M. points to the “indirect effects” of student loan debt:
“Trying to service the loan and not being able to work gainfully in a field for which they were ‘trained,’ the young people are putting off family formation and with it the commitment to stability. Having invested four to six years and accrued a substantial debt, the young adults find themselves in a not much improved, and in many cases a substantially less advantageous, position than when they left high school.
“For those who do get married and begin a family, their perspective on family size is detrimentally influenced by their financial position, i.e., fewer (if any) children. Marriage, children, home ownership, gainful employment, etc., are all elements of civic engagement which is necessary for physical, moral, and spiritual wellbeing.”
J.M. adds an aside:
“(It’s hardly a secret that Vladimir Putin recognizes that Russia can’t be a superpower on its own because of the small and dwindling population. He realizes that a superpower needs land, resources, and people, thus the long-term push for what was once called RUK: Russia, Ukraine, and Kazakhstan. He’s already working on Ukraine.)”
There is another angle to consider, says J.M.: “The Philadelphia Federal Reserve Bank has calculated that approximately 40 percent of college graduates can’t find work commensurate with their skill level. That mismatch is a direct result of our government’s commitment to ‘college for all who want it.’ If we had purchased a tractor and found out that it could perform only at 60 percent of advertised capability, we’d be back at the dealer demanding our money back.
“That doesn’t work for the ‘ethnic studies major,’ for example, who’s invested time and money in his or her education and now has no job. Their education is what economists call a ‘sunk cost’; the time and money spent are gone. Although, when you think about it, maybe it shouldn’t be a sunk cost. Businesses can be sued for false advertising. Maybe unemployed alumni should be permitted to sue their alma mater for the false assurances college counselors gave them that their college degree was going to secure them gainful employment.”
J.M. concludes with the following:
“If we pile on top of all this the personal disappointment and resentment of thwarted dreams, we have a toxic brew of resentment and distrust. This is especially true in a society that is already fueled by an expectation of entitlement — a career, fancy house, corner office. America has not had to deal with mass movements led by demagogues exploiting alienation of this kind.
“That does not mean we never will. Bernie Sanders is not likely to pose such a threat, but that does not mean that there is not someone more dynamic and ruthless than Sanders out there somewhere pondering such an opportunity.”
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Readers are invited to submit comments and questions about this and other educational issues. The e-mail address for First Teachers is fitzpatrijames@sbcglobal.net, and the mailing address is P.O. Box 15, Wallingford, CT 06492.
