Friday, May 1, 2015
I Got Mine!
The loans they will have to start making payment on six months after they graduate are enormous. They can range from $40-$100 thousand or more and will take most graduates decades to eliminate.
Hence, they are more than student loans; they are college mortgages.
Meanwhile, elected officials of California issue bromides on the importance of educating a workforce to meet an anticipated economic shortfall of 1 million college graduates by 2025.
Besides the rhetoric, the politicians do little.
State legislators propose faint-hearted remedies to students on how to “manage” debt or propose abstemious relief that would restore a couple hundred million dollars to California’s public systems of higher education that suffered a combined $2 billion in cuts since the Great Recession of 2007.
In other words, Sacramento legislators do not propose any bold action that stresses a re-investment in California’s human capital. Even executives of the California State University and University of California rationalize the rising cost to attend college by stating it is still a bargain compared to other states.
Surely this assuages the financial worries of students and their parents.
Ironically, many Democrats and Republicans in Sacramento and public higher education executives are of the Baby Boom generation who received UC and CSU degrees almost completely subsidized by the state of California.
For example, in 1980 a CSU student paid annual fees of $202. Adjusted for inflation this translates to $575 today. At the UC, it was $750 this same year; adjusted for inflation this is about $2,140.
Today resident CSU and UC students respectively shell out approximately $6,500 and $14,000 in fees annually.
So Sacramento legislators are essentially saying to current and future college students and their working-class parents, “I Got Mine. You’re Out of Luck!”
This message is clear as California legislators and Governor Jerry Brown hurriedly grant tax “incentives” to aerospace, entertainment, and gas and oil corporations.
In 2014, Governor Brown and his fellow Democrats in the state capitol approved a $400 million tax break to aerospace manufacturers and another $300 million in tax credits and subsidies to Hollywood moguls.
Furthermore, with supermajorities in the senate and assembly able to stave off defeat from “anti-public-anything” Republicans, the governor last summer refused to use the bully pulpit of his office to rally his party to supporting SB 1017.
Similar to laws in Alaska and Texas, this bill, courageously created by then state senator Noreen Evans (D-Santa Rosa), called for the institution of a 9.5% severance tax on oil and gas production.
Fifty percent of the projected $1-$2 billion in annual revenue raised from this tax would have been deposited into a Higher Education fund to reduce community college, CSU, and UC tuition costs. The Democrats in Sacramento allowed SB 1017 to die in the state’s Senate Appropriations Committee.
This golden opportunity is no more as the Democrats lost their supermajority in Sacramento last November.
The timidity of Sacramento pols is hardly surprising as Democrats and moderate Republicans dread to offend pressure groups such as the California Chamber of Commerce, Californians Against Higher Taxes, and other bodies closely allied with the industries of gas and oil.
Furthermore, politicians and UC and CSU executives of working-class provenance have their egos stroked as they fraternize with corporate leaders at conferences and summits while they plead for donations for their reelection campaigns and institutions.
In exchange, the super wealthy buy their silence on taxing the most able to make higher education affordable once again for working-class families.
As this takes place, increasingly college graduates caught up in this insidious system are unable to realize the American dream of homeownership as their debt-to-income ratios are off kilter before receiving their diplomas.
This is unfortunate to say the least, as the college debt crisis is a significant factor behind the state’s anemic housing market recovery.
According to a 2014 study completed by the Southern California firm John Burns Consulting, reported in the Los Angeles Times, over 400,000 potential home sales (valued at $83 billion annually) have been lost due to the national question of student debt that stands at $1 trillion.
If more CSU or UC students graduated with modest to zero college debt, they would be poised to purchase residences and all the accoutrements that follow this rite of passage into the middle class.
To make their houses homes, these recent college graduates would go on to buy durable goods and other amenities. In addition, these new homeowners would pay property taxes to fund public services that hire people and private contractors.
You would think the California Chambers of Commerce and other anti-tax scolds would enthusiastically support such a strong stimulus to the economy.
But Instead of making this a reality, today’s elected officials and public university executives carry the water of the Chamber and their corporate donors while expressing to our young adults by their actions, “We will not invest in you to any meaningful degree as others did for us. Take out a loan.”
This essay was published in The Bakersfield Californian, ¡LatinoLA!, and the Ventura County Star.