Generation Debt

The Wall Street Journal today reports on a drastic increase in student borrowing and debt:

Students are borrowing dramatically more to pay for college, accelerating a trend that has wide-ranging implications for a generation of young people.

New numbers from the U.S. Education Department show that federal student-loan disbursements—the total amount borrowed by students and received by schools—in the 2008-09 academic year grew about 25% over the previous year, to $75.1 billion. The amount of money students borrow has long been on the rise. But last year far surpassed past increases, which ranged from as low as 1.7% in the 1998-99 school year to almost 17% in 1994-95, according to figures used in President Barack Obama's proposed 2010 budget.

The sharp growth is "definitely above expectations," says Robert Shireman, deputy undersecretary of the Education Department. "But we're also in an economic situation that nobody predicted." The eye-opening increase in borrowing is largely due to the dire economic environment, which is causing more people to seek federal loans, he says.

The new numbers highlight how debt has become commonplace in paying for higher education. Today, two-thirds of college students borrow to pay for college, and their average debt load is $23,186 by the time they graduate, according to an analysis of the government's National Postsecondary Student Aid Study, conducted by financial-aid expert Mark Kantrowitz. Only a dozen years earlier, according to the study, 58% of students borrowed to pay for college, and the average amount borrowed was $13,172.

Anyone who has read a poll knows that the economy is the #1 concern for young people today, but what does that mean in terms of the policies they would support? The Center for American Progress just issued a new report that sheds light on this not-often-explored intersection of demographics and policy. The report - The Progressive Generation: How Young Adults Think About the Economy - does much to dispell myths (like the one that says young people are gung-ho about Social Security Privatization), and clarifies the position of Millennials on a number of issues. The report provides some rays of hope to the labor movement, and has a lot to say not just about the economy, but really what Millennials think about the role of government in America.

This should be mandatory reading for campaigns, the Party, and anyone seeking to understand the political beliefs of the youngest generation. Here are the major findings:

• Millennials are more likely to support universal health coverage than any age group in the 30 previous years the question has been asked, with 57 percent of 18- to 29-year-olds saying that health insurance should come from a government insurance plan.
• Eighty-seven percent of Millennials think the government should spend more money on health care even if a tax increase is required to pay for it, the highest level of support in the question’s 20-year history.
• An overwhelming 95 percent of Millennials think education spending should be increased even if a tax increase is required to pay for it, the highest level ever recorded on this question in the 20 years it has been asked.
• Sixty-one percent of Millennials think the government should provide more services, the most support of any age group in any of the previous 20 years the question was asked.
• When asked in the General Social Survey whether they were in favor or against the idea that cutting government was a good way to help the economy, Millennials had the lowest support of cutting government spending in the history of the question.
• Millennials are very supportive of labor unions, giving them an average ranking of 60 on a 0-to-100 scale (with 0 indicating a more negative view of labor unions and 100 being a more positive view), the second-highest level of support of any age group in the over 40-year history of the question.

For the more graphically inclined, here's what that looks like in graphs:

Right to Health Care

Health Care Spending


Services


Jobs


Government Waste/Spending


Unions

That last provides a nice ray of hope to the labor movement, which many Millennials have little or no direct experience with.

In addition to these areas on which Millennials seem to be the uber-progressives within the electorate, the report also singles out two areas in which Millennials views - while far from conservative - are not as progressive as those of older generations. These are Social Security and their views of the business community.

With regards to the business community, the report notes that Millennials views "defy easy characterization and suggest a more pragmatic progressivism than populist orientation." Millennials are OK with increased regulation, but they are also comfortable with increase profits for business, suggesting a middle of the road view. Anecdotally, it seems to ratify the phrase I hear a lot among my peers: they want to do well by doing "good."

Social Security is often thought of as the conservative Trojan Horse within the Millennial generation. CAP's report notes that there is some truth to this: 74% of Millennials support privatization compared to 41% of adults over age 60. That tends to be the most reported fact - and one overplayed at times by conservatives - but it masks the full story. Studies show that the further away from retirement a person is in their life, the more likely they are to support privatization. And Millennials are more likely than almost any group to support increased spending on Social Security:

Taking both of these factors into consideration, the report concludes that support for savings accounts are likely a "lifecycle" issue that can be messaged around and will decline as Millennials age into the population.

