Congress to Lift Student Loans?

Farai Chideya talks with economist Bernard Anderson about Congressional plans to grant relief for student loans and challenge a Supreme Court wage discrimination case.

FARAI CHIDEYA, host:

From NPR News, this is News & Notes. I'm Farai Chideya.

Teen pregnancy rates are down and more kids are living with at least one parent who works full time. That good news came last week in a new federal report. The number of households where food is scarce is also down. But the picture isn't entirely rosy. More children are drinking polluted water and breathing polluted air. And those kids are more likely to be both poor and black.

For more, we've got Bernard Anderson. He's a former assistant secretary of labor under President Bill Clinton and now a professor of management at the University of Pennsylvania's Wharton School. Professor, good to have you on.

Doctor BERNARD ANDERSON (Professor of Management, University of Pennsylvania's Wharton School): Hello. Glad to be with you.

CHIDEYA: So how does where you live affect the health of your children?

Dr. ANDERSON: Well, it affects at a great deal because living conditions vary very sharply with income. People who earn a higher income tend to live in better communities, and especially, live in communities with less environmental degradation of the kind that these to the conditions that you just described.

CHIDEYA: Now, are children important indicators of economic health of the country?

Dr. ANDERSON: Oh, I think they are. But children don't live alone. Children live with families. And in the case of low-income families, I think what you'll find is that the - a number of African-American families headed by women has been very high for a long time. But typically, those women have been unemployed. That is they've not been in the labor force. That changed in 1996 when the Congress adopted and the Clinton administration approved of the welfare reform measure. That was the 10th of act of 1996.

What happened there was that people who were on welfare were forced to work. And so what we find is that the number of African-American women who were hitting families, who were employed increased significantly. And the problem was that while they got jobs, they typically got low-income jobs. That is to say that their employment in low-wage jobs did not provide enough income to permit them to improve their living conditions.

So it's not surprising that despite their increase in employment, the families remain vulnerable to hazardous environmental conditions and poor health conditions and other characteristics of poor families.

CHIDEYA: I want to move on to another topic because one of the best ways to get out of poverty is to raise your education level. And last week, the House approved legislation to help poor college students. And what exactly is this and could it do?

Dr. ANDERSON: Well, as I understand the bill - I haven't read it in detail - but what it will do is to reduce the financial burden for students in repaying education loans. Many college students today leave school with debt in the neighborhood of $40,000 to $50,000. That is even before they can get a job. They're deeply in debt. And that can be double for students who go on to graduate studies.

There are two sources of student loans. One is the private sector that is private banks, which tend to charge higher interest rates and have stringent repayment terms. The other is to borrow student loan from the federal government, which offers lower interest rates and more reasonable return - repayment terms. African-American students, in particular, rely more heavily on the private loans and they face far greater difficulty…

CHIDEYA: Professor, let me just…

Dr. ANDERSON: …in repaying those loans.

CHIDEYA: Let me just jump in for a second. We had Senator Barack Obama on last week. And we asked questions from our audience. One of them was from a student who really had to transfer universities and deal with the baseline economics of going to school and trying to raise herself up. Is there anyone who really tracks how poverty or lower incomes fit together with education and how much opportunity to be upwardly mobile people have?

Dr. ANDERSON: Oh, well the evidence on the relationship between educational achievement and income is very widespread. There's no question that the greater educational achievement an individual has, the higher income they earn. But that educational achievement is financed substantially with student loans. And that's why the bill is important. That is one of the things that will do is to tap the annual repayment of loans based on the individual's income. It will also forgive some basis of the loan if individuals go into public service careers.

And I heard Senator Obama speak in Philadelphia to the National Education Association last week, where he said that if he is elected, he's going to support legislation that would completely forgive the loans for any young person who goes into teaching in distressed areas.

CHIDEYA: Now, some folks might say, well, look, the lenders have a right to go out and deal with this on a business level. Will this hurt lenders potentially? And will this also add more debt or more of a burden on the federal government?

