While the health care debate takes center stage on the Senate floor, it’s worth remembering that the Student Aid and Fiscal Responsibility Act (SAFRA) of 2009 — which would overhaul the student loan industry — is still being fought over, as private loan companies try to preserve a system that senselessly gives them tens of billions of dollars in subsidies every year.
SAFRA passed the House of Representatives in September by a 253-171 vote, but the Senate has not yet drafted a concurrent bill. According to a new report from The Project On Student Debt, though, time is of the essence, as record high student debt is colliding with record high unemployment for recent college graduates:
Nationwide, average debt for graduating seniors with loans rose from $18,650 in 2004 to $23,200 in 2008, or about six percent per year…Meanwhile, employment prospects for young college graduates have soured along with the economy. The unemployment rate for college graduates aged 20-24 was a challenging 7.6% in the third quarter of 2008, the highest third quarter rate since 2002; by the third quarter of 2009 it had risen to 10.6%, the highest on record. The majority of the class of 2008 fell into this age group in both years.
In a move that wisely captures the political temperature at the moment, the private lenders are targeting specific senators — particularly Sens. Bob Casey (D-PA) and Jeff Bingaman (D-NM) — and framing their opposition in terms of jobs, claiming that SAFRA will eliminate thousands of positions at student loan companies if enacted.
While any job loss is, of course, lamentable, as Pedro de la Torre wrote, the lenders are “playing politics with jobs, frequently changing their job loss estimates, and exaggerating the impact that the legislation will have on their workforce.” “While reform will fundamentally change the student loan industry, it should not cause significant job losses,” he wrote, because the industry will still need to service loans.
And ensuring access to higher education isn’t about our current workforce, but our future one. As former President Bill Clinton told me, “higher education institutions are pricing themselves into America’s decline,” and “we are headed into long-term economic decline if we don’t do something about it.”
The Lumina Foundation estimates that, with the status quo, the American economy will face a shortage of 16 million college educated workers by 2025. In fact, “the United States may not only be losing ground compared to other countries, but also in relation to its own population,” as the projected 13 percent increase in college enrollment over the next ten years would occur simultaneously with a U.S. population increase of 14 percent.
So why would we cripple the next generation of workers, and simultaneously hasten our economic decline, to perpetuate business as usual for student loan companies?