The real significance of CAP's research is that all the data is compiled from long-term studies and surveys. That allows them to speak not only to the concerns of Millennials, but to compare those concerns to those of Generation X and the late Baby Boomers when they were of a comparable age. In doing so, they help dispel the myth that voters become more conservative as they age (what the study calls "lifecycle factors"), and paints a picture of a generation that is far more progressive than its predecessors ever were. The CAP report argues that this is evidence of a long-term, generational shift towards a more progressive set of political beliefs.

Several pieces of data suggest that a lifecycle explanation is not sufficient. The decades of survey data show that young people are not always more economically progressive than older people. In addition, Millennials are more progressive than previous generations—especially Generation X, for which there is the most comparable data at the same age. A period explanation is not likely to be sufficient because even though all Americans have been trending more progressive in recent years, Millennials are far more progressive than older people today and, on several questions, have become more progressive at faster rates than the rest of the population.

As a result, it is likely that, in addition to period and lifecycle factors, there are generational forces at play in shaping the progressive views of Millennials. This suggests that not only are Millennials quite progressive now, but they are likely to be so in the future.

There's a lot of focus right now on the upcoming election - as their should be. But it's important to remember that elections aren't ends in themselves. They are vehicles the people use to usher in policy changes.

When Rock the Vote released their poll of Millennials (ppt) a few weeks ago, topping the list of concerns was the economy. Specifically, young people were concerned about their ability to obtain jobs that would allow them to climb out of debt and begin to build a life, whether that be supporting a child or buying a house (or both). This is the number one concern of Millennials, who on average graduate with $20k of debt and may be the first American generation to not do better financially than their parents.

What are the policies that could change this situation and provide economic security to our generation? These are the questions that Demos hopes to answer at their upcoming conference: A Better Deal - Reclaiming Economic Security for a New Generation.

The conference, scheduled for May 8th and 9th in DC, will feature an impressive array of speakers including Katrina vanden Heuval of The Nation, Andy Stern, President of SEIU, Andrea Batista Schlesinger, ED of the Drum Major Institute, as well as a number of youth organizing leaders. Panels include:

User-Generated Breakout Sessions
Registrants will have a chance to submit requests for topics or proposals to host a session during online registration. At the conference, these small group discussions or training sessions will allow participants to learn from each other and connect with other activists in their region or issue area.

Paycheck Politics
This panel will focus on the quality of jobs available to young adults in the New Economy, comparing wages, job security, unionization and benefits to the jobs that sustained previous generations. Speakers will also offer strategies for improving job quality, including living wage laws, career ladder and green job programs, traditional unionization and alternative organizing strategies including worker centers.

Higher and Higher Education
This panel will focus on issues of higher education access, affordability and debt. In this generation, the college degree is what the high school diploma was in the previous generation: an entry requirement for middle-class jobs. The panel will explore the attack on affirmative action amidst the widening racial gap in higher education, the drivers behind skyrocketing tuitions and student debt, and offer policy solutions.

Getting a Life: Housing, Health Care and Child Care
This panel will focus on affordability barriers to the necessities of middle-class life: housing, health care and child care. Panelists will describe why and how costs have risen, what public policies could help young adults and families, and how activists can play a role.

Generation Debt
This panel will focus on the rise of personal debt among young adults, explaining how culture, financial pressures and new lending industry practices have played a role. Panelists will discuss strategies to combat payday lending, abusive credit card practices, predatory home loans and other high-cost credit.

Young Elected Officials
This panel will showcase a group of young elected officials who have made the economic concerns of young adults and families central to their campaigns and agendas.

Race, Ethnicity and Economic Destiny
This panel will explore the connection between the millennial generation's two claims to fame: the most diverse generation in American history and the first that is widely predicted to not surpass their parents' standards of living. Panelists will discuss the economic status of immigrants and their children; the effect of the racial wealth gap; the economic contours of mass youth incarceration, and issues of political power and the challenges of winning broad government investments in a more diverse population.

We're Broke and We Vote
This panel will focus on strategies to build a movement for a better deal for young adults. Panelists will discuss the power of young voters, the obstacles to moving a young adult economic agenda and how to mobilize young adults around these issues.

Many of the topics that will be covered at the conference were written about in a recent special report by The American Prospect: Mobilizing Millennials. I highly recommend both the conference and the report for those looking to understand the economic concerns of young voters, and the policies young people will ask the next administration to implement.

I'll be at the conference live-blogging, as well as speaking on a panel. Hope to see you there.

