We Need A New Version Of The GI Bill

Among the multiple newsletters I receive is one called The Signal. It recently had a thought-provoking report on a growing gender divide among young Americans.

Apparently, over the past few years, young women have become more liberal than young men. Forty-four percent of women aged 18 to 29 consider themselves “liberal,” compared to only 25 percent of men in the same age range—a major change from 30 percent of young women and 27 percent of young men considering themselves liberal a decade earlier.

The article attributed the increase in progressive politics to a series of trends: fewer women in that age bracket are married than was previously the case;  more are educated and religiously unaffiliated, and they “spent formative adult years during the presidency of Donald Trump, whom a strikingly high ratio of them disliked.”

The bulk of the article was an interview with the researcher, and his observations (and their implications) were all interesting, but what struck me was the following.

Politically, climate change is important to Get Z. Gun policy is important. LGBTQ issues are important. I expect abortion to become tremendously important. Yet there isn’t one preeminent, animating political issue for this generation. What’s happened instead is that political identity has become increasingly central to people in defining who they are. It’s become a stand-in for character or even personality. That’s unfortunate in some ways. It leads Americans to be more politically segregated and to shut down political conversations based on the belief that knowing someone’s politics means you know what you need to about their whole life story and whether they’re part of your good tribe or not. We’re on track to become even more politically segregated—more politically polarized—and I believe the decline of institutions and the unraveling of our civic life are playing important roles in that process.

That analysis leads to the question “What can we do to ameliorate this political segregation?”

How about a requirement for national service, an updated version of the wildly successful GI Bill?

Here’s my proposal: upon graduation from high school, students would enroll in a one or two-year program of civic service. Upon satisfactory completion of that service, the government would pay for two years of college at a state university or trade school. The program would be open to everyone, but marketed heavily to the poor and disadvantaged.

Civic service would require young people from disparate walks of life and different political “bubbles” to work together. Service performed for local government and vetted nonprofit organizations would also focus their attention on the common good–a concept missing from the worldviews of far too many Americans, young and old.

We have massive amounts of research confirming that most Americans—rich or poor—know embarrassingly little about the economic and governmental structures within which they live. This civics deficit is more pronounced in poor communities, where civics instruction (as with other educational resources) is scarce. Because civic knowledge is a predictor of civic participation, one result is that poor folks don’t vote in percentages equal to those of middle-class and wealthy Americans. That disparity is especially pronounced among the young.

Poverty is a reliable predictor of low political participation and efficacy. Giving students from disadvantaged backgrounds an affordable opportunity to go to college or trade school—an opportunity they may not have otherwise—and conditioning that opportunity on a year or two of civic service—would do three extremely important things: it would give those students the civic skills they need in order to have a meaningful voice in the democratic process; it would reduce the nation’s currently unconscionable level of student loan debt; and it would cut across the “political segregation” that is turning Americans who disagree with each other into enemies who cannot communicate with each other.

As we’ve seen in the current discussion of Biden’s debt forgiveness program, the need to borrow money in order to afford college keeps many young people from getting the education they need. It keeps others from taking lower-paying jobs with nonprofits and humanitarian organizations after they graduate. The massive level of student loan debt is also a substantial drag on the economy, because payment on those loans prevents large numbers of  graduates from setting up households, buying homes and appliances and even starting families–all activities that keep the economy humming.

As with so many other aspects of contemporary American life, the burdens fall most heavily on those who can least afford them.

A new version of the GI Bill along these lines would require young Americans to meet and work alongside people from outside their “bubbles;” enable informed civic participation, and begin the task of permanently reducing our horrific levels of student loan debt.

It would be a win-win-win…..

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Forgiveness

One of the problems inherent in all public policy discussions is the degree to which various aspects of our communal lives are connected–and the even greater degree to which those connections are unseen and/or under-appreciated.

As an example, a recent study from the Brookings Institution detailed the multiple ways in which student loan debt affects Americans, and illustrates the way lack of understanding of those connections distorts discussion of proposals to forgive at least some portion of it.

