How Finance Vultures Feed off the Poor As They Fight to Climb Out of Poverty
A funny thing about poverty: it’s really expensive, especially once you start trying to get out of it. Ginnina Slowe, a 26-year-old who is about to begin college in the Bronx, discovered that irony back in the boom years, when she first attempted to break into the elusive middle class. She was one of many poor and working people who tried to make their American dreams real in those days—and instead learned hard lessons about promises that are too good to be true.
In 2005 Slowe decided to get her GED and associate degree. She found a great-sounding deal at Taylor Business Institute that let her earn both degrees in just two years; it’s a common model at for-profit schools targeting low-income communities. Slowe had to pile on debt and work full time along with classes, but she jumped at the chance. And although the money was stressful, the studies turned out to be a breeze.
“I was like, ‘This is college? I shoulda been doing this a long time ago,’” Slowe says, laughing self-consciously. “It wasn’t as challenging as I assumed it would be. But I was like, ‘Well, maybe I’m smart, I don’t know.’”
She graduated, with a ceremony and a diploma and everything. And her ambition paid off, at first. She got a job as a bank teller, making not-bad money. About a year into it, she received a call from human resources after applying for a promotion. “I thought I got it, but no,” she recalls. They’d run a background check and she didn’t have an accredited degree; they assumed she had gone online and bought a fake one. “The lady was like, ‘Oh, I’m so disappointed in you.’”
The state had shut down Taylor in late 2006, not long after Slowe graduated. Peer reviewers found a shoddy academic operation with “a strong cash flow and unusually high profit.” Its owners came from the world of finance, not education. The school had collected more than $6 million a year in federal and state financial aid through its largely poor students, but in 2004 the library held just four periodicals.
Slowe called around to see if she could do anything to protect herself, but it was a confusing, frustrating situation. Eventually, she settled into a food service job. “You just gotta keep going on,” she says, shrugging as she reflects on the long, winding road she’s still trying to navigate out of poverty. “That’s life.”
That’s life in places like the Bronx, at least, which is the poorest urban county in America. Nearly 28 percent of its families lived below the federal poverty line at the Census Bureau’s last count, in 2010; that rate approaches three times the national mark. Nearly 16 percent of people older than 16 in the Bronx were out of work in 2010.
Those numbers are sadly predictable. The Bronx is nearly â€¨90 percent black and Latino, and that demographic profile remains a solid indicator of dense poverty and joblessness. More than a quarter of blacks and Latinos nationwide live in poverty, too. Four cities have black jobless rates near or above 20 percent—on par with rates during the Great Depression—according to the Economic Policy Institute. Four more cities can say the same about Latino unemployment. National black unemployment is officially above 15 percent and rising. White unemployment is 7.6 percent.
For decades, the myopic national debate on this deeply racialized poverty has invoked images of poor people as passive victims or self-defeating freeloaders. But people like Slowe have struggled frantically for generations to yank up their individual and communal bootstraps. They have not succeeded because the poverty they live in is not accidental. It’s the result of decades of political choices that first created ghettos and then left them prey to a still growing industry that profits from their existence.
The Bronx, in fact, provides a uniquely clear case study of how yesterday’s economic and political choices constructed the poverty that so many people accept now as a natural phenomenon. From midcentury forward, a series of planning initiatives ripped out the community’s interstitial tissue. Middle-class housing subsidies drove white residents into restricted suburbs. Public funds built highways to move those white migrants to and from equally restricted jobs, tearing down housing in the process and replacing it with high-rise projects. Officialdom turned a blind eye as slumlords milked dry the black and Puerto Rican residents left behind.
By century’s end, the South Bronx was synonymous with hopeless poverty in the national discourse. Three presidents used its manufactured destitution as a backdrop for showcasing their poverty plans to middle-class voters. Also by century’s end, the struggling community—like many others across the country—was swarmed with financial businesses that take advantage of the American dream’s particular resonance in poor, largely black and brown neighborhoods.
There are the rent-to-own furniture sellers that make the trappings of middle-class life wildly expensive. The tax “refund” shops that strip away an estimated $600 million in Earned Income Tax Credits each year. The small-money lenders that have built a $30 billion national business from debt-trap credit schemes. Now banks like Wells Fargo—at which loan officers famously targeted “mud people” with high-priced home loans—have developed new products that consumer advocates say are just better-branded versions of payday lending. All these operations are feasting off the economic carcasses that twentieth-century policy-makers created.
