SOS: Saving Our StudentsOctober 25, 2011
Tomorrow, President Obama is set to announce an executive order claiming to bring relief to America’s cash-strapped and debt-ridden college students. The plan would allow students to consolidate their government and private loans into one government loan, thereby lowering the interest rate and monthly payment. It’s also expected to add options for loan forgiveness and loan repayment.
Matthew Siegel, president and co-founder of Our Time, says the plan is not enough, and that the student debt is actually keeping America’s best and brightest shackled to Wall Street.
He believes this is causing what he calls a “brain drain” in our country. In fact, he recently launched StopTheBrainDrain.org to say that college campuses are being bought off by big Wall Street firms who are getting preferred access to the best and brightest students, thereby taking away the people who are most likely to be innovators, entrepreneurs and start the kind of companies and jobs our country so desperately needs.
>>> the president pivoting from housing debt to student debt, at least rhetorically. so far, the proportional nature of his actual response is very, very small compared to the problem. tomorrow, president obama set to announce an executive order claiming to bring relief to america's cash-strapped and debt-ridden college students. i should say, cash-strapped, debt-ridden, and unemployed college students. the plan would allow students to consolidate their government and private loans into one government loan, thereby lowering the interest rate and monthly payment. it's also expected to add options for loan forgiveness and loan repayment. our next guest says the plan is not enough and that the student debt is actually keeping america's best and brightest shackled to wall street, causing what he calls a brain drain in our country. we're breaking it down today with matthew siegel, president and cofounder of our time. you can get lost in opinion, thinking this is my opinion or your pin or the president's opinion. we're not in an opinion market here. there is a mathematical amount of student death. there's a mathematical inflation rate in the amount of education. there's a defined fact that banks are recruiting from these institutions and to the conversation we were having right before the commercial break, when you look at the size of the debt load we're putting on our college graduates and look at how much more participating in the bank extraction pays compared to trying to fight against the trend by doing something else, a lot of folks don't even -- you can't blame them.
>> well, you made my argument, for the most part.
>> i'm sorry.
>> i mean, we launched stop the brain drain.org as a petition site to essentially say that our college campuses are being bought off by these big wall street firms who are getting preferred access to the best and brightest students. now, obviously, what that does --
>> the banks actually pay money to the recruiting office.
>> what that does is take away the people who are most likely to be entrepreneurs and start companies, like in our buy young initiative, which we talked about --
>> i love that, yeah.
>> and instead make them financial instruments for banks. and to calculate the derivatives and do the credit default swaps.
>> young math me technicians.
>> that's problem one. problem two is you can't blame them. when you're graduating $70,000, $80,000, $90,000 in deatbt, of course you'll want to take the highest paying job. the president did a good job on the executive order, which is very limited. like you said, it doesn't go to the symptom of the problem in general, which is that, why the is higher education so expensive? and the reason for that is plenty, but, a, they've become huge corporate institutions and the banking industry with the student loan hikes they can get from it have realized, well, let's, you know, encourage more and more people to go to college and keep inflating rates. the cost of college has outgrown the cost of living tremendously.
>> and when you're basically giving loans to 18-year-olds under the threat if they don't take the loan, you're not going to have a life, what loan wouldn't you take?
>> that's one. but the other reason is, colleges are like our politicians, competing to raise money. and so college career centers and college administrators are ranked the best based on their endowment. that's how the u.s. news ranking works. the highest endowment wins. they're holding on to their cash, as opposed to making that cash available to people who otherwise can't afford money for scholarships and grant money. and the last and final thing is 47 states have cut higher education in their budget squeezes. well, why is that? because seniors outvote young people 2 to 1. when they're deciding what they're going to cut, there's less consequences for cutting education. so those are all the different issues.
>> and where would you begin a process, where can we begin the process of correcting this?
>> well, i think, for one, you know, we need to begin to look at new ways to make college more affordable. whether it's free community college, whether it's making sure that we have more vocational training. people need to look where there's demand in the market. there's no longer demand to be a journalist. there is demand to be a scientist or mathematician or stem feel field. most of the people we brought to washington for our buy young initiative were saying, well, we can't get talent. that's our biggest barrier. we can't attract engineers and scientists and ctos to help program our tech --
>> but how much of the inability to attract those people is because those same people are being offered more money to go work at jpmorgan?
>> that's a huge -- it is sucking entrepreneurship dry in this country, and that's why we launched, stop the brain drain.
>> and if you were to look at what other people -- if you just wanted to educate yourself, if you wanted to learn more about this, where would you point people to understand, perhaps, a little better why college is costing as much as it is and how dangerous the brain drain is?
>> well, i actually reference people to my friend who wrote the book " generation debt." she does financial work in this area. but also, it's stop stopthebraindrain.org, there's facts and figures that talk about why this might be happening, and why the higher education bubble, almost $1 trillion of student loan debt, almost exceeds the credit card debt in this country. and that's not dischargeable in bankruptcy court. and the student borrowers in this country don't have the same right that people in credit card debt have in this country.
>> i forget who it was, there's some comedian who was saying that if osama bin laden had a student loan, they would have had him on september 12th.
>> that's absolutely right. that's very true.
>> so you can attribute that one to jeff chrysler and use it as you see fit. thank you for bringing this issue forward once again. i look forward to seeing you sooner than later.
>> matt siegel, our time.