There is one element of student debt that is widely understood, of course–its size. In the last quarter of 2020, the Federal Reserve calculated the national student debt at $1.7 trillion, spread across 45 million borrowers. That is a monumental amount, and a monumental burden on both the borrowers and the economy.

Research suggests that forgiveness of some or all of that burden would prompt a variety of economically consequential behaviors–everything from eating out more frequently to  making large purchases that the level of debt currently doesn’t permit: houses, cars, appliances and furnishings. Respondents to one survey also cited returning to school, and saving more for emergencies.

In a study cited by Brookings,

Higher amounts of student debt forgiveness were associated with other investment behaviors like starting a business or savings for a down payment on a home, as well as a willingness to spend more on entertainment….

These results [of the study cited] show two things. First, they show how extensively student debt affects debt holders. The responses to this experiment indicate that student debt is strongly influencing decisions that can have large implications for household economic stability (e.g., emergency savings) and mobility (e.g., saving for a down payment on a home, starting a business). In addition, student debt may be altering the structure of families themselves. Roughly 7 percent of respondents reported that they would be more likely to get married (results not shown) or have children if their student debt were forgiven, indicating that this debt burden is affecting even fundamental decisions about debt holders’ life trajectories.

Second, these results show that the level of student debt forgiveness matters. In particular, setting a student debt forgiveness target too low may not lead to broad-based changes in households’ economic behaviors. However, setting a student debt forgiveness amount at a point where the average debt holder would have more than a quarter of their debt forgiven may yield large changes in savings behaviors, human capital investments (e.g., returning to school), and business starts, without leading to large changes in labor supply.

It is undisputed that even a modest amount of debt forgiveness would remove what is currently a large drag on the economy. There are, obviously, other considerations: many people who have dutifully paid off their loans object to what they see as unfairness of giving later-comers relief that was unavailable to them. Others argue that any forgiveness should prioritize low-income borrowers, and avoid “bailing out” higher income folks.

Going forward, my own preference would be to replace the current, complicated student loan environment with a program that pays for at least two years of college in return for a year or two of military or civic service (a la Americorp).

Whatever the policy approach, we need to recognize that debt of 1.7 trillion dollars constitutes an enormous drag on Amreica’s economic growth. It isn’t simply an impediment to business formation–it prevents many individuals from taking lower-paying but gratifying jobs in the nonprofit sector– and it is a significant fiscal and psychic burden to individuals. It has become unsupportable.

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Education and Student Debt

A few days ago, I wrote about the increasing tendency to rank colleges on the basis of alumni earnings, as if higher education is simply another venue for job training.

In the comments, people pointed out the importance of earning power, especially in light of the staggering expense of a college education.

Believe me, I get that.

Nothing I wrote was intended to justify the increasing costs of a university education and the resulting sky-high levels of student debt. Indeed, to the extent that we are pricing education out of the reach of many, we are sabotaging the educational mission I was defending.

Student debt is not only a huge problem for recent graduates; it is dragging down the economy. As Matt Impink and I wrote in an article for the Chronicle of Higher Education,

Student debt constrains individual decision-making in a number of ways, and its growth affects the entire economy. For example, people paying back student loans are less likely to start businesses. Considering that 60 percent of new private-­sector jobs are created by small businesses, diminishing the ability to create businesses does considerable harm to the economy.

Debt loads also affect overall consumption. According to research by the Federal Reserve Bank of New York, fewer 30-year-olds in general have bought homes since the recession, but the decline has been steeper for people with a history of student-loan debt and has continued even as the housing market has recovered. In an economy that depends upon the ability and willingness of consumers to purchase homes, furniture, automobiles, and other goods, a debt load that effectively precludes such purchases poses a real problem.

The Consumer Financial Protection Bureau has found that three-quarters of the overall shortfall in household formation can be attributed to younger adults, ages 18 to 34. In 2011, 1.3 million more Americans in this age group lived with their parents than in 2007. Although it is impossible to determine the relative contribution of student-loan debt and the economic downturn to that phenomenon, student debt is clearly implicated. Any program that reduces the need to borrow can only improve the situation.

