Money to Learn

It's the kind of thing that's easily written off as a photo opportunity: a presidential candidate sitting down with a worried student and a financial aid administrator, working out a plan to help the student pay for her education. But, not if the candidate is one who understands the importance of education, and the difficulty of paying for it. So, when I read about Barack Obama helping a college student [1] with her tuition concerns, it made sense.

A tearful Wayne County Community College student got advice and encouragement from Sen. Barack Obama on Tuesday, as he touted his plan to improve financial aid and tax credits to college students.

Marilyn Pace is about $1,500 short of paying for tuition and supplies for her dental hygiene studies, she told Obama at a meeting arranged by his aides. After she described the costs of supplies and exams, gas to get to and from classes and her father's disability, which keeps him from working, a financial aid counselor told her and Obama that private loans should be able to close her financial gap -- prompting tears from her and encouraging words from the candidate.

It may have something to do with understanding what it's like to go into debt for an education [2].

"Unfortunately, another thing that Michelle and I have in common is that we left school with a mountain of debt," he said. "Michelle I know had at least $60,000. I had at least $60,000, so when we got together we had a lot of loans to pay. In fact, we did not finish paying them off until probably we'd been married for at least eight years, maybe nine. And like a lot of families, we were still dealing with the cost of our own education when we had to start thinking about saving for our children."

Which is probably why he's proposing help for students struggling with the cost of getting an education.

"This isn't an issue you hear Sen. John McCain talk about much," Obama said. "It's not just that he doesn't have a real plan to make college affordable. It's that he has voted time and time again to stop us from making college affordable."

Obama has proposed a $4,000 tax credit his campaign says would pay nearly all the annual expenses for community college students and two-thirds of costs at four-year public schools. In return, students would have to perform 100 hours of community service each year. He also would make changes that reduce administrative costs and bank subsidies in federal student loans, and simplify the financial aid application process.

"Every college-savings account starts with a job, and Barack Obama has proposed tax hikes on over 21 million small businesses that drive job growth," said Tucker Bounds, a spokesman for McCain.

There's more than a little irony in the McCain campaign's response — or non-response — to Obama's proposal, because much of the difficulties students and families face in paying for education are direct consequences of conservatism and its impact on our economy. The credit crisis, brought to us in part by McCain's own economic advisor [3], has driven some student lenders out of the market [4], and a few into bankruptcy [5].

It's dried up the other resources families once used [6] to finance their kids' education; bank loans and home equity lines of credit are harder to get. More than 70% of parents who responded to a survey just a few months ago indicated that they were "very concerned" about how they would pay for college.

Parents are concerned because they know what I mentioned earlier [7], that upward mobility is linked to education [8]. Good jobs are harder to find for less educated workers [9], and even educated, white collar workers are having trouble finding decent work [10].

The McCain campaign may say that every college savings plan starts with a job, but as Alex pointed out [11], the cost of tuition has gone up 39% since 2001, while the median household income has gone down 2%. Pell Grants have been whittled down to the point of covering less than half the college costs they used to cover. The Bush administration stripped over $12 billion from the federal student loan program to fund tax cuts for the wealthy. And in the economy we're left with after 7.5 years of conservative rule, jobless claims are rising [12], Americans are $1.7 trillion [13] poorer than we were even earlier in the fiscal year, low-income and middle-class families are struggling just to pay for utilities [14], more Americans are using food stamps [15] than ever before, some are stockpiling food [16], and others are finding empty shelves at food banks [17] overwhelmed by an unfortunate trio of economy-driven circumstances: a drop in donations, an increase in the number of people needing their help, and ever increasing food prices.

In the America conservatism has given us, having a job doesn't even guarantee a family will eat [18], let alone send their kids to college.

A common myth states that "if you can get a job, you can make a living in America", but the gap between a living wage and jobs that pay a living wage is ever-widening. Living below the poverty line places a massive strain on a household budget and little or no money makes it impossible to purchase adequate and nutritious food.

Meanwhile, hedge funds have been prowling the halls of Congress, looking for an angle on the student loan market [19]. The same velociraptors of Wall Street, whose predatory prowess has left countless neighborhoods littered with the boarded up, gutted, foreclosed homes of subprime mortgagees — aided and abetted by the likes of former Senator and McCain's economic advisor, Phil Gramm [20], who deftly moved to keep credit swaps — the financial fuel the powered the subprime bonanza — unregulated by … well — anyone, really. The same financial entities that were still left virtually unregulated by the Bush administration's voluntary "best practices." [21] Only two dozen of the 8,000 hedge funds roaming the financial frontier signed on to the "best practices" when they were rolled out. And it remains to be seen whether they will be reined in by the new regulatory powers Henry Paulson is calling for at the Federal Reserve [22].

The same Wall Street firms are looking for an opening in the student loan market.

And they just might find one. In one of the latest responses to the credit crisis, banks are starting to bypass two-year colleges [23] — the community colleges for-profit institutions that are often the gateway to higher education for the country's neediest students. Financial administrators at these institutions have been able to find fallfack lenders — though at a cost to students of time and money — but how much longer will such lenders be easy to find? And students?

“If we put too many hurdles in their way to get a loan, they’ll take a third job or use a credit card,” said Jacqueline K. Bradley, assistant dean for financial aid at Mendocino College in California. “That almost guarantees that they won’t be as successful in their college career.”

And they may also be more vulnerable to predatory lending. Last year an investigation into relationships between lenders and universities yielded reports of corruption [24], as kickbacks to financial aid directors and deals with student lenders led to arrangements that benefited schools, lenders, and financial aid offers, at students' expense. The investigation also yielded proposed reforms, but those reforms don't apply to private loans [25] that are not federally backed, whose rates can rise unchecked. States like California [26] have met with heavy opposition from the banking industry when they have attempted to establish minimal standards of of ethical behavior for lenders and financial aid officers.

The pieces of the puzzle are easy to assemble, and the picture may be perilous for the neediest students — who need money to learn, but don't have "money to burn." So, it's appropriate that Obama visited a two-year college, and reached out to students while announcing a plan that would help those students pay for the education they will need to improve their lives and their chances of success in a changing economy, and deny those velociraptors of the financial world one more hunting ground.