Dr. ANDERSON: Well, by reducing the interest rate and easing the repayment terms, this legislation might well make bank lending for student aid less profitable. That could lead to some banks withdrawing from the market. It could also reduce the number of education loans made by small, low capitalized black-owned banks

But I would add this. There are two sources of loans as I indicated earlier, the federal government and the private banks. It seems to me that what should happen if the federal government should increase the amount available to students to borrow money directly from the federal government and repay at a lower interest rate and better repayment terms?

CHIDEYA: I want to move on to yet one more topic. It's wage discrimination legislation. So Democrats plan to draft a bill soon that would take a closer look at wage discrimination in the United States. Do you think that's necessary?

Dr. ANDERSON: Well, the reason they're doing that is largely related to the Ledbetter case, which was handed down in this current term with the Supreme Court. What happened was that the Supreme Court rejected a claim of paid discrimination by a woman, Lilly Ledbetter, because the claim was not filed on time. That is within 180 days of the unlawful pay discrimination act. I think what that does is that the decision fails to recognize the realities of pay discrimination in the workplace, especially for women.

Employees usually don't know what pay increase other employees are receiving and employers certainly don't widely distribute that information. Bear in mind that working women earn 79 percent of the pay of women and black women who were working own only 68 percent of the earnings of men. And that disparity has lasted many years. The pay disparity is accounted for by women holding lower-pay jobs and women being paid less than men in the same jobs and getting lower pay increases.

So, what the Congress wants to do is to correct that Supreme Court decision - the results of the Supreme Court decision, so that people can file claims of discrimination despite the fact that they've occurred over a long period of time and they didn't know that they were actually being discriminated against.

CHIDEYA: When you look at trends in discrimination cases every now and then -more than every now and then, you'll see a case of someone winning a suit based on racial discrimination or sometimes on race and gender even in a recent case on race and sexual orientation. What are the trends in discrimination cases? Have they been - have the awards been rising for example? Do you have any sense of that?

Prof. ANDERSON: Yes. The awards, the dollar value of the awards has been rising. We've seen several mega awards in recent years, over the past decade: $195 million in the case of Coca-Cola, $142 million Mitsubishi. Merrill Lynch, I think, settled a case recently that was above $80 million. So the dollar value of the cases settled has increased over time, and that's a good thing because what it will do is make employers more sensitive to correcting their employment practices in ways that eliminate discrimination and prevent the discrimination from happening in the first place.

CHIDEYA: When you were at the Department of Labor, what kind of relationship did you have to discrimination cases? Were you actively involved in tracking them? And what did you learn from your experience?

Prof. ANDERSON: Well, it's very interesting that you asked that. In fact, as assistant secretary for Employment Standards Administration, one of the agencies under my control was the Office of Federal Contract Compliance Programs. And in 1997, in the second term, the White House directed us to start a major initiative on pay discrimination to deal with the very kind of situation that was raised in the Ledbetter case. And we moved very aggressively through OFCCP(ph) to identify those employers where there were significant pay disparities between men and women, and we won several cases. Now, that it's over, I can mention several of them: one was with the bowling firm, then there were several banks that we were successful in getting to negotiate pay increases, Sears, Roebuck Company.

And in every case, I might add, the employers, when brought to the recognition that their pay systems were creating disparate affects, were willing to sit down and negotiate and work it out. In many cases, back pay was awarded to those employees who were adversely affected by the pay disparities.

CHIDEYA: Well, Professor Anderson, thank you so much for sharing your experiences.

Prof. ANDERSON: Thank you very much.

CHIDEYA: Bernard Anderson is a former assistant secretary of Labor under President Bill Clinton. Now, he's a professor of management at the University of Pennsylvania's Wharton School. He joined us from the studios of Audio Post in Philadelphia.

Copyright © 2007 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.

NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR’s programming is the audio.

Comments

 

Please keep your community civil. All comments must follow the NPR.org Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.