Making a Killing on Student Loans

Original Link: http://www.counterpunch.org/olorunda02102010.html

By TOLU OLORUNDA

Why have the right to a college education depend upon whether the father or mother is so well to do as to send a boy or girl to college?

—Huey Long

Since their appearance in the seventeenth and eighteenth century, American colleges followed the traditions established by Oxford, Cambridge, and the continental universities in the preparation of their overwhelmingly white male student body for law, ministry, medicine, and politics.

—Henry Giroux and Susan Giroux, Take Back Higher Education

The New York Times reported last week of rammed-up lobbying efforts by student-loan lenders to derail the Obama administration’s ambitious Student Aid and Fiscal Responsibility Act. What President Obama once considered a “no-brainer” is today being vehemently rebuffed by private loan giants through an arsenal of techniques including “sit-downs with lawmakers, town-hall-style meetings and petition drives.” The only no-brainer here is that no profit-driven corporation with competent CEOs would for a second let anyone—not even government—prey out of its cold hands lucrative opportunities to further sink a young, untrained generation into debt.

One November morning last year, about 100 Students at the University of California (UCLA), Berkeley, seized a couple campus buildings to protest the 32% tuition hike passed by the UC Board of Regents. Starting the following spring semester, they would be asked to pay an additional $585, right before a second increase of $1,344 scheduled for the fall. Those who could afford returning would end up forced to fork over more than $10,000 the next year—triple the cost a mere decade ago. Approval of this proposal had been all but unanimous, with the lone opposition vote cast by the only student accepted among the other 25 members. How ironic?

In no time, police officers, riot gear-ready, had arrived on scene, equipped to take down any unruly, snot-nosed kid in sight—or the union members, parents, community leaders and activists who together formed a crowd of more than 2,000 outside in solidarity with the students. About 50 of the 100+ students inside ended up arrested.

UCLA President Mark Yudof, in a prepared statement, bluntly defended the hike, passing the buck: “We’re being forced to impose a user tax on our students and their families. This is a tax necessary because our political leaders have failed to adequately fund public higher education.” Of course President Yudof, who, then, raked in over $800,000 annually, failed to mention the $200 million his university had just loaned the state of California—never mind its $26.3 billion deficit—with a 3.2% interest payback.

As I reflected over what, in an ideal society, would have been universally championed as justified indignation against unfair and unprincipled decisions affecting the lives of an often marginalized and disposable population, I couldn’t but be reminded of the adage, “A hit dog will holler!”

A recent College Board report, “Trends In College Pricing 2009,” revealed a 6.5% tuition increase, on average, at 4-year public colleges and a 4.4 % increase at 4-year private “not-for-profit” colleges, raising the annual cost of public higher education to $7,020 and private to $26,273.

A hit dog will holler!

These “trends” have abandoned most students at the mercy of five options: 1) drop out and transfer to a community college 2) pick up a second job 3) quit schooling altogether 4) bear the brunt temporarily and hope a degree pays off in the long run 5) take direct, non-violent action.

With a 10%+ increase in enrollment at 2-year colleges, many students seem to have split their alliances between option 1 and 4; but if the UCLA incident offers any insight, it must be that a new “trend” is taking shape within college communities nationwide: civil disobedience to protest tuition hikes and other elements of college life—e.g: exorbitant boarding and book costs—students find displeasing.

And this is but the tip of the iceberg; not only in terms of boiling outrage, but also regarding a rise in consciousness. Students countrywide, and in several instances internationally, are starting to realize how powerless they truly are. They’ve come to recognize student governments and other such organizations afforded them as farcical props to pacify any possibility of genuine student-led governance.

San Diego State professor Jerry Farber penned a popular essay in 1969, “The Student As Nigger,” in which he argued that most students were “politically disenfranchised. They are in an academic Lowndes County. Most of them can vote in national elections—their average age is about 26—but they have no voice in the decisions which affect their academic lives.” And while Farber frequently gave to exaggeration and hyperbole, his paralleling of the Black experience as metaphor for the conditions to which many students are consigned couldn’t be more spot-on:

The students are, it is true, allowed to have a toy government run for the most part by Uncle Toms and concerned principally with trivia. The faculty and administrations decide what courses will be offered; the students get to choose their own Homecoming Queen. Occasionally when student leaders get uppity and rebellious, they’re either ignored, put off with trivial concessions, or maneuvered expertly out of position.

