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almost 32 million kids eat lunch at school each day. it's a captive audience. what are we feeding them and who should pay for healthier option snz. first, the middle classes is falling behind. income for the average american family has fallen now for the past three years and is at 1996 levels now. bankruptcy filings by those holding a college degree are up 20% in the past five years. college graduates, the fastest growing group of feeling filing for bankruptcy. and one in six americans lives in poverty. rick newman is from "u.s. news & world report." rick, i want to talk about how we can fix this problem. what does it mean for our economy if the middle class is falling behind? can we have a meaningful recovery without having a recovery for the middle class? >> it's obviously bad news. incomes have been falling, real incomes after inflation, for the

last are ten years. that was going on before the recession and the recession intensified that. and this is a national problem. i mean, we do have a problem that affects the whole economy. this even affects people in the upper tiers because we need an entirely productive economy, not just an economy that's productive in small segments. >> i'll push you into politic for a minute. you hear it's the president's policies that are hurting the middle class. you're saying this has been going on for a long time. >> absolutely. this trend predates anything president obama has done. i think we put too much importance on the ability of politicians to either fix it or the blame we give them for making it worse. there are two major trends behind this, globalization and digital technology. those two things are rapidly transforming the workplace and we're probably only at the beginning of what is really a revolution in the global economy. >> and you throw -- >> we're feeling the pain of it. >> you throw a financial crisis, recession, in it there and it really hurts it. tamra, 5%, the top 5%, of earners are responsible for 33%

of all consumer spending. so you've got sort of the very top holding up the economy. we've heard how many times that this is a consumer-led economy. can we recover if the middle class isn't feeling better? >> no, we can't because everybody i think agrees with the notion that the middle class is really the engine behind this economy. we're not going to see the type of economic growth and consumer demand we need to get out of this economic stagnation unless the middle class has money to spend and right now they don't. >> let's talk about how to get that money flowing, talk about solutions and whether the president's job plan could help the middle class. some of the provisions the president wants to include are a payroll tax cut for middle class americans. the white house tells us that would amount to about $1500 a year. measures to help more americans refinance mortgages at today's historically low interest rates. they want to find the frictions keeping people away. they use the word "friction a"f" and also extending the deadline

to file for federal jobless benefits you all the way through 2012. rick, the white house says it's about increasing demand. will these measures do that? >> they're right, but anything the government does will frankly have a small impact on demand. if this passes -- >> big if in capital letters. >> yes, it it will put a little more money in people's pockets, but this is not the kind of thing that's going to make people run out to the department store and splurge on stuff. we need -- what we really need is consumers and businesses who are starting to feel more confident about the future, feel good about their job security, see jobs coming back. we need the private economy to get back on its feet. >> how does that happen? what is the thing, tamra, that is the spark that brings the confidence back? >> i think middle class families would feel a lot more secure, one, if they had more money in their pockets. the payroll tax deduction is definitely a good step in that direction. but they'd also feel more confident if when they dropped their kids at school they weren't going do overcrowded

classrooms because teachers are laid off. when they walk past the fire station that's empty because firefighters are laid off. everywhere they turn, they see layoffs all around them, their neighbors are sitting in homes that are worth less than their mortgages. all of that is sapping everybody's confidence. >> do you think they need another year of unemployment benef benefits? when you talk about this, conservatives go crazy. they think three years of people on unemployment is too much. >> it is. it's a moral tragedy that we have that many people out of work for that long. which is why the republicans and everybody else in congress has to get serious about doing something. we have got to do more federal spending right now because the federal government is the only person left that can stimulate the economy. >> i'd like to take maybe a different point of view on that. policy is important, but it's not the only thing people should be talking about. there still are people getting ahead. there still is a lot of opportunity in america. it's hard to find, but a lot of things people can do to improve their own situation. >> like? >> go out and find prosperity.

one of the biggest problems in the labor market is too many people don't have the right skills. too many people are waiting for jobs that aren't there mei more. there are things you can do to improve your skill set. >> there's an investment in that. >> boning up on technology to job retraining and maybe going back to school. >> tamara is shaking her head. you can retrain but there are no jobs. >> we have a jobs deficit. all of these people were gainfully employed two years ago. now all of a sudden everybody is underskilled and doesn't have the right training fort jobs coming back? >> we talk about this new knowledge-based economy and we get a new report this week saying the average s.a.t. score is 1500 and some of the lowest readings ever on components. wait a minute, how are we going to be the knowledge based economy without educating our kids? >> we can talk about the economy as a whole, but most individuals can't do anything about the economy as a whole, all they can do is affect their personal economy. tamara is right, we don't have

enough jobs but companies say they need people, we just can't find people with the right skills in the right place. >> rick, u.s. news and world report, tamara, stick around. millennials are known by many things. why they're not cut out to work in this tough new job market, that's next. [ hayden ] what if there was a makeup that didn't just hide your breakouts... but actually made them go away. neutrogena skin clearing makeup has our proven blemish fighting formula so it clears your breakouts. now that's beautiful. neutrogena®.

