Appalled at the high cost of a sheepskin? Part of the blame falls on John Boehner.
In a recent article in Business Week, Democrats were depicted as vulnerable in Ohio's November elections as a result of a jobless rate of 10.3%. Over the last decade, the Buckeye State has lost about 400,000 factory jobs -- 40% of the state's manufacturing workforce.
You would think that since his state is bleeding factory jobs, House Minority Leader John Boehner would be focusing on helping more young people from blue collar families afford college, especially now, when it's never been more unaffordable. In 2009 the average cost of sending a kid to a private college topped $35,000 a year -- up from $20,000 per year just 14 years ago, according to Financial Planning magazine.
However, in his previous job as chairman of the House Education and Labor Committee, Boehner offered assurances that he would prioritize the needs of the private student loan industry -- a business that makes pricey colleges even pricier. As I pointed out in my book, America, Welcome to the Poorhouse, loan-industry officials convinced Boehner to draft legislation that would end the ability for borrowers to lock in a low fixed-interest rate for up to 30 years, along with making it more difficult to extend payment terms without refinancing their loans.
Unlike most politicians, who at least pretend to put taxpayers' interests above those of big business, Boehner made no bones about where his priorities lie. In a speech to the Consumer Bankers Association, he reassured them that "I have all of you in my two trusted hands -- I've got enough rabbits up my sleeve to get where we need to." Wonder how Boehner manages to maintain his "tan, rested and ready" complexion? On several occasions Boehner was a guest of Albert Lord, Sallie Mae's former CEO/board vice chairman, on the company's corporate jet, primarily for golf outings in Florida.
What's most despicable about doing the bidding of an industry that boosts the costs of getting a sheepskin is that, in the same way Americans are the "pension-poorest" of any country in the advanced world, our citizens also foot a larger share of college costs than just about any advanced nation. According to the OECD, we are the third lowest spender when it comes to government subsidies of college costs. As Anya Kamenetz pointed out in her book, Generation Debt, while in 1976 the maximum Pell Grant covered 72% of costs at the average four-year pubic school, in 2004 it was only 36% of a bigger bill.
As fans of Reaganomics fail to fathom, if you lower tax rates on the rich, you increase costs for the middle class. Before Ronald Reagan's election in 1980, the top income tax bracket has been at or above 70% for 44 years. Reagan dropped it to 50% and eventually pushed it down to 28%. If we could reinstate the pre-Reagan tax rates on the rich, we could send more blue collar kids to college. Not only are high rollers taxed too little, but their riches have mushroomed in the past couple of decades; while the typical CEO salary was 40 times the median wage in the mid 1980s, it's now around 300 times the median wage.
A college education is a right, not a privilege. Unfortunately, only the privileged can afford a degree at a point in history when more Americans need one to find a job in an increasingly globalized economy. For those of you with high school kids aiming for a degree, in my next post I'll offer some tips on how to find bargains until we can make college more affordable.