May 13, 2012 -- If you're worried about student loan debt, what it means for graduating seniors and for the future of our nation, congratulations. That means you're paying attention. Now that Americans owe over $1 trillion in student debt, more than they owe on their credit cards, many people are beginning to see that our country's current way of paying for college cannot be sustained.
Unfortunately, as I mentioned in this space last week, our leaders are not taking the problem seriously. For all the suave coolness President Obama displayed during his "Slow Jam" on student loan debt, his call to keep the interest rate on federally subsidized Stafford loans at the current 3.4 percent will not have much of an impact. It's a distraction from the looming crisis.
Here's the problem, folks: In America right now, an entire generation is mortgaging its future. And the chances that they'll ever succeed in paying off that debt are growing ever slimmer. As tuitions continue to increase, the job market stagnates and median wages—especially for the young—trend downwards, we are now trapping millions of young people in a cycle of high debt and low opportunity from which some will never escape.
There is a better way.
I call it the National Service Corps. The idea is simple: In exchange for a few years of service to their country, young people would receive significant financial assistance to pay for college.
The idea is not new, of course. After World War II, the G.I. Bill sent millions of returning soldiers to college and technical school. Some veterans even had their entire tuition paid to attend the top Ivy League schools. The result: A generation of highly-experienced young people, trained in business, engineering and science, led our nation into the longest period of sustained economic growth the world has ever known.
The situation we face now is not so different from what we faced in 1944, when the G.I. Bill was first passed.
Then as now, America faced a new technological era that swept away millions of jobs that were never coming back (think Dustbowl farmers replaced by tractors then; bank tellers replaced by smart phones now).
Then as now, newly ascendant world powers threaten to overtake our leads in education and scientific research.
Then as now, a generation of young people faces the prospect of systemic unemployment and shaky economic futures.
What's also true is that young Americans are just as ready to serve their country in 2012 as they were in 1944. And now more than ever, America must invest to give its young people the skills they need to lead us into the future.
The basics of a National Service Corps haven't changed much since the G.I. Bill, or since I first wrote about the idea as an aide working in Congress in 1969. If you give service to your country, then your country will help you go to college. Young people who choose to participate could choose to serve in the military, or they could do civilian projects in education, community service and infrastructure building, similar to the work done now by Peace Corps and AmeriCorps volunteers.
AmeriCorps, in fact, was created by the Clinton administration and expanded dramatically under Bush 43. Given the fact that it is a federal program, it is of course complicated: It is part of the Corporation for National and Community Service, which also oversees related programs that you probably haven't heard of, like the Senior Corps and Learn and Serve America. AmeriCorps itself has three divisions, which incorporate things like the Vista program, which is the domestic version of the Peace Corps, and has been around since 1965.
Although experience can widely vary, most members of AmeriCorps earn a stipend of about $5,000 a year which can be used to offset existing student loans, certain health benefits and living expenses while they're enrolled in the program. While the program has cachet and is good as far as it goes, $5,000 a year for college in the U.S. doesn't go very far.
[Related Article: The Other Student Loan Slow Jam: Is It Time for a National Service Corps?]
The time has come for the re-creation of AmeriCorps, and the rethinking of the government role in borrowing for education. Specifically, the country needs to address three major problems:
While it's certainly true that the 21st-century demands education beyond high school level, the notion that everyone should get some kind of a liberal arts education, however much it appeals to our nobler instincts, is ultimately counterproductive. Thus new or revamped programs need to create incentives so that people who should be getting skills-based vocational training do not instead study English.
Part of the reason for the inflation of tuition is the easy availability of borrowed money, just as a flood of mortgage money certainly contributed to the housing bubble. The existing skein of federally-backed loans and grants under Title IV of the Higher Education Act must be streamlined, and real standards for both borrowers and eligible institutions must be developed. There have been some steps in this direction recently, at least in terms of new regulations applying to for-profit schools, but they do not go far enough.
We need to reorganize all of the efforts combined within the Corporation for National and Community Service, so that the culture of borrowing tuition money is replaced with the idea of working for it. Obviously, there is no practicable way of allowing every student to work for the government in order to pay for tuition, but the creation of a National Service Corps will have a meaningful impact on the problem, in connection with the other reforms outlined above.
There are many questions that need answering. Should the program pay for college entirely? Or, should there be a cap of, say, $15,000, above which students can find loans if they choose to attend a more expensive college?
Should all volunteers join the National Service Corps at age 18, right after high school? Or should they be allowed to choose whether to participate during college or even after college, depending on their financial and educational needs?
Should all National Service Corps volunteers serve two years? Or should civilian volunteers serve for three years while military volunteers—who put their lives on the line—serve only two?
Answering these questions and probably even discussing this idea will be a challenge. To be large enough to solve the problems of looming college debt and structural unemployment, a National Service Corps could cost billions of dollars a year. In the current political environment, arguing for any new or expanded program, especially one as large and important as this one, might be viewed as a risk few politicians are in the mood to take.
We must not allow what amounts to political cowardice to stop us. We cannot accept the United States as a waning world power, simply because we are too myopic to invest in our own future. We cannot accept generations of young people drowning in a sea of debt and underemployment. We cannot accept politicians who distract us with silly—but cool—gimmicks, however well intentioned. It's time to act.
[Student Loans: Research and compare options for student loans at Credit.com]
Adam Levin is chairman and cofounder of Credit.com and Identity Theft 911. His experience as former director of the New Jersey Division of Consumer Affairs gives him unique insight into consumer privacy, legislation and financial advocacy. He is a nationally recognized expert on identity theft and credit.