Friday, August 12, 2016
I Don’t Want to Be a Loan
The increasing levels of student debt have been hot topics in the U.S. primary race. While many countries offer fully subsidized college tuition at exceptional universities (e.g., Germany), other countries seem to believe that the American system of allowing students to borrow up to their necks is fiscally prudent and good for the country. While the United States revised its laws in 2005 to make student loans almost completely unable to be discharged in bankruptcy, the relatively modern Western nation of New Zealand takes non-payment of such loans to a completely different level. They can and often do arrest defaulting former students, particularly those audacious enough to travel out of that tiny nation.
According to an Inland Revenue (their IRS equivalent) spokesperson "Our powers to arrest at the border are used as a very last resort, and would only follow strenuous efforts to contact the borrower to make repayment arrangements - these would typically involve making phone calls, sending correspondence via mail and email to the borrower, and attempting to contact them via any third parties such as nominated persons and/or any known employer." New Zealand is very serious.
“About 20 people who have defaulted on their student loans are being monitored for possible arrest if they return to New Zealand… It is the harshest in a range of measures to recoup student debt from overseas Kiwis. Last year those based overseas made up 15 per cent of all borrowers, but 74 per cent of borrowers with overdue payments, and had 90 per cent of the amount overdue.
“Those in default and living in Australia will come under more scrutiny from next month, when a transtasman [multi-platform media communications across Australia and in New Zealand] information-sharing agreement begins. It will cover contact details of student loan borrowers living in Australia.
“That could see thousands more borrowers receive warning notices. Accurate contact information is crucial, as a district court judge can issue an arrest warrant only if satisfied a person is knowingly avoiding repayment obligations.
“The majority of overseas-based student-loan borrowers live in Australia. Legislation allowing the information-sharing passed last month… Authorities say those in default should make contact with Inland Revenue, to arrange a repayment agreement or discuss hardship plans if in financial difficulty. Applying for an arrest warrant is a "last resort", the IRD [Inland Revenue] says.” NZHerald.co.nz, June 2nd. But this debt burden on recent graduates is becoming a global epidemic.
“In the UK, starting in 2012, universities were allowed to charge up to £9,000 ($11,987) per year for tuition fees, so some students are now graduating with tens of thousands in debt. In Australia, the government recently passed legislation requiring expats to make payments toward their student debt — the first time that’s been obligatory since 1989… And in the US, students are now graduating with an average of $37,172 in student loan debt, up 6% from a year prior.
“‘Student loan debt is a big issue in the UK,’ says Helen Saxon, chief product analyst at UK site MoneySavingExpert.com. ‘Recent figures showed that English graduates on the new student loan system have the largest average debt in the world at £44,500 ($59,269).’ There are large differences in other parts of the UK, however — Welsh graduates owe an average of £19,000 ($25,306), and Scottish grads face an average of £9,400 ($12,520)” BBC.com, August 7th. But there is a Catch-22 in this new reality.
As we can readily see with the disenfranchisement of American middle-aged white workers without college degrees, who are unemployed or underemployed, not having advanced training or education is today a non-starter for even modest success. Their blind support for outlier presidential candidate, Donald Trump, is predicated on their assumption that his economic expertise and anti-regulatory bent, combined with his threat to end multinational trade agreements and pledge to throw undocumented immigrants out the door, will simply give them their old, well-paying jobs back… thus making “America great again.” No one with even an ounce of economic knowledge believes that obsolete jobs can be restored, but hope springs eternal when a mainstream candidate promises the impossible.
What is really going on is that too many modern educational systems, particularly in the United States, have simply failed their constituency. The old assumption – that a high school degree (perhaps with an apprenticeship or trade school) is enough to earn a solid living – has died hard in the face of automation and global competition. We get cheaper consumer products that we have come to depend on from globalization, and the thought of isolating ourselves from the international marketplace is an unachievable (and unwanted) goal. But to get a reasonable shot at a good job, having just a high school education is no longer remotely enough.
For decades, the second part to the above assumption was that college was an enhancement option for those with more academic leanings. That there were public schools up through and including 12thgrade, free to all, suggested that for “most of us,” this was sufficient preparation for a lifetime of reasonably-paying employment. Some may recall how high school “shop” was a job-preparer of old (above picture from the 1960s).
When an associate’s or bachelor’s degree became the new “high school equivalent,” our financial structure still priced that education as an optional enhancement. As fiscal conservatism embraced cutting educational support and raising tuition simply as a matter of “prudence,” the cost of getting the kind of training for young people to get those jobs slammed the lower and middle classes really hard. If we believe that the great mobility-maker, the great leveler of the employment playing field, is an education sufficient to get and hold an average middle class or working class job, then not providing that education/training is a societal failure.
In ancient times, you didn’t need to read or write to make a living. As life expectancy extended, as the division of labor became more specialized, societies actually were able to tolerate (even need) a greater period of “life preparation” than in times when 35 was considered old. Way back when, a touch of literacy was more than enough. As time progressed, especially in advanced nations, the time young people spent in the educational process before formally joining the work world expanded as technology increased in complexity and demanded intricate mutual interdependence, expansive legal systems and massive supporting infrastructure.
This trend continues into the present day, so to assume that there is a constant – high school – that is enough for all time clearly flies in the face of history. What may have been correct half or three-quarters of a century ago becomes incredibly deficient today. Not only is it time for us to adjust our minimum educational commitment for all our children to reflect the “now,” but putting money into education is not just an expense. It is an investment that makes the nation richer, more successful and competitive.
I’m Peter Dekom, and it is time for this country to address a ground-up restructuring of what constitutes a fair and reasonable right to public education in this modern era.