According to a report from Zillow, the relatively few millennials who are thriving economically are the ones whose parents are able to subsidize college tuition or a down payment on a home. Help with education and buying a home were the two primary ways in which the original GI Bill created upward social mobility. Estimates are that each new household leads to $145,000 of economic impact. If student debt is keeping just a third of those two million young Americans from living on their own — a reasonable, if undocumented, assumption — that adds up to a $100-billion loss or delay in economic activity.

Student debt is an enormous issue for the country. The Democratic presidential candidates have all addressed it; Senator Elizabeth Warren has proposed measures to ameliorate it.

If any of the Republican presidential candidates have paused their attacks on immigrants, reproductive choice and various kinds of “losers” in order to address student debt levels and their impact on either young people or the economy, I’ve missed it.

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Playing “What If”

The Chronicle of Higher Education (subscription required) recently published an essay written with my former Graduate Assistant. Hey–if you’re going to dream, might as well dream big….Anyway, here’s our original draft, appropriate for a Sunday Sermon.

______________________________

Americans are increasingly concerned about two seemingly unrelated issues: a distressing lack of civic literacy and informed civic engagement among the general public, and the escalating burden of student loan debt.

We could make significant progress on both of these issues with a new G.I. Bill.

In the wake of World War II, Congress passed the Servicemen’s Readjustment Act of 1944, better known as the G.I. Bill. It provided a wide range of benefits for returning veterans, including subsidies that allowed G.I.’s to obtain low-cost mortgages, low-interest loans that could be used to start a business, cash payments of tuition and living expenses to attend a university or vocational training program. All soldiers who had been on active duty during the war for at least one hundred twenty days and had not been dishonorably discharged were eligible. By 1956, estimates were that roughly 2.2 million veterans had used the G.I. Bill education benefits in order to attend college, and an additional 5.6 million had used them to obtain job training of some sort.

The G.I. Bill was expensive, but by all accounts it was a major political, humanitarian and economic success. It contributed significantly to the creation of a skilled workforce, moved thousands of people into the middle class, and was a spur to long-term economic growth.

The G.I. Bill was originally an effort to reward those who had manifested a willingness to risk their lives for their country, but it has had a number of other salutary consequences: it raised the skill level of the American workforce and provided an avenue for social mobility.

Defending the United States is an important goal, but military service is only one aspect of that defense. It is equally important that citizens understand just what it is that our military is protecting. Citizenship is more than residence; patriotism requires informed engagement by people who have earned the right to be considered citizens. Survival of America qua America is not the same thing as physical survival.

To put it bluntly, there is more than one way to lose one’s country.

If we are to provide that second kind of defense—defense of the American system of law and government—we require a civically educated populace, and it is increasingly obvious that current patchwork efforts to boost civic literacy are not producing that populace.

Our proposal builds on the laudable efforts of others—including, recently, General Stanley McChrystal– who have called for a renewal of national service. It’s important to challenge the notion that military service is the only way to serve one’s country. While military service has been shown to significantly increase voting rates and other forms of civic engagement, fewer Americans serve in the military than in past generations, and we need to consider what sorts of national programmatic efforts might begin to change the civic culture.

We propose a National Service program for high school graduates who would be paid minimum wage during a one year “tour of duty.” At the end of that year, assuming satisfaction of the requirements, participants would receive stipends sufficient to pay tuition, room and board for two years at a public college or trade school. The public service requirement would be satisfied through employment with a government agency or not-for-profit organization focused upon civic improvement.

In addition, students would be required to attend and pass a civics course to be developed by the U.S. Department of Education in cooperation with the Campaign for the Civic Mission of the Schools.

What sorts of outcomes might we expect from such a program? Since the program is likely to be most attractive to those struggling to afford higher education, we could expect broader civic participation from populations whose voices are largely missing from today’s civic conversation. A better-educated population should engage in better, more nuanced policy debates, leading (hopefully) to more thoughtful policy choices. We might even see more meaningful and issue-oriented political campaigns, with fewer of the “dog whistles” and less of the intemperate rhetoric that characterizes messages crafted to appeal to uninformed voters.

