We witnessed historical reform on two critically important issues this week: health care and education. But young Californians could be forgiven for thinking it had little to do with them: almost all the public discussion of health care reform focused on older people’s issues while student loan overhaul was barely discussed. They couldn’t be more wrong – in fact, there are few demographics which have more to gain from the new laws. This time, Congress and the Administration really did deliver on their commitment to young Americans.
On average, students borrow $23,000 in loans to pay for college. There’s good reason for it: a college degree increases a graduate’s lifetime earnings by over $1 million, and opens doors to all kinds of career opportunities. Most of the fastest growing sectors of the job market require some kind of post-secondary education. But while college costs have soared, financial aid has remained stagnant, leaving students to make up the difference with loans, and often to graduate with crushing debt.
The new student loan laws will increase funding for the Pell Grant program, which provides financial aid to millions of needy students. This funding will prevent 500,000 low- and middle-income students from losing their grants, and another 8 million from seeing their awards cut by 60 percent.
Students will also benefit from income-based loan repayment, under which college graduates with federal loans who have low incomes will never be required to send in a payment higher than 10 percent of their monthly salary and can see their loan completely forgiven after 20 years. Best of all – this historic investment in students won’t cost the American taxpayer a cent. It’s all covered by savings generated by eliminating wasteful subsidies paid by the federal government to banks like Sallie Mae, which package federal loans for students.
Health care is often presented as an older person’s issue, but in fact Americans aged 18-24 are the most likely demographic in the country to lack health insurance: of those between the ages of 18 and 24, 29 percent are uninsured, compared to an uninsured rate of 17 percent for all adults. For new college graduates, that figure is an eye-popping 38 percent uninsured. Part of the reason for this is that most policies drop students from their parents’ plans when they graduate from college – so, ironically, graduation day also welcomes many young people to the ranks of the uninsured. High turnover among young employees, frequent periods of unemployment and temporary jobs make it hard for new grads to access coverage through their employers.
The new health care package will allow students and young people to stay on their parents’ insurance policies until age 26, so turning 19 or graduating from college will no longer mean losing your coverage. Health insurance exchanges will act as purchasing pools for individuals and small businesses, allowing them to combine their bargaining power to get a fairer rate. This will help college students and recent graduates to purchase affordable, portable coverage that’s not linked to an employer and can see them through the first few volatile years out of college.
Without a doubt, these changes are a huge step forward for young people, addressing two of the most pressing concerns they face at an insecure time in life. Our leaders in California did their work well: Speaker Nancy Pelosi and Senators Barbara Boxer and Diane Feinstein were key in navigating these reforms to victory. They have chosen to make young people’s concerns their own, and their leadership has secured reform that will be benefiting today’s college students, and future generations, for years to come.