Editorial: Students and financial adversities

No Money, Plenty More Problems

The life of a college student is usually characterized by budget living.  Food costs money.  Books cost money.  Printing at the library costs money.

What is different today from the previous generation: a college degree is more essential to financial security more than ever, loans are the primary financial aid for most college students, and the elimination of retirement pensions to measly 401(k) retirement savings accounts.
            The Occupy Wall Street movement highlighted the other financial crisis—educated graduates burdened with loans and an economy in which jobs are endangered species.

The journey of completing higher education starts with a single step; for nearly 70 percent of California students, it starts at the community college.  In 2007, 55 percent of California State University and 30 percent of University of California baccalaureates were awarded to community college students who transferred, according to the California Community Colleges Chancellor Jack Scott.   

Watch for Summer 2012 for higher tuition for the fee to go up from $36 to $46 “if state revenues fall more than $1 billion below projections and trigger cuts are executed” according to Chancellor Scott.

Investing into community colleges will alleviate the state budget crisis:  “For every $1 California spends on higher education, it receives $3 in return.  If just 2 percent more of Californians earned associate degrees and 1 percent more earned a bachelor’s degree, our state’s economy would grow by $20 billion, state and local tax revenue would increase by $1.2 billion a year and 174,000 new jobs would be created.” Chancellor Scott stated.

Reflecting on Gov. Jerry Brown’s current fiscal year’s budget, Scott estimated that up to 670,000 California students wanting to enroll in community colleges would be denied access.

Kevin Carey, the policy director of the independent, nonpartisan think tank Education Sector, credited the Occupy Wall Street movement for coercing, even President Obama to address the problem of hefty loans for students: “The students in Zuccotti Park are right to focus on the injustices of student debt: Many of them are indentured to the very banks that destroyed the economy.”   Furthermore, Carey points out that student loans are soaring much faster and higher than credit card debt; a report from CQ Researcher estimated the amount exceeding $830 billion.  Unlike other types of debt, student loans cannot be forgiven by declaring bankruptcy.

President Obama’s Health Care and Education Reconciliation Act pledged $40 billion for Pell grants which primarily benefit low-income students, “$2 billion over four years for community colleges” and limit student loan payments to 10 percent of income effective 2014.

Financial crises aside, most students are far too busy to educate themselves on financial literacy.  Credit card companies eagerly target college students recognized with the legal status of consenting adults.  Credit card companies offering free pens and hats set up shop near the Cub Bookstore and the Quad with clipboards.  Decisions made while at age 18  will continue to haunt until they are repaid.  Debts establish credit history. 

In such a sink-or-swim situation, City College students must teach themselves financial literacy more than ever.  Few years ago, financial guru Suze Orman came up with “The Money Book for the Young, Fabulous, and Broke” (LACC Library call number 332.024 Or5m).  Many rules have changed from the previous generation, especially predatory credit card companies targeting college students and the disturbing trend of loans making up the bulk of financial aid packages. 

To My Fellow Fabulously Broke City College students: If you have a student loan or a credit card, please check your credit report every year to monitor for identity theft and inaccuracies.  By state law, every Californian is entitled to free credit reports every year from the three credit bureaus from AnnualCreditReport.com.  Those fortunate enough to work should invest in a 401(k) (assuming the employer still offers it). The Los Angeles Public Library has books and audio books available to download; search the catalog using the subject term “Finance, Personal.”

 Knowledge is power: financial literacy is the knowledge to be free from a lifetime of being broke.