We are in the midst of graduation season, with young people from pre-schoolers to post-grads moving on to the next big thing — life.
That means you’ll be seeing a lot of inspirational stories in the weeks ahead — but likely none more inspiring than the Morehouse College graduation ceremony last week.
In case you missed it, here is the short version: Robert Smith, the wealthiest African American in the nation, is paying off the student loans of Morehouse’s 396 graduates.
The Lompoc City Council is involved in a full-on disagreement over the city’s next budget. It is a familiar situation throughout North County.
Smith made the announcement of the gift during his podium appearance, leaving some of the grads stunned, others screaming with joy. The payoff amount is $40 million, a mind-numbing sum for most of us, but little more than pocket change for a self-made businessman with an estimated net worth of more than $5 billion.
Smith’s gift not only thrilled the Morehouse grads, but it emphasizes a much bigger issue for college students and graduates nationwide — an overwhelming student debt totaling more than $1.5 trillion, which exceeds what Americans owe on their credit cards, or their car loans.
Smith’s final words at the graduation ceremony are important: “Pay it forward.”
California college students are among the most debt-ridden in the country, owing more than $133 billion as of the end of last year. That debt has ballooned from $70 billion a decade ago, and there is little hope of that figure dropping, given the escalating cost of a college education.
The national average student debt is about $40,000, but for specialty degrees, such as medicine, it can be five or six times that amount. The average monthly payment on a $25,000 student loan is just under $300 — or about the monthly payment on a new car.
All of which makes a person wonder what would happen if all student debt were suddenly erased, as some presidential candidates are talking of doing. According to financial experts, wiping out student debt could be a game-changing event, and not just for the young people who owe.
According to a collection of economists, eliminating the debt could boost the gross national product by up to $106 billion a year, reduce unemployment, and add up to 1.5 million jobs a year.
You wake up in the middle of the night with a severe pain in the gut, maybe appendicitis, maybe something far worse.
In other words, an economic shot in the arm of national significance. Think of putting $1.5 trillion in the pockets of the 44 million student borrowers. The economy could soar.
Sounds great, huh. But here is the rest of the story. The federal government owns more than 90 percent of student debt, and because cancelling the debt would have to be paid for, that means an extra burden for the overall taxpaying population. The debate now is focused on whether cancelling the debt would have greater benefits than the downside for the government budget and taxpayers.
All of which boils down to — don’t hold your breath waiting for the student debt to be erased. Policymakers are aware of the pros and cons, and like almost every other big issue in modern politics, the two sides are light years apart.
Another key takeaway from the student loan debate is the overall value of a community college education. We keep circling back to what a blessing it is to have Allan Hancock College in our midst, a place where local students can get a quality education, career training, and now, several four-year degree programs — at a fraction of the cost of trundling off to a pricey four-year university.
You may not get Harvard or Stanford on your sheepskin, but you will get what you really need.