Two years ago I built a new house in an over-55 community in Los Lunas, just south of Albuquerque. Los Lunas is the fastest-growing town in New Mexico and the development is exciting to watch: new industry, hundreds of new homes sprouting from empty desert and road construction to accommodate heavier traffic.
Years ago I was involved in a different kind of development, an economic turnaround in my hometown of Oak Park, Illinois. Oak Park is one of the oldest suburbs of Chicago. It was a growing community in the 1870s (thanks in part to the Chicago Fire) and was completely built up by the 1920s with around 50,000 residents crammed into 4.7 square miles.
My parents moved to Oak Park in 1955, and I settled there with my own family in 1969 after my hitch in the Navy. At that point the community was facing unprecedented challenge. The adjacent section of Chicago had undergone racial resegregation and experts were predicting the same for Oak Park. Crime rates were rising, businesses were leaving and residents were nervous. Oak Park responded with a commitment to integration and renewal, and organized a series of community initiatives to make this happen.
One of the things that needed fixing was the local economy. Oak Park had been one of the largest shopping destinations outside Chicago’s Loop but department stores were moving to new suburban malls. Auto dealers, unable to expand in built-up Oak Park, were moving farther out in the suburbs.
An unlikely catalyst for economic renewal was the Frank Lloyd Wright home and studio, which had been in private hands for years and came on the market in the early 1970s. To assure its preservation as a national landmark, the local banks got together and purchased the house until the National Trust for Historic Preservation could acquire the property.
The banks’ partnership was so successful that instead of adding a local government department for economic development, the Village of Oak Park worked with business leaders to organize the nonprofit Oak Park Development Corporation (OPDC). OPDC was funded through annual contributions by the banks and other businesses. One of the banks donated office space for OPDC’s president and a secretary. OPDC had a contract for services from the village government and the village manager sat on the organization’s board.
OPDC’s mission was to attract new businesses to Oak Park and help existing ones expand. One of its first tasks was to work with local government to make the village more business-friendly on issues such as permits and zoning.
Oak Park had virtually no restaurants because it had outlawed liquor sales in the 1890s — after the great-grandfather of one of my high school classmates bought the last tavern and poured the liquor into the street. OPDC worked with the village government to build public support for going “damp” to permit liquor sales at full-service restaurants while continuing to ban bars and liquor stores. Within a few years Oak Park became a magnet for fine restaurants.
One of OPDC’s most successful ventures was a business loan program. In those days cities could get federal community development block grants, and most communities used this money for business loans administered by the local government. OPDC instead deposited the federal money in the local banks as a reserve fund, which enabled the banks to write below-market-rate loans for three times the amount of the federal grant. The five banks participating in the program had an agreement to share the risk in case a loan defaulted. Because banks wrote and serviced the loans, they had a stake in the outcome and served as consultants to startup entrepreneurs and minority business owners.
Most of the loans were used to restore and repurpose vintage commercial buildings. A local movie house underwent a million-dollar rehab to modernize the theater and restore its Art Deco features. Multistory department stores were converted to mixed-use with offices or apartments on the upper floors. A street of obsolete, too-small retail spaces was reborn as an arts district with galleries and craft shops. The loan program, along with village grants for exterior renovation, enabled many local businesses to upgrade and refurbish their properties.
I joined OPDC’s board in 1982. My employer, Illinois Bell, was one of the organization’s investors and appointed me as its OPDC representative because I lived in Oak Park and had been active in the community. It was an impressive board. In those days banks were locally owned, and the bank presidents attended the meetings rather than delegate the task to subordinates. Other board members included the village manager, a state senator, several local business owners and two prominent nonprofit leaders. Meetings were brisk, focused and productive. (I learned a lot about how a board of directors ought to operate.)
The bank presidents, most of them relatively young, were innovative problem-solvers. On one occasion the board held an emergency meeting because a vintage commercial building was due to be demolished the following week. Within a couple of hours the bankers came up with a million-dollar package of loans and grants that saved the building from the wrecking ball.
Oak Park’s economic turnaround was more than million-dollar deals. OPDC was a one-stop shop for new or expanding businesses. The three-person staff maintained a database of available business sites, helped entrepreneurs obtain village permits and connected them with the loan program. OPDC’s president actively recruited Chicago-area companies and restaurant chains to locate in Oak Park.
