Student Loan Debt <http://www.salon.com/topic/student_loan_debt/>
*Friday, Nov 4, 2011 10:00 AM 10:09:48 EDT *
Forgive student debt, fight the recession
<http://www.salon.com/2011/11/04/forgive_student_debt_fight_the_recession/singleton>
The founder of the loan forgiveness movement on how to turn a $1
trillion problem into prosperity
*By **Robert Applebaum* <http://www.salon.com/writer/robert_applebaum/>*
*
*A week ago , President Obama unveiled a series of executive orders to
address the ever-growing student loan debt crisis in America. Billed by
the White House as a **direct response*
<http://www.nytimes.com/2011/10/26/education/26debt.html>* to a petition
I created on the White House’s new “**We the People**” petition site,
the president announced the implementation of already-passed changes to
the government’s student loan program.*
*The changes could be found in the fine print. The **Income Based
Repayment* <http://www.ibrinfo.org/>* (IBR) program included in last
year’s Affordable Care Act would be moved up from 2014 to 2012. And
certain types of federal loans would be eligible for consolidation and
enrollment in IBR. That was it. That was the entirety of the
president’s response to a petition signed by over 30,000 Americans
calling for across-the-board student loan forgiveness as a means of
economic stimulus. Obama also announced the **creation of a new form*
<http://www.washingtonpost.com/business/form-helps-calculate-college-student-loan-costs/2011/10/24/gIQAifvJTM_story.html>* that
would allow people to calculate their educational costs and repayment
obligations. Inspirational? Hardly.*
*Here’s the problem: there’s only so much the president can do on his
own without a Congress willing to do the job it was elected to do. So
while I was **disappointed *
<http://www.forgivestudentloandebt.com/content/obamas-student-loan-reforms-right-problem-wrong-solution>*by
just how little the president’s new initiative would help the vast
majority of Americans drowning in student loan debt, I was encouraged by
the fact that he at least acknowledged the problem: a $1 trillion
student loan debt overhang that isn’t going away any time soon.*
*In fact, it’s **growing larger by the day*
<http://www.finaid.org/loans/studentloandebtclock.phtml>*, and its
effects are be felt by everyone. President Obama’s inability to
adequately address the concerns raised by those who signed the We the
People petition (not to mention the over /651,000 people /who’ve signed
the same basic **petition*
<http://signon.org/sign/want-a-real-economic>*I created on MoveOn.org’s
new petition site, SignOn.org) highlights the limits of unilateral
executive power. The president can be criticized for being tone-deaf to
the needs of the people, but I think that criticism is more
appropriately reserved for the do-nothing 112th Congress. But I digress.*
*Forgiveness as stimulus*
*The movement to forgive student loan debt as a means of economic
stimulus started out by accident, prompted by **an essay I wrote in
January 2009*
<http://www.forgivestudentloandebt.com/content/proposal>* as I was
watching cable news coverage of the debate over the proposed “Obama
Stimulus Plan.” A mere nine days after the inauguration of a man
ushered into office on a platform of “hope and change,” yet, there we
were, having the same tired old debate over tax cuts, corporate welfare
and the demonstrably failed ideology of trickle-down economics.*
*As someone who has student loan debt myself, it occurred to me that if
I were suddenly relieved of my obligation to repay the approximately
$500 in student loan payments that I dutifully make each and every month
without fail, I’d have an extra $500 per month, /every month/, to spend
on ailing sectors of the economy. Think of it as a trickle-up approach
to economic stimulus.*
*My point in writing the essay wasn’t to say that I didn’t want to pay
back what I had borrowed. Rather, it was to say that if we truly wanted
to stimulate economic growth, I had a better, more efficient way of
accomplishing that goal.*
*The president’s new “Pay as You Earn” initiative is unlikely to help
very many people for several reasons.*
*First, the IBR repayment plan is available only to those with federal
loans. Those drowning in private student loan debt, which often carries
usurious interest rates and exceedingly few good options for anyone
experiencing any sort of trouble repaying their loans, are ineligible.*
*Second, one of the requirements for eligibility for IBR is that you
must be current on your repayments. Those who aren’t current on their
repayments, almost by definition, need the additional help now, arguably