Meanwhile, as politics remain mired in the notion that poor people have brought their troubles on themselves—by taking on too much debt, by not sufficiently adapting to the information age, by becoming too dependent on the state—Bronx residents like Slowe continue trying to reverse the damage.
That effort is as optimistic as the economic predation is relentless. The Bronx is home to a generations-old Occupy movement—a communal refusal to get out of the way of the destructive forces that long ago overtook the place. A four-story mural along one of the South Bronx’s major thoroughfares—which moves four lanes of high-speed traffic through a residential area—sums up the spirit. Two larger-than-life brown-skinned women storm an old high-rise apartment building, fusing greenery into its walls and pouring sunshine over its roof. “You don’t have to move out of your neighborhood to live in a better one,” announces the inscription.
Sharon De La Cruz, 24, grew up around the corner from that mural and now leads a youth action group at The Point, a nearby community center. In October she took the youth to a city forum on the future of the Sheridan Expressway, which funnels commuters through their neighborhood and on to northern suburbs. “We want to tear down the Sheridan,” De La Cruz declares, without the slightest hesitation over the enormity of the goal. “I had two of my freshman kids,” she says, “who had no qualms about going in and saying, ‘Yeah, I want that!’”
The Sheridan is not in imminent danger. But hearing De La Cruz’s enthusiasm, you’d think the expressway is already slated to become the city’s next High Line park. She describes the experience of a skateboarding teen at the meeting. “He was like, ‘Wait, there’s no parks. Where do I go?’ He just started thinking about parks on a whole different level, as political, at 14. He took his experience—‘I like to skateboard’—and in a matter of two hours started looking at it through a community lens.”
That brand of intensely personalized activism is the parallel reality to entrenched poverty in places like the Bronx, where so often the only barriers between families and disasters are the communities they’ve built around themselves. As the economic crisis drags on and poverty mounts, those communities have rarely been so crucial.
Last year, Slowe rejoined her tussle with bootstraps. She passed a GED course at Grace Outreach in the South Bronx and is now taking college-prep classes there; she wants to be a radiologist. She and her fiancé have moved to the Poconos. “It’s cheaper,” she explains succinctly, so they commute an hour and a half to the city for school and work. Despite the catastrophe of her previous experience with class-climbing through education, she’s giddy to be back at it. She figures all that stands in her way is math.
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Slowe sat hunched over her notebook one afternoon in November as Carol Williams—or Ms. Carol, as Slowe calls her teacher—patiently walked her students through the logic of factoring trinomials. Williams wrote 2x²+6x+4 on the white board. The previous night’s homework involved reducing pages of these numbers down to their most basic form. “When you’re factoring, you’re going to do a lot of trial and error,” she told the dozen women gathered around folding tables in front of her.
It’s a process with which the women are all too familiar: isolate one complex challenge in a string of problems, simplify it the best you can, then move on to the next headache. The students vary in many ways—some are young enough to be the traditional age for college; others are much older. Some have high school degrees; most have just completed the GED program at Grace. But they’ve all been accepted to Bronx Community College and are trying to solve the costly problem that opportunity presents.
Because they have GEDs or they didn’t score high enough on the state Regents exam, they must begin college with remedial classes. That makes good educational sense, but it’s a financial nightmare. “Basically, they’re in college, but I would say they’re doing high school work,” Williams explains. “So it takes them a longer time to graduate, and it eats up their financial aid.” Her goal is to test the students out of the remedial classes.
The complexities won’t end there. Williams says Slowe’s story is not unique. Her students routinely show up loaded down with student debt and without a degree. The for-profit education industry, which exploded along with subprime mortgages and payday lending in the past decade, is largely responsible. A Government Accountability Office study in 2010 picked fifteen schools and found that all of them used some form of deception—or encouraged outright fraud—to pump up their students’ federal loan burden.
That is no small part of the reason that one in three black college graduates owe more than $38,000 in loans. There’s increasing concern that student debt will hit $1 trillion in 2011; it has already topped credit card debt. The trend line is driven not only by the high price of the Ivy Leagues but also the high price of poverty.
Still, many of Williams’s students were racing to join the indebted ranks in November. They’ve lived off unemployment insurance for months, but it will expire in December if Congress does not extend benefits for the long-term unemployed. Ms. Carol’s students hope to be in college and, thus, tapped into financial aid by the time the clock runs out.
Slowe is not worried about it for now. First she’s got to figure out how to factor down these trinomials, so she can save much needed time and money on her latest plan to beat poverty. January’s problems will come in January, and she’ll solve them then. “It’s always a way,” she shrugs. “It’s always a way.”