At noon Wednesday, thousands of college students from at least 75 colleges walked out of class as part of Occupy Colleges, which is the collegiate version of Occupy Wall Street. Students are angry and they want to show their support for the 99 percent of American citizens whom they feel are being ignored by our political leaders and fleeced by Wall Street. Given the Arab Spring and the unrest caused by the youth in these countries, is it surprising that America could be on the brink of a College Fall?
They are angry about the debt that many of them must obtain to go to college and that their employment opportunities look vastly different from the way they did in the fall of 2007. They are stunned by the lack of economic progress over the last three years. Certainly a freshman in the fall of 2008, when Lehman Brothers failed, thought that things would be fixed by the time he graduated from college.
They are angry that many will need to live with their parents for years after they graduate, and their parents are not so happy either. They are frustrated that they are going to be stuck paying down the national debt that has gone from approximately $5 trillion in 2000 to nearly $15 trillion today. They know that Social Security and Medicare will be vastly different for them than for their parents and grandparents. They are wondering why society is making them pick up the check when they were not even invited to have dinner at the restaurant. They feel as though their future has been mortgaged for the benefit of the Wall Street elite and the baby boomers.
In 2009, the average college debt for a graduating senior with debt was $24,000. Outstanding student loan debt exceeded credit card debt for the first time in 2010. Interestingly, all consumer credit outstanding -- mortgage, home equity, auto loans and credit cards -- has declined by about 4 percent to 20 percent since the fourth quarter of 2008, with one exception: student loan debt is up 25 percent over that period. A 2008 study indicated that seniors graduated with an average of more than $4,100 in credit card debt and that nearly 20 percent had credit card debt in excess of $7,000.
College costs, just like healthcare, have had a shocking multidecade rise in cost that is more than double the inflation rate. College students are graduating into the worst job market since the Great Depression. The unemployment rate for young college graduates reached an all-time high in 2009 and has not been reduced much since then. Many are being forced to take jobs for which they are overqualified, so we see a business student working as a waitress or a law school graduate tending bar.
We should not underestimate the power of these “Occupy” grassroots movements. Our youth could channel their anger into a potent political force. Like Hosni Mubarak, the elites run the risk of underestimating the power of a large number of unemployed and underemployed educated young citizens armed with social media weapons to inflict significant damage. This Occupy movement could be 2012's answer to the Tea Party revolution of 2010. As I recall, the media and the political experts also underestimated the power of the Tea Party during its early days.
Of course they are angry — wouldn’t you be angry if you were graduating in the fall of 2012 with more than $30,000 in debt and fearing that you may not be able to find a job? These student protests are a call for help from our leaders. Will our leaders hear them, understand them and help them?
John Pelletier is director of the Center for Financial Literacy at Champlain College and was formerly chief operating officer of Natixis Global Associates and chief legal officer of Eaton Vance Corp.