even more than those who are current. Asking them to repay thousands of
dollars on their student loans /before /they can even apply for this
“help” is like a hospital telling a gunshot wound victim that he has to
remove the bullet himself, before the hospital will consider whether to
stop the bleeding.*
*Contrary to what the regressive right would have you believe, the calls
for student loan forgiveness are not about a generation of
self-entitled, pot-smoking, lazy deadbeats looking for a handout. It’s
about restoring some semblance of sanity to the student lending industry
that has made a mockery of the very objective behind obtaining a higher
education in the first place.*
*Generally speaking, the whole purpose of obtaining a higher education
is to get further ahead in life; to better contribute to society; to be
successful and to share the spoils of that success with the next
generation. If we’re routinely failing to accomplish any of those
goals, and if millions of Americans are graduating into much worse
financial positions than they otherwise would have been in had they
never chosen to go to school at all, then what is the point of seeking
out a higher education at all?*
*Sadly, from the perspective of the student loan industry, the point is
to rake in hundreds of billions of dollars by preying upon the youngest,
least financially savvy and most economically vulnerable among us by
continuing to advance the farce of **the so-called American dream*
<http://www.washingtonpost.com/blogs/ezra-klein/post/the-cbo-takes-on-income-inequality/2011/10/26/gIQAzcPqIM_blog.html>*that’s
been slowly but surely slipping away since the 1980s.*
*Saddling entire generations of current and former students with massive
educational debt comes with huge opportunity costs. As a result, the
“educated poor” are not buying homes, not starting businesses or
families, not inventing, investing or innovating and otherwise engaging
in economically productive activities we need all Americans to be doing
right now if we’re ever to dig ourselves out of the hole created by the
greed of those at the top.*
*And, let me be clear about who the “educated poor” really are. Yes,
some of them are recent college grads and 20-somethings, but just as
many are in their 30s, 40s, 50s and beyond — people who have paid for
their educations several times over but who still have balances in the
tens of thousands of dollars.*
*Don’t believe me? Check out the new website, **OccupyStudentDebt.com*
<http://occupystudentdebt.com/>*, that my
organization,**ForgiveStudentLoanDebt.com*
<http://forgivestudentloandebt.com/>*, is undertaking with the folks
behind the film **“Default: The Student Loan Documentary”*
<http://www.facebook.com/DefaultMovie>*(premiering this month on PBS;
check your local listings). Relieving these taxpaying Americans of
their student loan debt obligations would usher in an era of broad-based
entrepreneurship, innovation and prosperity.*
*Unfortunately, the top 1 percent and their cheerleaders on the right
would rather focus on how “unfair” such a proposal is, as if the
situation /their /policies have created is in any way “fair” to the
millions of Americans holding student loan debts. Their narrow-minded,
ill-informed reactions can be summed up with a familiar phrase: “I got
mine, Jack, so screw you!” *
*The heart of the problem*
*Student loans themselves are the problem. A well-intentioned program
designed to give access to higher education to those who could otherwise
not afford one has had the (unintended?) consequence of turning
education into a commodity with highly disturbing parallels to the
subprime mortgage mess. With so much seemingly free money flooding the
system in the form of student loans, anyone with a pulse and a desire to
obtain a higher education can avail themselves of a loan. As **tuition
rates have soared*
<http://inflationdata.com/inflation/inflation_articles/Education_Inflation.asp>*,
the very same degrees that now cost nearly five times the amount they
did a just a few decades ago are worth significantly less in today’s
decimated job market.*
*The sad but undeniable truth is that, through student loans, we’ve
shifted all of the burdens not only of obtaining an education but of
maintaining a bloated educational system /down /the socioeconomic ladder
on those who can least afford to shoulder the costs.*
*Then, once they graduate, we expect them to repay hundreds and,
oftentimes, thousands of dollars per month in student loan repayments,
despite approximately **five applicants for every job opening*
<http://economix.blogs.nytimes.com/2011/03/11/5-unemployed-for-every-job-opening/>* and
