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B.A. in bankruptcy: young people have always struggled with money, but members of this generation face higher debt, lower salaries, and more obstacles to financial security than their parents or grandparents.

WHEN JEWISH ZEALOTS REBELLED AGAINST ROME in 70 A.D., the first thing the insurgents did as to destroy the debt records, liberating tens thousands of Judean peasants from crippling poverty and indentured servitude. If the college-age children of boomers ever repeat their parents' overthrow of American campuses, these 21st-century radicals might not burn their draft cards but the school's loan records.

Throughout history debt has been the road to slavery, and education the path to liberty. In scripture indebted Egyptians, Canaanites, and Hebrews sold themselves into servitude to keep from starving while crippling debt shackled medieval serfs and 19th-century sharecroppers to their masters' lands and imprisoned the urban poor in workhouses. In contrast, ever since Socrates education has been the privilege of the free and leisured class and the gateway to that idyllic life. But today a growing number of America's college grads find themselves deeply indebted and burdened by--among other things--the spiraling costs of education. The sheepskin that was to be their ticket to financial freedom is often a passkey to a modern debtor's prison. Indeed current college grads are among what may be the most indebted generation of modern times.

In Generation Debt: Why Now is a Terrible Time to Be Young (Riverhead, 2006), 25-year-old journalist and Yale graduate Anya Kamenetz explores the growing debt of America's 24- to 35-year-olds and argues that "generation debt" is not in hock up to their contact lenses because they are slackers but because American society has broken its covenant with its children. Tamara Draut, director of the Economic Opportunity Program at the think tank Demos, offers a similar argument in Strapped: Why America's 20- and 30- Somethings Can't Get Ahead (Doubleday, 2006). According to Draut, the combination of skyrocketing tuition, housing, and health care costs; stagnant student aid and salaries; and diminishing benefits and pensions delivers a knockout punch to the dreams and aspirations of many young people hoping to climb the educational ladder to adulthood and financial independence.

As Kamenetz, Draut, and nearly everyone else agree, a college degree is the new high school diploma--the essential ticket to financial success in today's job market. The average salary for 24- to 35-year-old high school grads has dropped $10,000 in the past 30 years, which could explain why about 75 percent of today's high school graduates enter some college program. But more than half of them never graduate from a four-year school, in large part because of spiraling tuition costs and unbearable debt. And even those who do finish college find that the jobs, benefits, and pensions they were hoping for aren't there. Today's male college graduate earns $3,000 less a year than his father did when he finished school in the 1970s when adjusted for inflation, and real earnings for college graduates with only a bachelor's degree have dropped every year for the past four years.

Lots of folks drop out of college (or shift from a four-year school to a community college) because tuition costs continue to skyrocket. Since 1990 the cost of a diploma from a public college--where the vast majority of students go--has shot up 68 percent, while the cost of an education at a private school has climbed 47 percent. Since the early 1970s the cost of tuition at a four-year state college has increased nearly thirtyfold.

There have also been increases in student aid since the 1970s, but these increases have not kept pace with escalating costs. And, unlike 30 years ago, most of the aid offered today is in the form of loans, not grants. When Congress passed the 1944 GI Bill that sent 2.3 million veterans to college, the $500 given to each student for annual tuition covered the cost of education at nearly every school in America. In the 1970s Pell Grants (the best federal aid program for poor students) usually covered three quarters of the cost of college. Today a full Pell Grant pays less than a third of college costs, and most poor students receive enough to pay for only a quarter of their college education.

This may explain why the nation's top 250 colleges and universities have fewer middle- and working-class students than they did 20 years ago and why two thirds of today's students must borrow money to get through college, nearly a quarter using credit cards to pay tuition. It may even explain the startling fact that Americans ages 25 to 34 are less educated than 45- to 54-year-olds.

The average college graduate owes $20,000 in student loans and $3,000 in credit card debt. According to the loan industry, 55 percent of student borrowers have unmanageable debt burden after college. Still, credit card companies flood campuses with applications, and over three quarters of college students get at least one credit card. Why? Because the companies know Mom and Dad will pay the bill if Junior defaults. And because they want a long-term relationship with borrowers who will be paying off college loans into their 40s.

Once in the job market, these indebted graduates will take on housing debts 50 percent higher than those of their parents or boomerang back into their parents' basements until they can get enough money for a mortgage. About one in seven college grads will delay marriage because of debt. And when they do marry, members of this generation will be the first group to have more bankruptcies than divorces.

DEUTERONOMY IS FILLED WITH RULES PROTECTING those trapped in debt, because the biblical authors understood that real liberation from slavery demanded the prevention of a crippling and enslaving debt. Rules forbidding interest on loans to the poor and commanding the sabbatical release of debts and indentured servants were the Bible's way of protecting a just society. Tamara Draut and Anya Kamenetz's jeremiads against the indebting of a whole generation are a reminder that every just society must ensure that its children can earn and save enough to take care of the next generation.

PATRICK McCoRMICK, professor of Christian ethics at Gonzaga University in Spokane, Washington,
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Title Annotation:culture in context
Author:McCormick, Patrick
Publication:U.S. Catholic
Geographic Code:1USA
Date:Jul 1, 2006
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