The truth about twenty-somethings - 20-year-olds - Cover Story

Washington Monthly, Jan-Feb, 1995 by Jon Meacham

What's missing today is an acknowledgment that government, in this sense, can be a useful tool to get certain things done. It wasn't always this way, though. From the thirties to the mid-seventies, for example, because they had a greater sense of belonging to a national community, rich Americans were willing to pay higher taxes (the top rate, now 38 percent, was 91 percent under Truman, Eisenhower, and Kennedy) and most American men, in the democratic military draft, gave up a couple of years of their lives to serve.

But try to talk about smart government now--recount how, say, the CCC rescued unemployed youths or how the REA brought electricity to rural America in the thirties--and people tend to drift to another part of the room. (That's understandable, but the point is how little interest there is in finding out about government programs that have worked.) The young are supposed to have a capacity for hope that we can do better--the young of the thirties and the sixties surely did. Today's crew does not believe that.

The most revealing case study of how these trends--distrust of government, self-centeredness, and little awareness of what well-executed public action can accomplish--play out in real life is the student lobby's near-wreckage of key provisions in Clinton's revolutionary student loan reform. [For more on this issue, see Steven Waldman's article on page 27.]

To make college more affordable, the Clinton administration, in 1993, proposed having the government loan money for school directly to students. (It costs the government half what the private sector charges to make a loan.) The United States Student Association, a lobby which boasts members on campuses in every state, fought for this direct lending, attracted by the lower interest rates and reduced fees that would result. Government, in that sense, was fine with them. Part of Clinton's reform was making the rate of loan repayment contingent on a graduate's income rather than sticking the student with high set payments. Better thought of as "pay-as-you-can" reform, this means students with large debts can go into low-paying but useful work and still make good on their loans, only over a longer period of time. A marvelous idea, and one of the great social reforms since the GI Bill first threw open the doors of college to millions who could not have paid for it otherwise.

To make this work, however, it is critical to have the Internal Revenue Service in charge of collecting the loans. The IRS has the means to do it (just about everybody files a tax return), the ability (there's already a line on the standard 1040 that could be used), and is in the full-time business of tracking and collecting what people owe. And when it comes to student loans, repayment is not a side issue: From 1988 to 1993, Washington had to eat $14 billion in defaults. Why? Because the banks who, under the old system, contracted with the federal government to loan students money, had no incentive to collect because Washington guaranteed the deal. So if you don't have the IRS involved, you leave collections in the incompetent hands of the Department of Education and its contractors, meaning money that could be helping students could be lost.