despite the fact that **middle-class wages have gone down*
<http://money.cnn.com/2011/09/21/news/economy/middle_class_income/index.htm>*, not
up, over the last 10 years.*
*Is it any wonder that so many people find themselves in financial
trouble, causing a downward spiral of debt from which there is almost no
escape? Student loans have been stripped of nearly all basic consumer
protections such as bankruptcy and statutes of limitations, thereby
eliminating any risk on the part of the lenders in issuing these loans.*
*If a student loan borrower misses a payment, fees of up to 25 percent
of the principal can be tacked on to the bottom line and, if the loan
should go into collections, up to another 25 percent of the principal
can be tacked on in penalties, all of which gets capitalized, meaning
that the principal balance grows exponentially, eliminating any and all
hope, short of winning the lottery or robbing a bank, that these debts
can ever be repaid.*
*What can be done*
*So, where does all of this leave us? With **#Occupy*
<http://www.occupytogether.org/>* protests spreading to every major city
all across the country, **clamoring for student loan forgiveness*
<http://www.forbes.com/sites/matthewherper/2011/10/07/some-say-occupy-wall-street-protesters-aimless-facts-say-otherwise/>* (among
other demands), hundreds of thousands of people energized and mobilized
for a long, hard fight. One member of Congress, **Rep. Hansen Clarke, *
<http://www.forgivestudentloandebt.com/content/special-message-rep-hansen-clarke-cut-cap-forgive-student-loan-debt-0>*D-Mich,
has even introduced a **House resolution*
<http://www.opencongress.org/bill/112-hr365/show>*calling on Congress to
endorse the idea of reducing home mortgage balances and student loan debt.*
*We need a Congress willing to work with the president on easing the
enormous burdens faced by millions of Americans who find themselves in
such dire straits because they made the decision to better themselves
through higher education.*
*There’s a whole host of things that Congress and the president can and
should do right away. I continue to think across-the-board student loan
forgiveness **will provide a sustained economic stimulus*
<http://www.forgivestudentloandebt.com/content/my-long-overdue-response-mark-kantrowitz>*for
the next 20-30 years, and reaffirm that an education is something
actually worth pursuing.*
*But short of that there is no good reason why anyone should be able to
have his or her gambling debts discharged or restructured in bankruptcy,
but not their student loans.*
*There is no good reason why the collections of student loans shouldn’t
be subject to statutes of limitations, just as any other cause of
action, civil or criminal (other than murder), is subject to.*
*And there is no good reason why **banks and other financial
institutions can avail themselves of low- or no-interest government
loans*
<http://www.huffingtonpost.com/2011/04/26/fed-lending-helped-wall-street_n_853884.html>* while
students must borrow at **interest rates of 6.8 percent or more*
<http://online.wsj.com/article/SB10001424052970203554104577000284182160646.html>* just
to obtain an education.*
*No other industrialized country in the world treats education and the
financing thereof the way we do here in America and few sane people
would argue that /this/ is the best we can do. But without a Congress
willing to do its job, initiatives such as what the president unveiled
last week are pretty much the best we can hope for, which is to say, not
a whole lot.*
*Continue Reading*
<http://www.salon.com/2011/11/04/forgive_student_debt_fight_the_recession/singleton/>
** <http://www.salon.com/writer/robert_applebaum/>
*Robert Applebaum, a lawyer in Staten Island, N.Y., is founder &
executive director ofvwww.forgivestudentloandebt.com
<http://ofvwww.forgivestudentloandebt.com> **More Robert Applebaum*
<http://www.salon.com/writer/robert_applebaum/>
*
*
--
You received this message because you are subscribed to Mark Crispin Miller's "News
From Underground" newsgroup. If you'd like to donate to News From Underground,
please visit http://markcrispinmiller.com/donate - we appreciate your ongoing support.
Ways to unsubscribe, 1) send a blank email to [email protected]. PLEASE NOTE: you must unsubscribe using the SAME email with which you subscribed; 2) go to http://groups.google.com/group/newsfromunderground and click on the "Unsubscribe or change membership" link in the yellow bar at the top of the page, then click the "Unsubscribe" button on the next page.
For more News From Underground, visit http://markcrispinmiller.com
