Whatever Happened to Subsidized Education?October 26, 2000 |
Whatever Happened to Subsidized Education?
This fall has brought news that economic expansion may finally be trickling down to those at the bottom of our nation’s economy. The poverty rate, at 11.8 percent, is at a 21-year low. Incomes were up by more than 2 percent in 1999. The number of Americans without health insurance has decreased, though a staggering 41 million people still lack coverage. And the national student loan default rate is at its lowest point ever — 6.9 percent for fiscal year 1998. That default rate is two-thirds lower than it was eight years ago, when it peaked at 22.4 percent.
Of course, economic good news always has an ugly underbelly. While the poverty rate is lower than ever, the Black poverty rate, at more than 22 percent, is more than double the White rate. While incomes rose, median household income was $40,000, which means that half of American households earned less than that. Median household income for African Americans was lower still, at $27,910. With African American household incomes so low, it is no wonder that college recruiters face challenges attracting African American students.
The income data tell only part of the story. The wealth gap is greater than the income gap, and African Americans have less than 2 percent of our nation’s wealth. No matter what criteria you use, African Americans are experiencing gaps — in homeownership, computer ownership and other areas. While incomes are on the rise in our nation, debt is rising faster. The only equality we see between African Americans and Whites in terms of financial statistics is that 46 percent of both African American and White households have credit card debt.
With African American families lagging behind others in terms of income, wealth and access, the challenge to send young people to school becomes difficult. The spiraling cost of tuition makes it even worse. And the pressure on young people to mortgage their futures with student loans is high. Few students are offered financial aid packages without loans being a component of the package.
Yet these financial aid packages often fail to consider the difference in circumstances between African American students and other students, even when incomes are the same. For example, 70 percent of White households own their homes, compared to 46 percent of African American households, so more White households have the resource of home equity to depend on in case of emergency.
What does this mean to a student? Often it means that a family emergency will force a young person to drop out of school in order to help out at home. One student I recently mentored left school after the first semester of his freshman year to “help out” in his family’s small convenience store. This student was pressured into quitting by a parent who had had one employee shot in a high-crime area, and who was reluctant to give up his business, the sole source of his support.
Another young woman I recently worked with left school to care for her ailing grandmother. She has left the dormitory and a set of well-
developed study habits to join her mother, sister and two nieces in a cramped two-bedroom rented apartment. Medicare has provided the family with some resources for her grandmother’s care, but family pressure pushed her out of school with just a year left to go.
Both these students have loan obligations that must be repaid. So part of me cringed when I read about the low level of student loan defaults. Too many students have shared harrowing tales of rude collectors who are trying to get student loans repaid. They say they can work it out, one student told me. “But they mean, ‘Give me the money now.'”
Of course, students shouldn’t borrow if they don’t think they can pay loans back, and most people sacrifice to receive an education. But whatever happened to affordable tuition? A reasonable rate would reduce the amount of indebtedness that young people shoulder to attend college. Why not consider fully subsidizing tuition for young people from especially low-income homes? I can already hear naysayers yammering about free-spending liberals, but if human resources are the greatest resources we have, shouldn’t we make sure that everyone who has the desire and ability to attend college also has the opportunity?
A lack of both personal and family financial resources often makes it difficult for low-income youngsters to go to school. It can make it even harder to stay in once they get there. Institutions that can accommodate those who take a semester or two off are doing a service to those youngsters who are often pulled between family responsibilities and a thirst for higher education.
The U.S. Department of Education has been celebrating “vigorous” loan collection. Officials there have talked about the “serious consequences” in store for those who default on student loans. They have sanctioned those institutions that have low repayment rates, and barred hundreds from student loan programs because their students don’t pay. They have garnished wages, snatched IRS refunds, and used “whatever means necessary” to get the collection rate down.
And to some people, that’s a good thing.
But I bet if those people looked into the circumstances surrounding some defaults, they would find students who don’t have the means to pay their loans back. Indeed, if they looked carefully, they would find some students were so desperate to go to school that they signed up for loans they knew they would have problems paying because it was their only ticket to education. For many, education is the only way to move from households that earn below the African American median income to households that earn more than that $27,000 a year.
In economic expansion, we ought to be able to share prosperity enough to provide more assistance to low-income students. And students who have daunting family circumstances ought to have the opportunity to forgo loans for grants, work-study and tuition subsidies.
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