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With the rising costs of college, gasoline, food, health care, and other expenses, credit cards are becoming the "safety net" for an entire generation. Unfortunately, credit card companies are using unfair and even predatory practices to increase their profits at the expense of the financially vulnerable or inexperienced. Luckily, there are several efforts in Congress and in the Federal Reserve Board to reign in these anti-consumer practices. In fact, the Credit Cardholders’ Bill of Rights will probably be considered in the House Financial Services Committee by the end of the month. We need your help to make sure that your representative takes this issue seriously. Take Action Now!

 

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Nope, I don’t mean medieval torture, but I do mean something almost as bad: moving back in with your parents.

The LA Times ran a pretty good article about the economic situation of young people, especially as it relates to the current recession.

The gist - young people are facing some tough economic times as they enter the job market, forcing many to move in or borrow money from their folks, as well as cut back on the lifestyle they are used to. Along with the steady trend towards higher student and credit card debt, the bursting economic bubbles have meant that young people are now more concerned with economic issues than, for example, ending the war in Iraq (although, of course, they are related issues - money spent on the war could help alleviate the crisis at home).

Speaker Pelosi held an event at the Capitol yesterday to sign and send to the President very important legislation to make college more affordable.  Here's an excellent quality cell phone shot of the Speaker, Senator Ted Kennedy, Rep. George Miller, Rep. Joe Courtney, and others -- all leaders in this effort to stop the shameful government handout to lenders and use the money to help students afford college. There’s also video of the event. 

 None of this would gave happened without the efforts of young people, through Campus Progress's Debt Hits Hard Campaign, through our Campaign for College Affordability coalition, and other efforts, to demand change.  The efforts of New York State Attorney General Andrew Cuomo, a number of journalists, our own Pedro de la Torre, and others to investigate and expose bad practices and shady dealings between lenders and financial aid offices were also critical. 

The work is by no means done.  College is still out of reach for far too many young people.  One area that needs reform now is private loans, the ones not guaranteed by the government.  Lenders need to present clearer information to students about loan terms – and about the fact that students are better off obtaining all the federally guaranteed loans they can before seeking private loans. 

Right now you can weigh in on this debate, expose more bad behavior, good behavior, or other key facts about financial aid and the loan industry, get your work noticed, and potentially win $2500 to pay tuition or pay off student loans.  It’s our College Affordability Essay Contest – deadline October 29.  Enter now!

This afternoon at the Capitol, Senator Kennedy and Representative George Miller held a press conference to celebrate the impending success of legislation that will help college students pay for school. 

In the world of government-supplied financial aid, students have several options, such as state grants, federal Pell grants, and a few different types of loans, including those that students take out themselves, and those that parents sign on for.  Kennedy and company went on for about 45 minutes about the somewhat unlikely agreement that has been reached not only in the House and Senate, but with the White House as well. They called the pair of bills, “the largest increase in college and student aid since the GI Bill.” Considering that the status of student loans and federal grants has been stagnant/declining for the last few years, this is a much needed and vast improvement.

From the New York Times: "Citibank, one of the largest providers of student loans, as well as five universities have agreed to pay $5.2 million to students and the New York State attorney general to resolve an investigation into student loan practices, Andrew M. Cuomo, the attorney general, announced yesterday."  It seems that the shady deals lenders cut with universities will be reigned in, at least in New York State. It's also good to see Cuomo is attempting to live up to Eliot Spitzer's legacy of using the attorney general's office to prevent deceptive corporate practices.

Income inequality? Conservatives say it’s not happening. Libertarians don’t care. Sadly, Reason Editor-in-Chief Nick Gillespie bucks the trend, seeming to have no problem with deliberate misrepresentation.

Predictably, Gillespie dismisses concern for the financial security of the middle-class as mere politicking. While this may be true to some extent, a closer look at his evidence reveals selectivity and misdirection. He cherry-picks a few self-fulfilling statistics, failing to recognize the inevitably more complex nature of these economic issues, and ignores more pertinent indicators of economic mobility and security.