More than a niggerization of college life, I think, is a deliberate manipulation of the minds of students. So, if, for instance, a particular student feels a particular professor is “indoctrinating” her with a particular set of leftist or radical views, said student is encouraged to report immediately to the dean or chair of whatever department the professor operates within. The student is made to believe the school cares deeply about whatever concerns she has, and with swiftness, depending on the amount of discipline the administration believes the professor deserves, this notion is confirmed. If the student is lucky enough, she might even be paid a special visit from David Horowitz, director of Freedom Center, whose organization funnels millions of dollars annually into college campuses—ostensibly to guard the “intellectual freedoms” of students.

But if, for a moment, this student thinks she would be just as fortunate in raising issues of tuition costs, book costs, infantilizing curricula, departmental outsourcing, or school-infomercialization, the result might be far from enthralling. The student would discover that the academy’s ear is mostly open only to cries about “bad teachers” or “activist educators”—rather than more concrete concerns like the blotting-out of the public character higher education once embodied. More and more, this false sense of empowerment is being stared down and wrestled with, nationwide, by students witnessing their colleges turn into educational shopping malls, academic boutiques, and research firms for private companies.

The history of vibrant student-led movements is probably best remembered in the ‘60s when one set of students were standing up in opposition to segregationist policies that barred Blacks from academic upward mobility, and another set presenting just as strong a case against the Vietnam War ambitions of Lyndon Johnson’s administration. To some degree, both sets intertwined and overlapped. Sadly, the vacuum of student-led mobilization against corporate infiltration remains largely unfilled today; but with mounting student loan and tuition costs, it shouldn’t take long before that scene at UCLA last Thursday is replicated en masse—from city to city, town to town.

In August 2009, Congress passed the Student Aid and Fiscal Responsibility Act (253-171), which terminated the Federal Family Education Loan (FFEL) program, effectively eliminating private lenders from the equation of federal student loans. Since 1965, when FFEL was introduced under the Higher Education Act of 1965, private companies have made a killing, generation loans of over $56 billion in 2008 alone.

The same year, according to a National Postsecondary Student Aid Study, two-thirds of students seeking a Bachelor’s Degree borrowed more than $23,000 from the federal government. Another 13% were forced into private student loans, putting more than $11 billion in private companies’ pockets. Congress eliminating bankruptcy protection from the Higher Education Opportunity Act of 2008 seemed the perfect gift basket sent to giant private lenders like Sallie Mae who’ve made bundles holding hostage overburdened students, many of whom live lives too preoccupied with academic work or social functions to meticulously track the inflating interest rates bolstering their loans.

For many the Pell Grant, which thirty years ago covered up to 77% of a public 4-year education, is the last messiah standing. Unfortunately, today it only covers 35%. Students with family incomes below $50,000 ordinarily qualify for the Grant, but, in times of economic encumbrance like this, many are finding it increasingly difficult to meet the mark.

Very little hope is left for youth from low-income and middle-income backgrounds to pursue higher education. “We can lose a greedy bank more than we can lose a generation of needy students,” said Rev. Jesse Jackson in a TV appearance, calling for a federal bailout aimed at relieving students loan debts. “I mean, the banks are self-inflicted wounds. Students, in their innocence, are trying to borrow money, are trying to get a scholarship, to do the right thing. They want to be productive, and this is a very counterproductive measure.” Students don’t have lobbyists as powerful and resourceful as those hired by big banks and insurance companies to push through or destroy impacting legislations. And this brings to light the reality that young people are no more perceived as worthy investments for a democratic future.

The struggle for a democratic academy has hardly received the mainstream support long overdue. Higher education today is slipping far outside the reaches of not only low-income students but even kids from middle-class backgrounds who see, with perfect clarity, mass erosion of job sectors once guaranteed to anyone with a bachelor’s or master’s degree. With academic inflation ever on the rise, many today need PhDs for jobs 4 years of undergraduate studies once took care of. College campuses are losing the diversity thousands of dedicated teachers, activists, parents, and students worked hard to establish for decades. They are now turning into gated communities (culturally and financially)—open only to those with CEOs for parents. Journalist Andy Kroll described this systematic—far from accidental—sequence in full detail:

[S]tate flagship universities and a group of other major research universities spent $257 million in 2003 on financial aid for students from families earning more than $100,000 a year. Those same universities spent only $171 million on aid to students from families who made less than $20,000 a year. Similarly, between 1995 and 2003, according to the report, grant aid from the same public universities to students from families making $80,000 or more increased 533%, while grant aid to families making less than $40,000 increased only 120%.