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just who are these millennials, people born after 1981, more than 45 million of them, their current unemployment rate around 13.5%. according to research from pew, they are less religious, less likely to have served in the military and they could be the most educated generation in american history. but is this new tech-savvy generation cut out to compete in this rough job market? back with us, tamara draut, author of "strapped." and jean twangy, an author of "generation me." jean, wow, these kids are confident, entitled, raised in a fast-paced, rewards-based environment. are they cut out for this new job market? >> the good news is, of course, some of them are, some are hardworking and have realistic

expectations. there is a reasonably large segment who grew up in this time of plenty when, you know, for their childhood they would just show p up and they got a trophy just for participating. they've really come to have these high expectations. what we found in the research, you look at baby boomers, general xors and the gen me, the biggest attitude difference is gen me says, i don't want to work, i want a job with vacation and overtime. they say they want the status and prestige and money. that's the problem. that's where you really run into trouble, where you don't have just the status from the status and prestige, you don't want to work hard to get there. that's where you see the disconnect. >> someone once described it as this is the first generation that knew more about self-esteem than self-discipline. they're taught, you're special and you're the best, maybe because the generation before them had to work so hard or didn't get as much attention. >> it's possible.

and this is an overall cultural change. that's the other thing you have to keep in mind. generations are about culture. gen me didn't just wake up one day and say, i'm awesome, give me the job and i don't want to work. they gt the ideas from somewhere, their parents, teachers. this really is a cultural change more toward focustion on the individual, which can have really good things but i think it's been taken too far in emphasizing self-esteem, which really doesn't cause success, we know from the research. >> right. >> and not as much of this self-control and self-discipline which really does lead to success. >> tamara, whatever the qualities they simply haven't had a chance yet and there aren't really the opportunities for them to try it out. on one hand, they say they're not cut out for the new workforce. maybe the workforce isn't caught out for them yet. >> this economy has dealt a raw deal to young people. couple of things, do young people want jobs? absolutely. the latest research shows that 40% of 20-somethings in college

degrees work in jobs that don't require one. they're eager to work. when i think of the heart beat of this generation are, if you can generalize about a generation, which is hard to do, i think of the quintessential generation me person is getting up every morning, taibing a full load of classes at the community college, going to waitressing at night, hitting the books and then doing it all over again. if you go to any community college in america, you will see young people who are desperate to get a towhold in this economy. >> but it's interesting because pew did a study last year and asked representatives of all the major generations from the silent generation, world war ii, boomers, generation x and generation me. generation me the only generation not to put work ethic in their top five descriptors. that says something. >> it may say something, but actions speak louder than words. certainly this generation will be expected to work longer hours

for less pay than their parents' generation. there's no indication they're sitting at home twiddling their thumbs. when chrysler -- >> no. they're working on their ipad, planning vacation. >> maybe they're using their thumbs on their blackberries. >> iphone. >> they're drinking their parents' imported beer because they still live at home. that's the stereotype, i know. >> that's the stereotype. but really the more accurate stereotype, we have to remember that only about a third of young people in their 20s have bachelor's degrees or more. the majority of this generation, two-thirds, don't even have the bachelor's degree. they're out there trying to get a job, any job. and the reality is we have an 11 million jobs deficit in this country. >> that's the thing, jean. just to wrap it up, the class of 2009, 2010 and 2011, they're all competing for the same jobs at this point. >> i know. and i feel for them. i completely agree with tamara, the majority of this generation really does want a job, does want to work hard. the problem is we have this increasing minority that's the stereotype, but it's true.

we know there are more of these folk who say, i don't want a job that isn't perfect and if i don't get that perfect job and i don't get that job who has all the tinge things i want, i will just go home and live with my parents. that is the minority, but there are more and more of those entitled folks and they're giving everybody else a bad it name. that's the problem. >> jean, thanks so much, tamara, really great discussion. nice to see both of you. you know, a college degree may be the best insulator against unemployment but the debt that comes with it can weigh you down for decades. what are your options if you're struggling with student loans? we have the answers for you, next.

a growing number of americans are starting their careers deeply in debt, a result of all the money they had to borrow to pay for their education. for many, education loans have become a de facto mortgage payment that could take decades to pay off. cnn's allan chernoff explains.