Economic development was only one of Oak Park’s community renewal initiatives. The village integrated schools and neighborhoods, tightened building code enforcement, built a new village hall, installed new street lights, improved police protection and expanded community involvement and participation. As Oak Park’s reputation grew OPDC’s clientele included a growing number of minority, women and gay-lesbian business owners.
Watching all of this happening was exciting. I remained on the OPDC board until I left Illinois Bell in 1990 and continued to serve as the organization’s public relations counsel until 1998.
The economic development corporation restructured in 2014 and is coping with a new set of economic development challenges. No longer a quiet suburb, Oak Park is following the pattern of urban centers outside the city with high-rise buildings where department stores once stood.
The Frank Lloyd Wright landmark that started the economic turnaround was restored by a nonprofit foundation and spawned a thriving tourism industry that has made Oak Park a destination for visitors as well as a great place to live.
Student loans: Now we’re all in debt
The debate over President Biden’s student loan forgiveness is just what we needed: yet another divisive issue. It’s the largest unilateral spending decision by a U.S. president. I’m waiting for the pundits to praise it as a triumph of democracy.
There’s no question that former college students need a break. They were unfairly conned into taking on big loans for degrees that may not equip them to make the payments.
It’s equally unfair to shift that debt to taxpayers who did not go to college, or who paid off their loans. And no, this is not at all comparable to the Congress-approved Paycheck Protection Program loans that allowed businesses that were shut down by the government to pay their employees during the pandemic.
While college grads and working stiffs point fingers at each other, the big winners are colleges and universities. They remain free to raise prices with impunity because the taxpayers will continue to foot the bill and future graduating classes will expect further bailouts.
It does not help when members of my generation huff that we paid off our student loans, by golly. When I graduated in 1964 tuition at Northwestern (an expensive school then and now) was $1600 a year, about 26% of the U.S. median household income of $6,000. Today’s tuition at NU is $62,391, only slightly less than the median household income of around $77,000.
I was lucky enough to get through college with scholarships, part-time work and help from my parents, and did not take out a loan until tuition went up in my senior year. In those days student loans came through the National Defense Student Loan Program, an outgrowth of the post-Sputnik push to compete with the Soviet Union. When I was in the Navy off the coast of Vietnam I began receiving collection letters from Northwestern demanding loan payments. I appreciated the perverse logic of using my combat pay for National Defense Student Loan payments.
The problem runs deeper than footing the bill for college costs. For decades we’ve promoted the idea throughout American society that everyone ought to go to college and have lavishly funded higher education. School systems have focused on college preparation at the expense of vocational education. Other countries have not done this: The U.S. is the only advanced nation that does not have a national system of trade schools.
More than 60 percent of high school graduates now start college but many need remedial courses because high school has not prepared them for college work. Fewer than half of college students complete a degree within six years. The percentage of Americans with college degrees has risen from about 20% in 1990 to more than 30% today, but about 40% of recent college graduates are employed in jobs that do not require a degree.
A report from the American Compass think tank summarizes it this way:
Put it all together, and the college pipeline proves incredibly leaky. Out of 100 high school students, 13 won’t complete high school, another 29 will complete high school but not enroll in college, and 27 will enroll in college but fail to complete a degree. Of the 31 who do earn a college degree, 13 will end up in jobs that don’t require one. That leaves just 18 of 100 young Americans—call them the Fortunate Fifth—actually moving smoothly from high school to college to career.
Forgiving student debt won’t fix the inequality of our higher education system. In the short term, one alternative to shifting student debt to taxpayers may be to give colleges some skin in the game: require schools whose students default on loans to reimburse the federal government through a tax on endowment funds. Another approach would allow people to discharge student loan debt through bankruptcy as we do with other debts.
Even though the government has insulated higher education from market forces, we’re seeing some pushback against the high cost and chancy benefit of a traditional college education. College enrollments already were declining, and more colleges are closing or merging. The pandemic accelerated the growth of online degree and technical certificate programs. The Mike Rowe Works Foundation offers scholarships to pursue trade careers.
The student debt crisis is an opportunity for lawmakers to re-evaluate higher education to make college a better value and develop a strategy for vocational education. This is unlikely, of course, but student loan bailouts should increase the pressure for reform from consumers and voters.