Much like the unregulated wealth transfer that made few exorbitantly rich and hung millions out to dry, money much needed by starving families is allocated to those well-to-do enough to succeed in life even without higher education. And several colleges have already made known their acceptance—indeed celebration—of such values. One in particular, Purdue University, unveiled late 2009 a “luxury” dorm-line which, amongst other amenities, includes 365 single-occupant rooms with private bathrooms, flat-screen televisions, wireless Internet, free laundry facilities and cleaning services—a $52 million project. These suites cost $5,000 more than average, a whopping $14,000 for one year only. “You feel guilty at all when you walk in here and think of your friends across the street in the other dorm?” a privileged student was asked. “No,” she scoffed, “I feel bad for them!”

College campuses, once considered the melting pot for cultures and ideas and values of all kind, are being remolded to fit the narrative of the world beyond—where money rules everything; where the poor are made to feel perpetually miserably for their financial woes; where the super-rich lead lives utterly disconnected from the society they exist within. Money talks and you know what walks. Gone are the days, it seems, when non-Ivy league schools sought to challenge students to make the world a better, fairer, more just and equitable place. Now, students who have it all are encouraged to revel in gluttony while kids from ordinary homes get used to a world dictated by the ethics of economic worth. They are denied all “rights to access higher education, to participate in the governance of the university, and to freely express and debate their ideas in the classroom.”

There is hope, however, as proven at UCLA. But as the student loan reform movement picks up steam and takes center stage, a number of outcomes should be expected and fought vigorously against. If the 2009 health insurance reform debacle is any indicator, students should expect private loan companies to play the victim—against all laws of sanity. Lenders like Sallie Mae, which complained in 2008 of 72% profit loss but reported a year later an 8% profit gain, would argue, against all rules of reason and reality, that any attempt on the government’s part to cut out the private middleman is “Un-American,” “Anti-Capitalist,” and an assault on the founding fathers’ free-market-fundamentalist visions. The private companies should also be expected to use their employees as human shields whose jobs, it would be argued, might be jeopardized if the government interrupts the free-flow of the market.

Students should also expect a cantankerous, Right-wing opposition to any form of reform. Two years back, very few believed the movement to ensure coverage for the 43 million or 10 million children currently uninsured would be at all considered controversial or partisan politics, but, as proven with the unremarkable “Tea Party” rallies, fueled unabashedly by powerful, well-funded conservative institutions like FOX News and FreedomWorks, any shift from market mechanisms is interpretable as full embracement of socialistic and communistic principles. Students would likely also find a Democratic Party leadership inept in crafting engaging language capable of communicating directly to, and winning over, the many kids and parents who would undoubtedly be misled into believing reform has no righteous intentions. They would also find themselves betrayed by neo-conservative, so-called “blue dog” democrats whose voting records indicate anything but democratic values and visions.

Students should as well expect the “Wall Street-controlled public press,” as that troubled but triumphant soul Huey Long described it, to make circus of an issue as critical as the future of democracy. They should expect the flippant infatuation with every fringe movement supported by a mainstream personality—a la former Alaska governor Sarah Palin.

But, most importantly, students must brace up in preparation for what is sure to be a no-holds-barred attack campaign. Students would be portrayed as indifferent and aloof to their responsibilities and the implications of adult life. They can depend on the neoliberal politics of unconscionable individualism to deem them “pansies” and “softies” who, unlike their parents, expect to coast through life unhindered. The young of today, it would be said, shouldn’t be “bailed out” of foolish choices made to fuel frivolous pursuits. It wouldn’t matter that in 1984 nationwide net state funding for higher education was 4.1 % of total state government spending, but by 2004, it had dropped to 1.8%.Students would be ridiculed as greedy and gullible. They would witness a total trivialization of the real-life stories of women like “Gina Moss,” a social worker and single mother raped in college (kept the baby), who ended up evicted, having watched her student loan debt balloon from $50,000 to $70,000 in only a few years.

But the struggle to lift the burdens weighing heavy on the backs of students would have to involve more than young people: it would take the sympathy and sensitivity of adults working hand-in-hand, side-by-side with tomorrow’s leaders. It would take the empathy and energy of courageous intellectuals to step out beyond the academic bubble and stand for something worth more than a corporate handout. It would take the unwavering support of parents, community leaders, and educators to make good on the hopes harbored in the minds of young people—hope that the society in which they live cares deeply about the future awaiting them.