Ed Driscoll

High School Kids, NYT Confused by Definition of 'Caveat Emptor'

Back in March, Ann Althouse had lots of fun with a New York Times article on “The Go-Nowhere Generation” on the “unexpectedly” sedentary nature of today’s youth. Althouse responded:

Isn’t that what the Boomer generation told them to do? Cars are bad. They are destroying the planet. Then, when they avoid driving, we scold them for being — what? — sedentary? unambitious? incurious?!

Similarly, having spent decades extolling the value of higher education and the payoff afterward of an Annie Hall and Alvy Singer-style lifestyle in midtown Manhattan, the New York Times is now running a series titled, “Degrees of Debt — This series examines the implications of soaring college costs and the indebtedness of students and their families.” The latest edition focuses on “A Generation Hobbled by the Soaring Cost of College:”

Kelsey Griffith graduates on Sunday from Ohio Northern University. To start paying off her $120,000 in student debt, she is already working two restaurant jobs and will soon give up her apartment here to live with her parents. Her mother, who co-signed on the loans, is taking out a life insurance policy on her daughter.

“If anything ever happened, God forbid, that is my debt also,” said Ms. Griffith’s mother, Marlene Griffith.

Ms. Griffith, 23, wouldn’t seem a perfect financial fit for a college that costs nearly $50,000 a year. Her father, a paramedic, and mother, a preschool teacher, have modest incomes, and she has four sisters. But when she visited Ohio Northern, she was won over by faculty and admissions staff members who urge students to pursue their dreams rather than obsess on the sticker price.

“As an 18-year-old, it sounded like a good fit to me, and the school really sold it,” said Ms. Griffith, a marketing major. “I knew a private school would cost a lot of money. But when I graduate, I’m going to owe like $900 a month. No one told me that.”

I learned a lot in college — but I’m pretty sure that even before I enrolled, I knew that loans were required to be paid back. Chevy Chase’s parody version of Gerald Ford may have been incensed about being blindsided by a complex no-win economic question during a presidential debate, but how does one enroll in college without understanding this basic fact of life?

[jwplayer player=”1″ mediaid=”76414″]

Oh, and speaking of presidents, numbers and students, “Generation 44,” as our Zelig-like president dubbed them, is likely about to experience sticker shock:

President Obama’s fiscal 2013 budget proposal would double the interest rate on federally backed student loans from 3.4 percent to 6.8 percent–eight months after the November presidential election.

The White House fiscal year 2013 plan calls for maintaining the current 3.4 percent interest rate for federally guaranteed student loans, but only through July 1, 2013, at which point it would automatically increase to 6.8 percent. Neither the president’s plan nor the Democrats’ legislation would extend the low rate beyond another year.

The president’s budget calls for “Suspending an Increase in Student Loan Interest Rates.” (See page 97).

“Under current law, interest rates on subsidized Stafford loans are slated to rise this summer [July 1] from 3.4 percent to 6.8 percent,” reads the Obama budget. “At a time when the economy is still recovering and market interest rates remain low, it makes no sense to double rates on student loans. The Budget suspends the scheduled increase for the coming year, so that rates will remain at 3.4 percent.”

The Senate bill favored by Democrats states, “in the matter preceding clause (i), by striking ‘and before July 1, 2012,’ and inserting `and before July 1, 2013.’”

The Republican alternative legislation would also extend the low rate for only another year.

* * * * *

Obama has focused heavily on keeping student loan interest rates down to 3.4 percent in some of his recent speeches on college campuses. The youth vote helped boost his victory in 2008, where he beat John McCain by 34 percent among voters under 30, according to the Associated Press. However, last month a Harvard poll found that this year Obama is leading his Republican opponent Mitt Romney by 12 points (41%-29%) among voters aged 18 to 24.

The details of that last paragraph are explained in depth here.

Related: “What I Learned About Money in My Twenties.”