A program of this sort would also have an enormous and positive impact on the level of student debt.

According to a 2014 report by the New York Times, total student loans outstanding have risen to $1.1 trillion, compared with $300 billion just a decade before. The average total debt for student borrowers was around $30,000 in 2013.

Student debt has thus become a significant impediment to America’s economic growth.

Studies show that the burden of student debt constrains individual decision-making in a number of ways, and affects the entire economy. People with student loans, for example, are less likely to start businesses. Considering that 60 percent of jobs are created by small business, diminishing the ability to create new businesses does considerable harm to the economy.

Debt loads also affect overall consumer consumption. According to research by the Federal Reserve Bank of New York, fewer 30-year-olds in general have bought homes since the recession, but the decline has been steeper for people with a history of student loan debt and has continued even as the housing market has recovered.

In an economy that depends upon the ability and willingness of consumers to purchase homes, furniture, automobiles and other goods, a debt load that effectively precludes such purchases poses a real problem. According to the Consumer Financial Protection Bureau, three-quarters of the overall shortfall in household formation can be attributed to younger adults ages 18 to 34. In 2011, 2 million more Americans in this age group lived with their parents than in 2007.

According to a recent report from Zillow, the relatively few millennials who are thriving economically are the ones whose parents are able to subsidize college tuition or a down payment on a home. Help with education and buying a home were the two primary ways in which the original G.I. Bill created upward social mobility. Estimates are that each new household formed leads to $145,000 of economic impact. If student debt is keeping just a third of those 2 million young Americans from living on their own, that adds up to a $100 billion loss or delay in economic activity.

The G.I. Bill was a social contract that said if you invest in your country’s future, your country will invest in yours.

A national public service program of the sort contemplated here would significantly reduce student loan debt, increase civic competence, and provide local communities with additional human capital— resources they can deploy to improve the quality of local life. (Kalamazoo, Michigan, where a local program has been providing subsidies for college tuition to high school graduates since 2005, the city has seen a 4.7 dollar return for every dollar invested, according to a recent Upjohn Institute Study.)

In addition to the economic benefits, a national program encouraging increased civic knowledge and engagement would also move the culture, since an informed citizenry with experience in civic life can be expected to vote, volunteer and engage at substantially higher levels.

The real question is: do we Americans still have the ability to think big?

 

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Student Debt is a Very Big Problem

The Consumer Financial Protection Bureau recently estimated the amount of total student debt at nearly $1.2 trillion. (Yes, that’s trillion with a “t”) and reported that federal student loans alone make up more than $1 trillion of that amount, with private loans making up the remaining $165 billion.

But as the website Vox reports, actual debt incurred for college is probably higher. Some students or parents use credit cards, loans from retirement plans, or home equity lines of credit to pay tuition, fees, and living expenses. Those financial products aren’t included in the $1.2 trillion estimate.

The total amount of student debt in the US has more than tripled in the past 10 years, as more students attend college and a higher proportion of those students take out loans. Thanks to rising costs, they’re also borrowing more than students did in the past.

The staggering amount of student debt isn’t just bad news for the students anxious to find good paying jobs that will allow them to repay those loans; it’s a huge drag on the economy. Student loan borrowers are less likely to buy a car or a house, in part because they can’t save for a down payment. They have less disposable income for consumer spending. Their credit scores are worse.

And since the students taking on debt tend to be from needier families, the student loan crisis is yet another structural impediment to greater income equality.

There has to be a better way.

Many countries have either free higher education, or extremely low tuition and grant aid: Germany, Denmark, Finland, Iceland, Norway, Sweden, Mexico and Brazil. Other countries that don’t offer free higher education have instituted small student fees. Australia and New Zealand have a system tuition and fees, but student loan repayment is entirely based on later earnings; student borrowers who make less than $50,000 a year owe zero monthly payments, and never pay more than 8 percent of income.

If they can do it, so can we.

Remember when America was the land of opportunity and social mobility wasn’t just a story we told each other?

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