A Youth Perspective on Workforce Development for Young People

The National Youth Employment Coalition supports a variety of programs that put youth on the path towards gainful employment. Among these programs, supporting summer opportunities for academic and career development goes a long way to putting youth one step closer to being able to earn a sustainable wage. My name is Eashan Kaw, and as the policy intern at NYEC during the summer, I feel that I am in a position to provide a perspective of how opportunities like summer internships have contributed to my experiential learning beyond the scope of the college lecture hall.

When discussing solutions to the achievement and earnings gap, measures that improve classroom education loom large in the conversation. And it’s true, refreshing old instructional methods and reforming K-12 education is instrumental in nudging youth toward a brighter future. But we would be remiss to ignore the role work opportunities outside of the classroom play in turning youth into productive employees and citizens. Youth activities within the Workforce Investment Act bridge the gap between the classroom and workplace by placing disadvantaged youth into summer employment opportunities, work experiences, and other skills development programs.

Dealing with little details is how I’ve been learning the thought process required to evaluate changes in policy proposed in the bills. I can confidently say there was no class I took that prepared me for the at times labyrinthine, but ultimately rewarding experience of combing through hundreds of pages of legislative wonk-speak to find a policy change I was seeking. At times, navigating the sections, subsections, and sub-headers seemed like unpacking hundreds of verbose Russian nesting dolls. But embedded within an innocuous looking subsection would lie updated language informing the direction of future youth policy. Classroom instruction can cultivate a mindset and cognitive tools a person can use to judge the merits of a program, but nothing I encountered specifically prepared me for the unique syntax legislators use to draft bills. Other work I did, like writing blog posts, analyzing employment and graduation data, and researching legislation, provided ample opportunity to interpret and make judgments on real-world and often ambiguous information that can affect a number of stakeholders.

The broad takeaway I’ve learned through working this summer is while many tasks I had to complete were concretely defined, the means to solve the problem were up to me. Even if the specific task at hand was to write a report on monthly employment changes, I had the freedom to gather data however I wanted and add analysis I thought was prudent. This is usually the opposite of classroom learning, where the applications are abstractly defined, but the acceptable method for completing an assignment is confined to what the teacher wants you to use.   Working on the types of assignments typically done in full-time jobs provides an indicator that the education AND skills you bring with you are useful to employers in the marketplace. This is critical for professional development after finishing classroom education.

Summer work opportunities also provide valuable insight into finding out what careers fit well with your interests, what you are talented at, and what jobs you thought you liked, but actually didn’t. Being armed with this information allows you to choose future work options well-matched with your strengths and interests. Unfortunately, many youth across America do not have the same access to education, summer opportunities, and experiences that have enabled me to make what I have learned in school relevant to the workplace. That only underscores the importance of updating youth programs within the WIA, and increasing workforce development investments for those who need it most.

Just the Tip of the Iceberg: Federal Student Loan Reform

With the college academic year approaching, the July 1^st doubling in student loan interest rates couldn’t have come at a worse time. Even with low rates on subsidized student loans, lending is big business for the Federal Government. In 2012, the government earned $51 billion from student loans, more than any corporation’s annual earnings. As such, with the jump in interest rates, it is projected that profits will increase an additional $21 billion if nothing is done.  That would mean further deficit reduction, but a heavier burden on student borrowers in the future.

While the student loan interest rates did double, not all hope is lost. To amend this situation, a bipartisan plan was crafted by Senate leadership to retroactively change interest rates and terms. The bipartisan language (H.R. 1911), which has now been approved by both the House and Senate, bears far more semblances to an earlier Senate bipartisan plan (S. 1334) than it does to the earlier House Republican plan (H.RES. 232). In fact, the final compromise language is the almost the exact same plan as the Senate bill, with the same interest rate ceilings and the provision to fix interest rate for the life of the loan. The only difference in this bill is that the interest rates for the loans are .2% higher than the rates proposed by Senators Joe Manchin, Angus King, and the Senate Republicans (S. 1334). This striking similarity between the compromise language and the earlier Senate proposal is probably because the Senate proposal already had bipartisan support, while the House proposal only had House Republican support.  The .2% rate increase from the Senate bill at face value looks like a measure inserted to satisfy members of the House seeking greater revenue from student loans to potentially pay for the deficit.

With all the attention focused on interest rates, other important measures like income based repayment have slipped through the cracks. Income-based repayment (IBR) programs index annual payments to the borrower’s income. The current Pay-as-you-Earn program calculates payments to a maximum 10% of the borrower’s salary. The idea enjoys widespread support, as it was originally proposed by famed economist Milton Freidman. The logic behind the policy is simple: college graduates make more money as their career progresses. As graduates make more, they have more disposable income to pay down their debts. Unfortunately, standard loan repayment options have constant monthly payments to pay down interest and debt. This conventional strategy makes sense for auto and home loans, where people have stable, predictable income. For college graduates, having constant monthly payments eat into their more modest entry-level income.  If there is high unemployment the situation becomes even worse because students have no savings to fall back on. Under IBR, students would no longer have to pay monthly payments even if they are making little to no income. As such, tying repayments to income alleviates the threat of bankruptcy from unexpected changes in employment or income.

Even though Congress expanded the program in 2010, private loan servicers (collectors) have been hesitant in offering this as a repayment option to borrowers. In this regard, none of the above proposals do enough to expand the usage of this program. Rather, the Excel Act (H.R. 1716), a proposal that isn’t endorsed by any party, does more to make IBR the standardized repayment system. The Excel Act proposes making repaying a student loan like a withholding tax. When the student graduates, a percentage of their income paid without any extra paper work, bypassing servicers who avoid giving students these flexible terms. While the Excel Act offers no student loan forgiveness, it goes a long way to making the debt easier for students to bear. Future proposals should make IBR the standard method of repayment to reduce the number of students defaulting on their student loans.