Easy college loans could be next 'mortgage crisis'

The parallels to the mortgage lending boom pre-2007 are eerie. People are qualifying for large loans with no regard to their ability to pay. For borrowers, there's no income check, no need to verify employment, and no disclosure of how much other debt they've taken on.

Welcome to the booming field of college loans 2012. As reported earlier this month in a joint investigation by the nonprofit news organization ProPublica and The Chronicle of Higher Education, the federal government gave out $10.6 billion last year in Parent Plus loans, which average about $11,000 per student per year. Adjusted for inflation, that's $6.3 billion more than in 2000. Just under a million families signed on for Parent Plus loans last year -- almost twice as many as in 2000.

The U.S. Department of Education, which runs this particular program, should not be in the business of knocking down families into poor credit and poverty. Yet, Parent Plus loans -- like the no-money-down mortgages of a few years back -- appear to run the risk of that very outcome.

The journalists' report tells the story of a woman making $25,000 a year in 2000 who took out $17,000 in loans for her daughter to attend NYU. Today, with fees and interest, the mother owes $33,000. Her credit has been so badly damaged that she can't qualify for a loan to send a second daughter to college. Student loan debt for Americans, as a whole, now exceeds credit card debt.

This tale of easy credit for people with little means is all the worse when you consider that one in five Parent Plus loans went to students who also received Pell Grants -- need-based financial aid for households with incomes under $50,000 that don't have to be repaid.

Is there a role for the Department of Education to tighten this lending? Should the department perform better credit checks on families? The answer to that question depends in part on your faith in the future. Lending to the parents of bright young students could give them the opportunity they need to step up the social ladder.

But there's also a gloomier prospect -- and another parallel to the mortgage disaster. The housing bubble inflated because people counted on housing prices to continue climbing skyward. With similar sunny optimism, families have been depending on graduates to emerge into careers with steadily growing paychecks.

Yes, college graduates earn 75 percent more, on average, than their peers with high school degrees. But that's if they can find a job. Some estimates say that 54 percent of recent college graduates are unemployed or underemployed -- meaning, they would prefer to work more hours or could take on more responsibility.

Another problem with Parent Plus is it allows colleges to keep raising tuition and fees. The bill for bigger student centers, fancier dorms, and higher faculty and administration salaries is being shifted onto middle- and working-class families. Colleges often steer families toward Parent Plus loans -- some include the loans in financial aid award letters -- when the colleges could be giving students a break on tuition.

Surely, colleges believe that families will safeguard their finances and forgo a loan that puts them at risk of defaulting. But is that asking too much of parents, who may be excited about an acceptance from a child's dream school? Pride and easy credit are a dangerous combination. I wouldn't want to deny a child the chance at an education that might mean everything to his or her future. Upward mobility is hard enough in this country -- and getting tougher all the time.

Yet the Department of Education and colleges need to close this lending spigot. Strict lending rules aren't punitive. They're just good sense.

This essay was first published in Newsday.

Tougher life choices for this generation

Entering adulthood used to be like wading into a gently sloping lake. You got your feet wet with a degree or job. Then maybe you found an apartment, and eventually a life partner. Soon, you were swimming in deep water.

But today, it feels as though the water gets deep fast. Young people can't just splash around and "find themselves" anymore. The world has changed.

Work can disappear with little warning. Skills grow obsolete fast. Lifetime employment and corporate loyalty are mostly things of the past. Compared to two decades ago, the average American worker puts in an extra 164 hours per year on the job, according to economist Juliet Schor. And adjusted for inflation, middle-class U.S. workers make less than they did in 1971.

These pressures mean that anyone who wants to "have it all" - career, family and leisure - needs to look way ahead. We parents would be wise to talk through the choices very explicitly with our children, especially the majority who are likely to want both work and kids.

We can explain the need for a sharply different perspective on career planning. For example, a friend of mine in her 20s who just got married says that she and others her age won't rely on working for an employer. The long hours and lack of security aren't worth it. Her plan is to run her own business and live frugally. Great idea; I hope for her sake it works out.

Another option is to choose an explicitly family-friendly career, something women have been doing for ages - a career with predictable hours and even some job security. Men increasingly are doing likewise; they make up ever more of our nurses, school teachers, bank tellers and food servers.

Even for the most ambitious, there are ways to craft a career that allows for more family time. A study of nearly 1,000 women who graduated from Harvard College between 1988 and 1991 showed that, 15 years after graduation, the ones who became doctors and lawyers had an easier time combining work and family than did those who later got an MBA. The doctors and lawyers had shifted to part-time work, opened their own practices with like-minded colleagues, or moved into the nonprofit sector or government work. The businesswomen, by contrast, faced an either-or choice: Put in grueling hours or quit.

