Thursday, July 18, 2024

A seeming moment of realization hits a graduate at the June 2010 ceremonies at the Massachusetts Institute of Technology. (Photo: Audubon McKeown)

I’m about to generate a lot of hatred from anyone of my generation on down, with the hatred probably increasing exponentially by year: I graduated from college with no debt.

I can actually feel the wave of loathing coming toward me when I confess that my parents paid for my college, which wasn’t cheap, and I was able to focus fully on my studies (when I focused at all, which would be my other confession) and other professional development (meaning I spent most every waking hour at the school newspaper, and cut back on nonwaking hours to do so). I didn’t even have work study or a school-year job.

Yet my parents are not rich. We were a solidly middle-class family.

So take some of that loathing you’re feeling toward me and divert some toward what’s happened to America as a whole over the past few decades as the rich got richer, the poor got poorer, the working poor became just poor and the middle class began slipping increasingly toward replacing them. While we can’t seem to cope with the idea of returning to the merely horrific gap between rich and poor of the Clinton era, and idiots earning minimum-wage at the multiple jobs they work fight against the estate tax for those with $5 million or more to pass onto their heirs, real wages have stagnated; middle-class families can no longer afford to send kids to college; and populist advocates fight against 20 percent down payments on home purchases because, according to the National Association of Realtors, “it would take 9.5 years for the typical American family to save enough money for a 10 percent down payment and closing costs, and fully 16 years to save for a 20 percent down payment and closing costs.”

Remember: The association isn’t talking about Cambridge, where The average listing price for homes for sale on Trulia was $616,151 for the week ending Aug. 24. (It’s still cheapest in the Wellington-Harrington neighborhood, with average homes at $371,600, according to Zillow calculations last month.) It’s talking about the typical American family, looking at land in Alaska, Hawaii and from the heartland to every corner of the continent. Sixteen years to earn a level of down payment that was once standard, leading a surprisingly broad coalition of organizations — from the American Bankers Association to the National Association for the Advancement of Colored People — to fight to keep down payments at 3 percent or 5 percent. In an age where top executives get nosebleed pay for avoiding taxes and slashing jobs, that’s near enough to subprime-crisis levels of incipient irresponsibility to make me nervous.

Widening the chasm

You have to ask: What has happened since the 1980s that even a 10 percent down payment requirement “means that even the most creditworthy and diligent first-time homebuyer cannot qualify for the lowest rates and safest [mortgage] products in the market,” according to the National Association of Realtors? You can look to President Ronald Reagan and his Trojan horse of trickle-down economics, since his policies marked the widening of the chasm between rich and poor and crippling blows against organized labor, which had helped keep wages high for the middle class for decades.

Conservative dominance in government also holds some answers for what’s happened to college expenses. State schools may still be tremendous bargains when compared with private institutions, but look at what’s been going at on the University of California, for instance: This past July saw the seventh rise in tuition in five years, and it was a 9.8 percent hike. And it followed an 8 percent hike eight months earlier. All told, students would be paying double what they would have had to pay in 2004. But what choice did the university system have? State lawmakers, facing huge deficits, cut its budget by $650 million.

That’s happening everywhere. University of Iowa nursing students got hit with 40 percent increases this year, The Associated Press reported in March. But who needs nurses, right? It’s not like we have an aging population or anything. (Or maybe the idea is to keep charging patients more so nurses in Iowa can afford to pay off college debt from 40 percent tuition increases? Either way, it seems untenable.)

At private institutions, tuition keeps going up between 4 percent and 5 percent a year, and while officially aid keeps increasing as well, surely the average $27,293 per year for tuition and fees reported by the College Board is going to have any middle-class parent blinking a bit. That’s $109,172 for four years.

It’s impossible to describe how grateful I am toward my parents for my education, which seemed to work out in the end, or how lucky I feel to not have college debt hobbling me as I try to save for my eventual — or, I should say, possible — retirement.

Yup. No college debt.

Yet I cannot afford to make a 20 percent down payment on a home or do what my parents did: send my own kid, were I to have one, to a private college.

This post relied on the reporting of Joe Mont at TheStreet for information on the debate over 20 percent down payments.