One of the clearest indications of the growing income and wealth inequality in our nation is the level of college debt that is being incurred by the vast majority of the current generation of college students and recent graduates.
According to one study, student loans total an astounding $1.5 trillion, a figure that represents the largest source of debt for Americans after home mortgages.
The recent college admissions scandal has highlighted what is common knowledge, namely, that the rich are able to gain admission into elite colleges for no other reason than their extreme wealth.
But the flip side of this story is that the wealthy not only can pay huge sums to bribe their kids’ way into these schools, but also that they can afford to pay the full fare without worrying about financial aid or loans.
However, admission into elite colleges is not even the tip of the iceberg in terms of the issue of paying college expenses. Public college and universities used to be affordable alternatives for lower-income and middle-class students. But given that state and federal funding for higher education has been on a steady, downward plunge since the 1980s, state schools of higher education now have little money for scholarships, even for needy students.
As a result, today’s young people are graduating with an average debt of $50,000. $100,000 in loans is not an uncommon figure — and these are graduates from state universities.
There also are two other factors that are compounding the negative effects of high student debt: According to a recent study, young adults today earn $10,000 a year less than their counterparts did in in 1989. In addition, the interest rate on that $1.5 trillion of debt is around seven percent — a figure that is far higher than almost any other kind of consumer debt
This situation not only is tragic — and that is not too strong a word to use — for our young generation, but it also holds profound consequences for the future of our country.
With such high levels of debt, young people are marrying later in life and having fewer children. Their college debt means that they will be unable to buy homes, which not only ultimately will have a depressing effect on the housing market and the economy, but will render the achievement of the American Dream all but impossible for this generation.
With the Baby Boomers reaching full retirement age, there also is this question: Who is going to pay for the Boomers’ Medicare and Social Security costs if today’s young people are so financially overburdened?
The Green New Deal proposed by Senator Ed Markey and others not only is about saving our environment, but it also aims to give young people a fighting chance to get out from under the crushing burden of student debt and exorbitant tuition bills. America is the only major country that imposes these debts upon its young people — and the time may have come to end it now.