A poorer generation – The New York Times

If you want to find a good example of someone who didn’t need to have their student loans forgiven, you might want to consider me.

I graduated from college in 1994 with about $26,000 in debt (equivalent to today’s dollars). I hate to return it. That’s a significant amount of money for a young journalist, and the check writing is a monthly reminder of the frustrations my parents and I feel about dealing with the critical financial aid system. dose of Kafkaesque.

If President Biden’s debt forgiveness plan had been enacted in the 1990s, I would have qualified and I would have eagerly applied. In hindsight, however, it was hard to justify forgiving any of my debts. In the end, I paid it off, without changing any major life plans. Over time, my income increased, as did college graduates.

Critics of Biden’s plan have made similar arguments since he announced it last week. Why is the federal government offering a bailout for white-collar professionals, they ask, especially in today’s highly unequal economy? And how is it fair to those who have paid off their loans?

These are complex questions and thinkers will disagree on them, as economist Arindrajit Dube pointed out last week. (My colleague Jim Tankersley writes about the heated debate among economists here.) But for loan forgiveness skeptics, I think it’s worth confronting the ways the U.S. economy has changed over the past few decades — since members of the World Generation X, like me and young boomers in their 20s and 30s.

Not your parents’ economy

However, college debt has increased in recent decades. The average borrower graduating from a 4-year public college emerges with $26,700 in debt in 2020, according to the College Board. That is 18 percent increase from the 2000 average (again, adjusted for inflation).

But the bigger change is not in these loans. It is within the broader economic conditions that young workers face. Over the past two decades, the U.S. economy has become much harsher for adults under the age of 40.

This chart shows how income has changed for different age groups since the late 1980s. As you can see, the typical 40-year-old today earns only slightly more than a typical 40-year-old three decades ago, while the typical seniors earn much more than their parents’ generation of the same age:

The changes in wealth are even more apparent. Americans in their 20s, 30s, and even 40s today are poorer than young people three decades ago:

A study by William Gale of the Brookings Institution and three other researchers conclusion“For millennials, their average wealth level in 2016 was lower than that of any similar age group between 1989 and 2007.”

That’s a remarkable – and grim – development in terms of how much GDP, stock prices and home values ​​have increased over the same period. How is this possible? One factor is that stocks and homes have risen so much since the 1980s that young people cannot buy into those markets as easily as their parents and grandparents could.

Many millennials also had the misfortune of graduating in an economy weakened by the 2007-9 financial crisis and the ensuing Great Recession. Many companies didn’t expand or raise wages much, creating fewer opportunities earlier in people’s careers.

Gale and his co-authors – Hilary Gelfond, Jason Fichtner and Benjamin Harris – note that millennials are also more racially diverse than previous generations. People of color, especially black Americans, have historically accumulated wealth less quickly than white Americans for a variety of complex reasons. Among those reasons is intentional discrimination from the government Throughout the decades this has kept Black families from getting subsidized mortgages, owning homes, and passing on wealth to future generations, which can then build on their own. .

Susan Dynarski, a Harvard economist who specializes in education issues and grew up in a working-class family, has long been skeptical of proposals for college debt relief. She thinks that people who have gone to college generally don’t need government help, because of the great value of a college degree. But emerging data changed her mind, as she explains in a Times Opinion essay published this morning.

Those who are having trouble paying their loans tend to be those who have taken a few semesters of classes at a public college or for-profit vocational programs and are not graduate, she explained. Often, these borrowers suffer from funding cuts at community colleges or from the government’s failure to regulate for-profit programs. And they have suffered because of how weak the economy has been for most Americans over the past two decades.

Case against

These factors clearly do not end the debate about Biden’s plan. There are still arguments against it.

This plan will benefit some young professionals who really don’t need help but will happily accept it, as I did. The plan also won’t do much for many Americans who have never attended college (although Biden has Signed or offer a number of other major policies aimed at the working class). There are also conundrums about whether canceling debt will encourage colleges to continue raising their prices, assuming more cancellations are likely in the future (as Megan McArdle of The Washington Post has argued).

However, before anyone tells millennials to toughen up and follow the same path as previous generations, at least remember that they never really had that option. Their economic prospects are worse than that of their parents and grandparents. Biden’s plan won’t erase that fact, but it will close the gap for millions.

Related: The Times wants to know what Biden’s plan is will affect you.

LATEST NEWS

Politics

• Donald Trump has asked an outside arbitrator to find any of those documents seized by the FBI that are potentially protected by executive privilege. But request may be too late.

• President Biden is going to Pennsylvania this week to give a speech about the threat to American democracy.

• Senator Lindsey Graham predicts that an indictment of Trump would lead to “riots in the streets.” He later said he was “not calling for violence.”

International

Advice from Wirecutter: The Wi-Fi extender will strengthen your internet.

Life Lived: Carl Croneberg, a deaf Swedish immigrant, helped write the first comprehensive dictionary of American Sign Language and coined the term “Deaf Culture”. He died at the age of 92.

SPORTS NEWS FROM ATHLETIC

An icon appears: Serena Williams Advanced into the second round of the 2022 US Open, her final tournament, in front of a star-studded crowd last night at Arthur Ashe Stadium.

A conscious openness in the NFL? San Francisco 49ers and Jimmy Garoppolo agree a restructuring contract kept him in town as young midfielder Trey Lance’s backup, ending months of exhaustion. The deal also gives the Niners the flexibility to move the veteran to another team when the time is right.

An American football star still puts: Chelsea will not send After all, the star of the South American men’s national team Christian Pulisic on loan. The news is a double-edged sword for US fans, who want their captain to have more game time before the World Cup, but would probably prefer him to be placed in bubble wrap until there.

ARTS AND IDEAS

Coffee start-up

If you live in New York, you’ve probably noticed Blank Street, which opened its first coffee cart in 2020 and now has 40 stores. Its creators come from the world of venture capital and their mission is to make coffee cheaper than Starbucks, better than Dunkin’ and brewed with an automated system that requires less labor.

Skeptics have criticized Blank Street’s expansion, saying it pushes out local businesses. But if their strategy is successful, it could be a sign that coffee customers are now more concerned with price and convenience than atmosphere. Julia Moskin wrote.

Thanks for spending part of your morning with The Times. See you tomorrow. – David

PS Third NASA Space Shuttle – Discovery – launched 38 years ago todayafter many delays.