I view my four transformative years at MSU as the utmost privilege, but I’m feeling a little entitled to a bigger Pell Grant after delving into the world of private student loans.
The class of 2011 spent its college career in three of the most turbulent years of our nation’s financial history.
We were greeted in fall 2007 with a budget crisis in Michigan, and the Great Recession has caused tuition rate increases each spring.
In the age of financial crisis, it is clearer than ever that our education is our most valuable asset. How we use that asset has yet to be decided.
The majority of educations are funded by borrowed money. According to the U.S. Department of Education, 61 percent of students and their families at public four-year institutions, 70.6 percent at private non-profit universities and 97 percent at private for-profit schools accrue educational debt.
A college degree is becoming more indispensable, but less affordable. This leaves our generation with an important question: Is education a privilege, commodity or entitlement?
Its current state is commodity. The Christopher Bryski Student Loan Protection Act, introduced in the U.S. Senate last Wednesday as an amendment to the Truth in Lending Act and the Higher Education Act of 1965, reworks cosigner obligations on private student loans.
At present, lenders such as Sallie Mae, Citibank and Wells Fargo require families to pay the balance in the event of the student’s untimely death or disability.
The new act would not require lenders to discharge the loans, but would require establishment of power of attorney upon signing.
This sounds more like buying a house than going to school, and it begs the legitimate question of what higher education means to our society in the generation of debt and deficit.
What’s worse, students at for-profit colleges such as the University of Phoenix and DeVry University — you know, the ones with the cute-girl-in-pajama commercials — represent only 7 percent of all college students, but are responsible for 44 percent of all student loan defaults.
Still, the Department of Education shows the University of Phoenix pulling in more than $1 billion in Pell Grant money during the 2009-10 school year. The national Pell Grant budget only is $9.28 billion.
It’s predatory lender heaven: Billions of taxpayer dollars essentially are funding for-profit colleges where nearly one in two students default on their education.
Not so ironically, for-profit schools’ students come from the same demographic as the one targeted in the subprime mortgage crisis — low income and largely minority.
In fact, to the private banks financing college diplomas, buying a house and going to school are frighteningly similar.
Even if you die, you’re in it for the long haul. How are we supposed to increase access to higher education if for-profit schools and the financial sector continue treating college degrees as necessary goods?
On Sunday, Federal Reserve Chairman Ben Bernake said in a “60 Minutes” interview that he believes the foremost driver of a rapidly expanding American wealth gap is education disparity — for college graduates, the current unemployment rate is 5 percent, but for those without a degree, it’s 10 percent.
So, here we stand. You need a college education, and maybe even a graduate degree, to move up in the world. Families and students take out loans to pay for a college education, but the banks that let us borrow the money are not quite as supportive.
They show you their love with high interest rates and predatory lending, gambling with taxpayer-funded Pell Grants.
The people impacted by this are the future shapers of public policy, financial industry regulation and higher education.
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In a perfect world, a college degree would be available, without life-altering financial downfall, for those willing to work for it.
Getting an education wouldn’t be treated like buying a house, and the people signing on to subprime educational loans wouldn’t exist because their taxpayer-funded secondary educations would have been of unsurpassed quality.
Talk of higher education and how the problem of a predatory financial industry leaves us with hundreds of open-ended questions.
Those solving these issues are the public school teachers, bankers, businesspeople, academics and public policy makers of tomorrow.
And we have some big problems to fix.
Monika Johnson is a State News guest columnist. Reach her at john2727@msu.edu.
