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Politicians: Ignore the Millennial Student Loan Crisis at Your Own Risk

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Though politicians fall all over themselves when it comes to voters in my age bracket and even older (that’s almost impossible to comprehend), a new survey by Harvard’s Institute of Politics shows a growing class of discontented, registered voters who agree that there is one major issue among them regardless of party affiliation: that class is millennials, and that issue is student loan debt.

Despite being ignored by many politicians (unless it’s for a photo op), fully 68% of the 18- to 29-year-olds surveyed are already registered to vote. Their approval of President Obama is near an all-time low, their approval ratings of Congressional Democrats and Republicans is close to zero and almost half of them (49%) think this country is headed in the wrong direction. A majority of them would recall the entire Congress — and 45% of them would recall their own representatives.

Although the impression of many people in my age bracket is that all young people these days are liberal, that’s not true: 37% of them self-identify as conservative or leaning conservative compared to the 33% that identify as liberals. The only good news for Democrats is that 33% of millennials identify with the Democratic party – mirroring the percentage of self-identified liberals – but only 24% identify as Republican. Democrats might not have to worry (yet) about losing liberal millennials’ affections, but Republicans seemingly already have.

An Issue That Bridges the Divide

They do generally agree on one thing: student loan debt is out of control. About 42% of millennials say they or someone in their household has student loan debt, but 57% say that they think student loan debt is a major problem, while a grand total of 79% think it’s generally a problem.

Why so much agreement? Well, for starters, there are 14 million people under the age of 30 with outstanding student loans. The average debt load for someone who graduated in 2012 was a staggering $29,400 – but the unemployment rate in that age bracket was 11.6% in November and, for those who are employed, the average annual earnings for those in the 16-24 age bracket ranges from just over $21,000 for women to just over $24,000 for men (regardless of educational attainment, though it improves significantly for those over 25 with college educations). So many recent graduates are saddled with a debt burden close to or larger than the average annual salary for someone their age, and they’d be lucky to find a job at all.

In fact, a Georgetown University Center on Education and the Workforce study earlier this year showed that the average millennial won’t earn the median-wage annual income of $42,000 until they are 30 – a full four years later than those who came of age around 1980. Millennials know that it’s increasingly hard to do as well as their own parents, if not better, and the path they’re all trying to follow to achieve that goal – a college education – is getting much more expensive.

And who do they think is responsible for that problem? Well, 30% blame the federal government for skyrocketing education costs, 42% blame institutions of higher education and another 8% blame state government officials.

In other words, almost 40% of young people today blame the government for the staggering debt they’ve taken on to finance the paths that they were told (sometimes by the President himself) would lead to financial stability – debt that often gets repaid to the federal government itself. If you thought Social Security was the third rail of politics in the ‘80s and ‘90s, just wait until the next time Congress jerks around and dangles sky-high student loan interest rates in front of all those un- and underemployed millennials trying to pay off loans the size of the Greatest Generation’s first mortgages.

A Trickle-Down Burden

This is not the time for politicians to hide, ostrich-like, in plain sight and ignore the problems than have been created by sky-rocketing tuition rates, uncertainty about long-term interest rates on federally subsidized student loans and a global economy that increasingly demands a college diploma as the price of entry. It’s not a time to point fingers at the other guys and blame them for their supposed past sins. If you haven’t yet noticed, millennials are a pretty savvy generation and, as this poll shows, they’re damn tired of being told to blame the other party for the problems that both created.

Congress needs to step up to the plate and start taking millennials’ concerns seriously, because their student debt burden – unlike Reagan’s tax cuts – are going to trickle down throughout our economy, as the next generation finds itself unable to afford to buy houses, finance large purchases (like new cars) or even just make Black Friday actually black for retailers. If they can’t find jobs, can’t build good credit, can’t achieve salary growth and continue to struggle under a massive debt burden from the second they start their adult lives, they aren’t going to push the American economy to new heights, and we’re all going to preside over its sputtering.

It’s time to look at solutions, like the ability of students to refinance their loans (as proposed by the CFPB) or even discharge them in bankruptcy. It’s time to crack down on abuses, whether it’s by non-bank student loan servicers operating with too little oversight or for-profit colleges that take students’ money and provide little actual education or even not-for-profit colleges in which administrators too often seem to personally profit at the expense of students’ education (and adjuncts’ ability to earn a living wage). Because if politicians and regulators don’t find some way to help our young people out, many of them may join them in the unemployment line sooner rather than later.

This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its affiliates.

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  • FA_101

    While I agree the student debt crisis is just that, I must whole-heartedly disagree with the suggestion that student loans be eligible for bankruptcy discharge. Part of teaching financial literacy is instilling accountability for financial decision making. By providing an out via bankruptcy court, the message will be that you can make uneducated and detrimental money decisions without any consequences. And isn’t that what made so many of us angry about the bank and auto industry bailouts? If we instill the same message in whole generations of young adults, I believe we’ll be headed down a dark and detrimental road that will do far more damage than the leaving the current student debt crisis as is.

    Instead of focusing on discharging debt (which, btw, already exists in the form of the IBR, income contingent, and Pay as You Earn repayment options, as well as public service loan forgiveness), we should reinforce responsible debt management instead. After having worked for many years in financial aid and providing financial education to college students, I can testify to the life-changing effects that imparting such information can have. Seeing the light bulb go on for these students, having them return repeatedly to learn even more, having them tell me that learning to manage their debt was the best service that we provided was proof to me that the students WANT someone to teach them these skills. That being said, I had a number of students who listened to everything I had to say and told me point blank that they did not care. These students over-borrowed, attending school for their “refund check,” spending federal student aid on non-education related items. The worst injustice would be to reward those students with a bailout. And I realize there are plenty of other good students out there who would have made different decisions if someone had taken the time to teach them, and they can’t be categorized with the few bad apples. But with the MANY resources now available to provide student loan education (which at the very least includes the much-improved mandatory federal entrance counseling that students must complete to receive aid), there must be accountability for personal debt decisions. Simply saying “I didn’t know” should not suffice as an option. However…

    Colleges and universities must do more to provide upfront loan counseling. While many are jumping on the financial literacy bandwagon, it’s hard to get upper level administrators embrace the message and make it mandatory and shared throughout the institution. If schools were somehow charged for student over-borrowing, not providing adequate counseling, or by some other criteria that reflects financial literacy efforts, I think we would begin to see real progress in this area. Surely, charging these already overpriced institutions and asking for them to share responsibility in the student debt crisis is a better solution than reinforcing a lack of accountability for students.

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