Mind the gap

Next time you are low on cash, try giving grandma and grandpa a call.

In 2011, the wealth gap between the 65 and older generation and the 35 and younger generation is five times larger than it was 25 years ago, according to census data released last Monday.

While older generations have accumulated money over time, the economic downturn in recent years has made it financially difficult for the younger generation to remain financially stable, according to the Pew Research Center.

Increases in student loans, fewer job opportunities and cuts in government spending are all contributing factors in the growing gap, the Pew analysis said.

So is this generation doomed to be less financially secure than our parents and grandparents?

Loans on loans

Student loans for those pursuing higher education – not to mention a lack of opportunities to pay back said loans – continues to be financially crippling to the younger generation.

Students who graduated in 2010 had an average loan debt of about $25,250 and entered a workforce with a 9.1 percent unemployment rate, according to The New York Times.

“Loans that come out of banks are more difficult than what we had to deal with,” College of Arts and Sciences sociology professor Susan Holsapple said. “My generation didn’t even have private loans for school. It was all government subsidized.”

CAS associate economics professor Marc Rysman said he believes that although student loans put the younger generation at an initial financial disadvantage after they graduate, the education is worth the price.

“The loans are definitely worth it,” Rysman said. “Because today people are getting better jobs than they did 50 years ago.”

The average financial aid package at BU is about $34,530 and the average indebtedness of a BU graduate is about $31,809, according to collegeboard.com.

While BU encourages all students to apply for financial aid even if they don’t believe they will qualify, some students said they feel that the financial aid they receive is still not enough.

Sargent College sophomore Vicky Landar said that even with the various grants and scholarships she received upon enrollment at BU, she is still going to have some loans after graduation.

“This school is so expensive that I think it is inevitable that the majority of kids are going to have to take out loans,” she said. “It’s just annoying because after graduation, I’m not only going to have the pressure of finding a job, but the pressure of paying back my loans as well.”

Finding an alternative

Two male senior ROTC students, who requested to remain anonymous, said that they took an alternate route in order to ensure that they received a good education.

“I really wanted to go to BU but I didn’t have the money to go here,” one said. “It was definitely in my best interest to find someone to pay for school.”

Students who participate in the Reserve Officers’ Training Corps have their entire tuition paid for, according to the ROTC website. This was true for past military generations – after World War II, the GI Bill of Rights helped veterans get educations.

“My parents didn’t go to college and don’t have these loans,” the other ROTC member said. “Loans are becoming just a speed bump that everyone has to get over now to be successful in life. It’s kind-of missing the point of getting a good education.“

In 2010, 79 percent of people ages 18-34 said they believe that college education and training is more important now than when their parents were growing up, according to the Federal Institute for College Access and Success.

Holsapple said that the increasing number of college students opt for student loans instead of paying tuition as they go, which contributes to the widening generation gap.

“When I was going to school, I was able to work full time and pay for my education,” she said. “Your generation couldn’t do that. You would have to have a $70,000 per year job and you can’t have a job like that and go to school.”

Mother, should I trust the government?

The government is making budget cuts to educational programs while still maintaining programs that benefit older generations, such as Social Security and Medicaid, according to the Pew Research Center.

Additionally, the congressional committee that proposed such budget cuts suggested charging interest on loans while students are still in school.

Holsapple said she disagrees with these measures.

“I don’t think you should have to choose between funding and education or Social Security,” Holsapple said. “I think one of the problems with politicians is that they pit these two groups against one another and will often make cuts based off of which group is more deserving.”

Rysman, on the other hand, said he agrees with measures to charge interest on student loans while students are still in school.

“I don’t think that the new interest on loans is unfair,” he said. “This won’t have an effect because I think these interest rates are falling anyway.”

Despite Rysman, 73 percent of students surveyed by the Federal Institute for College Access and Success are opposed to being charged interest on loans while they are still in school, according to a study published in early November.

Regardless, Rysman said he does not believe that things are going to change very soon.

“I don’t know if this gap will eventually close,” he said. “But the education and the loans are definitely worth it.”

Looking beyond statistics, Holsapple said the problem today is that these two generations are constantly being compared to one another.

“I think one of the problems is that they are pitting younger people against older people, but I don’t think it should be a choice,” she said. “It’s difficult to compare the generations because we have had deindustrialization in the United States that has caused all sorts of problems.”