>> reporter: rebecca is living her dream. she's made it it to new york city working in fashion. for retail giant j. crew. >> accomplished definitely. i would say that's a very good word to hdescribe how i feel. >> reporter: it's been costly, though. to earn her master's in fashion design at drexler, rebecca took on student loans from the federal government and private lenders, even with help from her parents. the three-year program left her with debt approaching six figures. >> i have some really dark moments about it, that's for sure. it it's overwhelming. it it it's overwhelming, and it it's extreme, it it's a lot of money and i just have to try to ultimately stay positive to know that i will get through it and i will make it work. >> reporter: the working world requires ambitious responsible americans lycra beck ka to assume mountains of debt to gain the education their careers demand. that debt load for students at

graduation is $27,000 on average. adding education loans their parents take on, the figure jumps to 34,000. pile all those loans together, and student loan debt now exceeds credit card debt. >> student loan debt is having an impact on how people live their lives, causing delays in getting married, buying a car, buying a house, having children, saving for retirement. >> it squeezes rebecca's lifestyle. she is sure to pay her credit card bills each month, lives in a small apartment in manhattan. how long do you think it will be before you actually pay it all off? >> well, i would say 25 years. 25 to 30 years. there are repayment plans that let you extend it and that's what i thought about when i was doing it. >> student loans are rebecca's educational mortgage.

but rebecca says she doesn't regret it. borrowing was the only way to achieve her career dream. allan chernov, cnn, new york. >> we're told the only way to compete in this lean, mean economy is to be educated. we also know education is going to cost you more than ever and take years to pay off. kids are graduating with $27,000 in student loans. job prospects are pretty slim. it doesn't mean you shouldn't make that investment. it just means you have to manage it. john, many spring grads are going to get their first student loan bills in the mail in i think november or december. what happens if you don't pay, john? >> not paying your student loan is bad news. it's the loan we don't think about before acquiring for four or five years. if you don't make the payment, the lender is going to quickly start reporting you as being diligent we know on the loan and

will eventually put it in default. defaulting on a student loan is very, very different than defaulting on any other type of consumer loan. >> why is that, is it because the federal government backs so many of these loans? >> that's exactly right. a federal student loan is not dischargeable in a bankruptcy. you cannot wipe away federally guaranteed student loan debt in bankruptcy. you will pay it. you're either going to die with it or you're going to pay it. most negative debt stays on our credit report for between seven and ten years. default owes federally guaranteed student loans, seven days from the date you pay it. >> john, college tuition costs are up 400% in the last 30 years. people have to weigh which investment is going to make sense for them, a traditional private liberal arts college, a community college or a public college. this is an awful lot of money and it's going to be really

important to make sure it remains good debt. >> yeah. i think that's very important. to expect an 18-year-old is savvy enough to know what they're getting into when they start signing those loan papers and four years later are going to understand how to get out of 15, 20, even $100,000 of debt depending on where they've gone, i'm not sure that's responsible for parents to allow them to do that without asking them to understand the roi they're going to get on that. >> the return on investment, it is. >> that's exactly right. >> so let me ask you this, what do you make of this new debate that a college degree isn't worth it? >> i have to be on eflt with you, i have one. i don't have one from an expensive school. i have kids with no degrees that do better than me and friends that have degrees from expensive schools that do well. frankly, who cares that you took english 101 at duke?

they care that you got your law degree at duke. >> thank you, john. >> thank you for having me. come up, you want your kids to eat healthy at school, but who is responsible for that, you, the school, the government? tr cost to quality, we'll talk about it next.

the average kid will east 3,000 school lunches between kindergarten and 12th grade. they are a captive audience. what can we do to feed them better food? who swallows the bill, the school, the government or you? with me now is amy, author of the book "lunch wars." almost 53 million schools school lunches were served last year, more than half of those paid for by the government. reduced price lunches, about 9% of them. full price lunches, about 35%. we've got these kids, the government is feeding them, we're feeding them.

what do we do to make sure we have healthy kids going off to the workforce? >> we're spending $9 billion a year on this program. we should be providing these kids with food that is going to make them healthy. what happens in schools is kids may be getting less in the classroom, but when they get to the cafeteria, they're often able to make a lunch out of a giant cookie, a giant pretzel is and chips and fries and a busy drink and nobody is really reinforcing those lessons that parents are trying to teach their kids at home and schools are teaching in the classroom. we need to connect the cafeteria with the classroom. >> i think the awareness is coming, though. michelle obama was talking about healthy eating in the schools and healthy eating among parents. we know there's a healthy free hunger kids act to set new nutrition standards for all koodz kids from schools to vending machines. here is a typical comparison of pizza lunches at school and

after. whole wheat pizza, no more chocolate milk. are these coming in slowly? are you happy that it's happening? >> i'm always happy that our federal government is supporting good eating for kids. i think the government's job is to provide basic regulations on nutrition and i call it a floor rather than a ceiling. but this is really a local mission. so the usda, which runs the school meals program has mandated that every school district that participates in the program has a wellness committee and a wellness policy. it's a great opportunity for parents to get involved on the local level, it's a grassroots kind of thing where you can advocate for what you want to do going on in the lunchroom, in the classroom, and even in terms of snacks and other activities. >> we keep going back to that. we're told that it was the department of defense initially that started the school lunch program because so many of the recruits, quite frankly, were not up to snuff, you know? and now it's the reverse.