Marissa Mayer, the new Yahoo chief executive, is an example. She's 37, will give birth this fall, and plans "a few weeks" of maternity leave during which she will continue to work. But if you want a different sort of work-family balance for yourself, then perhaps you shouldn't plan on following in her footsteps.

Stories about families working together to make hard choices are encouraging. Austrian tennis player Sybille Bammer, for example, had a child at 21 and quit competing. She went back to tennis after her life partner, and the child's father, became her coach, hitting partner and Mr. Mom. For a while, they lived on $500 a month.

Then there's Angela Braly, chief executive of health benefits giant WellPoint, whose husband left his family business for a more flexible schedule in real estate and teaching. They have three children. How do we discuss the complexities of the modern balancing act without blunting our kids' ambitions? I can hear them mocking us now: Settle for the mommy track early, dear, and save yourself a lot of angst. But that's not the message. On the contrary, what's important is figuring out what you want and planning for it, precisely so you don't end up sidetracked.

Couples considering a family should talk openly about their expectations, too. You know the old saying: If you don't know where you're going, you're sure to get there.

This essay was first published in Newsday.

The 'lost generation' of teenage workers

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I well remember how my first job made me feel: capable, creative, in charge. I was a summer counselor at a YMCA day camp, and still practically a kid myself, just out of 10th grade. I made a lot of mistakes.

As the arts and crafts counselor, I blew most of my $200 budget on Popsicle sticks and gimp. We ran out of arts and crafts supplies halfway through the summer, and so taking long "nature walks" became our fallback. I wonder what the campers' parents thought.

Making mistakes like that is partly what early jobs are all about. We learn, and then make better decisions when the "real" job comes along.

So it's troubling that teens today are facing their third straight summer of bleak employment prospects -- in fact, the worst since World War II, when the government began keeping track. In April, the jobless rate for 16- to 19-year-olds approached 25 percent. And the unemployment rate only counts those actively looking. Many are too discouraged by the dismal economy to try.

Parents may debate the merits of teens taking jobs bagging groceries versus studying or pursuing music, sports or college-level courses. But the poorest Americans don't have that choice, and to double down on their woes, they are hit hardest by teen unemployment. Last summer, just one in five teenagers with annual family income below $20,000 had a job, according to a report by Northeastern University's Center for Labor Market Studies.

Not only aren't these teens earning needed cash -- or learning the life lessons I got at the YMCA -- but the joblessness they experience now may drag them down for years. One study in the United States and Britain said that 37-year-old men who had sustained a year of unemployment before age 23 made 23 percent less than their peers. The equivalent gap was 16 percent for women.

College graduates who took jobs beneath their education or outside of their fields often never got back to where they might have been, according to what the Japanese learned from their "lost decade" of economic doldrums in the 1990s and early 2000s. When the Japanese economy recovered, employers preferred graduates fresh out of school, creating a generation that suffers higher rates of depression, heart attack and suicide, and lower life expectancy.

These structural problems with capitalism -- the ups and downs of the business cycle -- should not be borne by individuals, but collectively. That's why we have unemployment insurance, for example.

Other countries seem to have a better understanding of this. Germany's renowned apprenticeship program, a training period of two to four years, attracts roughly two-thirds of vocational school students there. They're often hired afterward, one reason Germany has a far lower youth unemployment rate than us, at 9.5 percent. Firms and government share the apprenticeship expenses.

The Netherlands, also keen on averting a lost generation of workers, is dividing full-time private sector jobs into two or three part-time ones, with government providing supplemental income for part-time workers. When the economy improves, Dutch 20-somethings will be ready with skills and experience.

The New York Youth Works program has the right idea. On Long Island, at least 64 employers have signed up. The program offers them tax credits for hiring low-income youth. Given that unemployment among teens is more than twice the 7.4 percent rate for adults on Long Island, we should expand this program.

When teens work, it teaches them independence, responsibility, a good work ethic and how to get along with others. Our collective future depends on investing in their success.

This essay was first published in Newsday.

Time for a 'living wage' for the middle class?

With millions out of work, complaints about the decline in middle-class wages may seem misplaced. But without some shoring up, the middle class will remain dispirited -- and our economy, which is 70 percent dependent on consumer spending, will remain in the dumper.

It may be that there's a role for government to play in buttressing these eroding wages, which result not only in a declining standard of living, but also in a family life so pressure-filled that it leads to its own problems: angry homes, fast-food diets, dependence on alcohol and drugs.

Calling for any sort of government role during these tea party times can raise charges of socialism. But the idea of a wage that supports some minimum standard of living -- shelter, clothing, food -- has been broached on and off for more than a century.

