Dr. Dobb's Journal June 1998
When it comes to politics, one hand doesn't always know (or care) what the other is doing. A case in point is the recent furor over the scarcity of high-tech workers. If you recall, a recent ITAA study (which has come under criticism from both the IEEE and the General Accounting Office) concluded that there are perhaps 350,000 jobs currently open for programmers, system analysts, and computer engineers. Not being able to fill these positions, say U.S. companies, limits the ability to expand and compete.
Lawmakers see two solutions to the problem -- increasing the number of H1-B visas for foreign workers, and increasing the number of computer-science students graduating from U.S. universities. (One member of Congress, obviously used to getting pocketfuls of money from lobbyists, proposes a third alternative -- requiring business to pay for the education of high-tech workers. After all, he explains, business will benefit the most from the student's education.)
Under intense pressure from deep-pocketed high-tech companies, Congress didn't waste any time dealing the visa issue, upping the H1-B allotment for foreign workers from 65,000 to 90,000. Congressional backers acknowledge this is a stopgap, only helping for the next three or so years until the university supply line meets demand. As for how to increase the number of home-grown high-tech workers, Rep. Lamar Smith (R-Texas), chairman of the House subcommittee on immigration and backer of H1-B increases, simply says, "Hopefully, American students will start majoring in computer sciences in greater numbers."
Strong words, Lamar, but fewer students will be majoring in computer science and other disciplines if an industry that has more money and clout than high-tech has its way. Led by Bank of America and Norwest Corp., big banks are threatening to bail out of the student-loan business if they can't maintain high profit margins. Specifically, the interest rates banks charge students for loans -- which are set by Congress -- are scheduled to drop from 8.25 to about 7.1 percent on July 1. The big banks say this rate cut is unreasonable, even though student loans (which are cosigned by the government) pose no risk for banks, even though the Treasury Department says banks have been earning about 1.65 percent -- which "exceeds a reasonable range" -- on returns, and even though banks somehow make money on 6.75 percent mortgage loans. All in all, the U.S. commercial banking industry, which claims to feel a pinch, earned $59 billion in 1997 -- the sixth consecutive record year.
By the way, this is the same Norwest that was featured in the documentary Troublesome Creek, which chronicled the bank's heartless foreclosures on family farms. And it's the same Bank of America that, a few years ago, fired all the full-time, permanent tellers at my neighborhood bank, then rehired them as part-time hourly employees not eligible for benefits, even as BofA profits were skyrocketing.
So, what's the big deal? According to the American Association of State Schools and Universities, the estimated difference between 8.25 and 7.1 percent interest is about $11 billion over a five-year period. That's $11 billion that ends up either as food for hungry students or bonuses for bank executives. From the congressional point of view, more money for student books means less money for campaign funds. (According to the Center for Responsive Politics, the banking industry contributed more than $14 million during the 1996 election year alone.)
As you might expect, a compromise is in the works, and the House Education Committee is about to give banks most of what they want. Instead of cutting student-loan lending rates by 1.15 percent, the compromise will chop it by about 0.5 percent. This sounds small, but could cost taxpayers (not banks or students) $3 billion over five years.
If Washington is serious about addressing the issues of education and employment, it might consider a Missouri plan to create an Advantage Missouri Trust Fund for student loans. Students would be eligible for loans of up to $2500 each year if they studied in "occupational areas of high demand," as determined by the Missouri Coordinating Board of Higher Education. Students who go into those high-demand professions (such as high tech) in Missouri would have the loans forgiven if they enter the field within one year of graduation. Each year the student stays in the job, 20 percent of the loan would be forgiven, with 100 percent forgiven in five years. Loans would be available to full-time students in two-year and four-year Missouri institutions. Individuals or corporations contributing to the fund would be eligible for tax credits of up to $100,000.
In all likelihood, Missouri isn't the only state to put programs like this on the table; similar proposals have also been made at the federal level. Rep. George Miller (D-Calif.), for instance, has proposed a loan-forgiveness program for teachers. But to solve the problem, Congress and the Administration -- both claiming to be pro-education and both concerned about the dearth of high-tech workers -- are going to have join hands and put personal gain aside. As we see far too often, however, that may be asking too much of our elected officials.
--Jonathan Erickson