-          Responding to claims that income inequality is widening, Gillespie admits that the rich are getting richer, but then points to Census data showing that each income group is becoming wealthier. What matters, however, is not income growth itself, but relative rates of income growth. This Census table paints a more accurate picture: the share of aggregate income for the bottom 80% of Americans has declined over the past 30 years. The income levels accessible to the vast majority of Americans clearly do not correspond to the same status within the national economy as they once did.

-          Gillespie points out a study showing that overall economic mobility has not changed much over past decades, that roughly the same percentage of Americans change income quintiles. Underneath this aggregate measure is evidence that mobility no longer means what it once did. A larger percentage stays in the same quintile, while a smaller percentage moves up or down by two quintiles. Furthermore, except for those who enter the fifth quintile, moving up by one quintile no longer corresponds to the same increase in purchasing power.

-          Gillespie notes that more Americans than ever before own homes. There is a flipside, however. With housing especially, the value of these assets is less impressive when debt is taken into account. Though all income groups have increased debt as a percentage of income, the trend is more pronounced with lower income levels. In fact, middle-income families devote the highest percentage of their income to debt payment. Further more, these middle-class homes, as a larger percentage of total assets, make net worth less liquid than in the past.

-          Finally, though it is encouraging that more Americans go on to college, we here at CampusProgress don’t need to rehash that, despite becoming an increasingly important component of upward mobility, obstacles to higher education are mounting.

 
Of course, if libertarians couldn’t engage in gross over-simplification of economics, they wouldn’t have much to go on, would they?

Today I had the pleasure of attending my first Senate hearing regarding college affordability.  Imagine my progressive giddiness as I watched Senator Kennedy enter the hearing room.  Camera’s flashing, the G.W. College Democrats behind me talking of tossing G.W. Dem’s underwear at him, and that school girl flustered feeling inside me from just seeing Kennedy in person, someone I hold at a high level of rock star status.  Unfortunately, that first impression faded quickly as I realized that Senators Kennedy, Enzi (ranking member from WY), and Isakson (republican from GA) were the only ones in attendance, eighteen others were missing.  Is college affordability that unimportant to our senators that they could not show up for a 90 minute hearing?  I was especially let down by my own senator, Sherrod Brown (OH), as his 2006 campaign platform was packed with promises regarding the issue at hand.

Witnesses at the hearing were Suze Orman, host of The Suze Orman Show, Tamara Draut, author of Strapped: Why America’s 20-and30-Somethings Can’t Get Ahead, Dr. Jon Oberg, former Department of Education researcher, and Dr. Sandy Baum, Senior Policy Analyst for The College Board and Professor of Economics at Skidmore College.

Senator Kennedy opened the hearing saying that “any individual, any student, young and old alike” should be provided with “help and assistance” from the federal government to obtain a college education.  Each of the panelists agreed, but had differing ideas on how to reach the ultimate goal of college affordability. 

Orman stated the only way to combat what she referred to as a “perfect storm” is to educate both students and their parents in financial aid issues specifically those regarding borrowing and repaying loans.  Draut proposed moving from our current “debt for diploma system” to a system where grants will cover three-quarters of the cost of college for those who qualify as low-income.  Oberg strongly urged the committee to read his report and pay particular attention to the footnotes and advocated federal loan auctions.  Baum felt transparency was best, that providing predictable aid quotes to students and their families at a young age would help them plan for the financial burden of college.

On my way out of the hearing room I thanked the man who not only invited, but snuck in myself and about 20 other college students.  This, he told me, was only the first of many hearings on this issue of college affordability.  I urge you to contact your senator, especially if they are on this committee, and tell them that as a voter you expect him/her to support this issue.  I agree with Orman, this is the perfect storm.  The average debt of a four year college graduate has almost reached $20,000.  It’s too late for me, as I will graduate in May, but with college tuition rising at an exponential rate, I fear for the future students of this country.