In the late 1800s, social activists began protesting wages earned by a working-class man that were not sufficient to sustain his family, without the additional wages of working children and mothers. The Catholic Church published a fundamental social teaching, "Rerum Novarum" (on capital and labor), that read, "Wealthy owners of the means of production and employers must never forget that both divine and human law forbid them to squeeze the poor and wretched for the sake of gain or to profit from the helplessness of others."

Shortly afterward, Australia's courts ruled that an employer must pay a wage that guaranteed a standard of living that was reasonable for "a human being in a civilized community" for a family of four to live in "frugal comfort."

In the United States, these ideas led to laws forbidding child labor, making education compulsory and protecting women from exploitive labor conditions. The campaign to establish a "family wage" was defeated, but in 1938, a lower standard, the federal minimum wage, was passed.

The Rev. Martin Luther King Jr., Daniel Patrick Moynihan and in 1968, a group of 1,200 economists including Paul Samuelson and John Kenneth Galbraith, have all supported some kind of minium income guarantee.

Echoes of this debate are being heard now, in the Vatican's critique last week of the global financial system, and in places where labor unions still have some sway: In the New York City Council, which at the urging of retail workers may require employers in commercial developments built with public subsidies to pay at least $10 an hour, a "living wage" higher than the minimum wage of $7.25; and in Albany, where the State Legislature in April passed an increase to $9 an hour for home health aides, who are represented by the influential 1199 SEIU United Health Care Workers East. That increase takes effect on Long Island in 2013.

It's easy to see why the lowest-paid workers would need a boost from someone powerful enough to argue on their behalf. But to make the argument for the middle class, one has to believe that this great swath of America, nearly half the country, has special value. And it does: The stability and upward mobility of the middle class not only underpin the U.S. economy but give America its famously optimistic and innovative spirit.

That spirit is on display as the middle class makes the best of things today: The average American has added around a month's worth of work, 164 hours per year, in the last two decades. One-third of American families have reduced their savings for college, according to a 2010 Sallie Mae/Gallup poll, and another 15 percent are not saving at all. Retirement savings are in similar decline.

How much more can the middle class cinch in its belt, before we lose what's precious about this way of life?

First published in Newsday.

Economic trends threaten families' health

After listening to President Barack Obama's job-creation address last week, I kept coming back to the idea that he wants to give payroll tax breaks to businesses that offer people pay raises. That struck me as odd, given that unemployment stands at 9.1 percent, and you'd think that this hard-times president would be focused exclusively on getting people back to work.

But even people with jobs are facing time and money pressures in this economy, pressures that are bad for families' health.

Certainly, putting cash in people's pockets should help to rev up the listless consumer economy. But it looks like the president is also acknowledging just how much wages have eroded in the last couple of decades.

Real wages have been declining since 1983 and that means the middle class has less buying power. At the same time, the average American has added around a month's worth of work -- 164 hours per year -- in the past two decades. The number of dual-income households has risen, as well as the number of people working multiple jobs. It's not hard to imagine that people are putting in more time at work to make up for the erosion in their wages. That sounds like a very busy -- an overly busy -- middle class.

This busyness has consequences for the mental and physical health of parents and children -- and study after study substantiates this. A six-year study of 11,540 working parents in France, published in 2007, showed that people who had higher work stress or greater family demands were more likely to miss work due to poor mental health, particularly depression. Research on working parents in New York's Erie County demonstrated a relationship between family-work conflict and depression, heavy alcohol consumption, poor physical health and high blood pressure.

Time pressures also contribute to weight problems. For the first time in history, there are more overweight than underweight adults worldwide, according to new research at American University. A study published in the January-February issue of the journal Child Development found that children's body mass index rose the more years their mothers worked over their lifetimes. One explanation offered is that working parents have limited time for grocery shopping and food preparation.

Not so long ago, as a society we were asking, is it better for families if parents stay home with kids or work outside the home? Moms were usually the parents in question. Now, because of steadily declining purchasing power, for most people, it's less a matter of choice than necessity.

I have to ask myself, was this a conscious decision? Did Americans choose "working parents" as the better alternative? Was it a good direction or have we lost something in the translation? Have we perhaps given too little thought to how parents can give both their employers and their children what they need?

The financial and time pressures on families are what make us so vulnerable to implied criticisms, like those on display in Amy Chua's "Battle Hymn of the Tiger Mother." It registered so strongly with American parents because we're insecure about having adequate resources to meet the challenges of raising children now.

It's too early to tell if the Obama tax break, if adopted, will be effective in raising people's wages, or even whether, if we made more money, we would choose to spend more time with our children. But it's worth trying to reverse some of the trends that are putting so much pressure on families' health.

First published in Newsday