I'm about to get on a plane (again, sigh). Here are some must-read stories around the tubes today:

• Anya Kamenetz pulls together a lot of recent data about young voters and takes a stab at outlining a youth policy agenda.
• The New York Times looks at a PEW survey from December and wakes up to the fact that young people get their political news through social networks on the web - aka digital word-of-mouth:
  

  According to interviews and recent surveys, younger voters tend to be not just consumers of news and current events but conduits as well — sending out e-mailed links and videos to friends and their social networks. And in turn, they rely on friends and online connections for news to come to them. In essence, they are replacing the professional filter — reading The Washington Post, clicking on CNN.com — with a social one.

  ....

  In one sense, this social filter is simply a technological version of the oldest tool in politics: word of mouth. Jane Buckingham, the founder of the Intelligence Group, a market research company, said the “social media generation” was comfortable being in constant communication with others, so recommendations from friends or text messages from a campaign — information that is shared, but not sought — were perceived as natural.

• Davey D. posted an article suggesting that young black voters are bucking the generational trend and becoming more independent and less Democratic in their party loyalties. This seems to be caught up in the rather complex dynamics of the historical role of African Americans in supporting the Democratic Party, and current divisions between the hip hop generation and the civil rights generation.
• In other news, Chelsea Clinton plans on attending the Young Democrats of North Carolina State Convention, and Rock the Vote lets us know about a bill now before Congress which would allow all 17 year olds the right to vote in local, state, and presidential primaries if they turn 18 before the general election.
  

• Rock the Vote blog has an excellent post on how anyone can do DIY voter analysis using Census data and some cheap software. The instructions are meticulous and slightly intimidating, but the writer makes it sound like something you could figure out in an afternoon. I've got to give that a try . . .
• YouTube announced that you will soon be able to sort candidate videos by issue, making a nice little tool for compare/contrast purposes.
• Three interesting things to check out for those interested in how the evangelicals (and other young people of faith) are doing it these days: Youthroots - a social networking site for people of faith; BattleCry - the online home of a (crazy/scary) hipster evangelical movement; and with young evangelicals worrying about poverty and global warming, the WireTap Blog asks "Is God now progressive?"
• The New America Foundation documents how our generation's GI's are getting the shaft when they return home from duty:
  

  Although military recruiting literature trumpets educational benefits of up to $72,900, for most recruits the benefit tops out at $38,700. That works out to $1,075 a month for 36 months. It might sound like a lot to a teenager looking for help with college, but it’s only 75 percent of the average cost of attendance at a public four-year-college or university. To be eligible for those benefits, servicemen and women have to contribute $1,200 up front, out of their own pockets, during their first two years of service. Virtually all do so, but nearly one-in-three never collect any educational benefits, and they don’t get a refund. Most important, GI Bill benefits are counted as student financial resources when veterans apply for federal student financial aid, making many veterans ineligible for Pell Grants or subsidized student loans that could fill the gap. For recruits from low-income backgrounds, that’s a huge loss.

• Barack Obama is scheduled to be on the Daily Show on Wednesday the 22nd.
• Check out this podcast of Anya Kamenetz of Generation Debt.

Anya Kamenetz, author of Generation Debt, has more on the college loan scandal:

So as part of Cuomo's still-ongoing probe into lenders' relationships with financial aid offices, 6 schools have agreed to reimburse students $3.27 million, Citibank is donating $2 million to a financial-industry education fund, while 29 New York State schools have simply signed codes of conduct without admitting wrongdoing.
To address some of the questions raised in the comments, I do see the quick payoff as an admission. If not overtly confessing guilt (and I agree that most lenders probably didn't break the law, as now written), it's an acknowledgment that both schools and lenders would rather that students and taxpayers hear as little about lender practices as possible. The money, frankly, is peanuts. This is an $85 billion industry which once sued the Secretary of Education. If the lenders wanted to, they could easily create a legal fund to defend themselves and every single one of the 100 schools involved.
Taking as a given the power of market forces to deliver the best prices to consumers in most circumstances, I think the incentives in the current system are messed up. Currently your financial aid officer is like a financial adviser who works on commission. He's going to try to sell you the financial products that give him the best commission, as well as making you happy.

And Fred's got more on New York AG Andrew Cuomo's investigation in the comments to my last post.

On a related note, I've been meaning to write about this, but seem to have lost it in the shuffle. New York Magazine is running a piece about a wonderful feature of our new economy:being young and lacking health insurance.

Young Democrats consistently list health care and education costs as two of their highest priorities when deciding how to vote, and health care is also listed (with Iraq) as an issue that Congress should act on in the next two years. Candidates need to be hitting these issues hard when addressing young audiences - with solid proposals, not just platitudes - and questions about both of these issues should be put to the candidates by reporters on the trail and in the debates. We need to know where they stand.