Forgive Student Loan Debt

[Samael]

Alright, I've seen this on tumblr, and while I am not American myself, I heard about the way these loans can cripple people for ages.
This may be worth taking a look at:






If you have or will have student loans, you need to read this.

Something potentially life-changing for millions of people has happened.

On March 8, 2012, Rep. Hansen Clarke introduced H.R. 4170, the Student Loan Forgiveness Act of 2012. This act proposes that people with federal student loan debt pay 10% of their discretionary income for a period of 10 years, and then the rest of the debt would be forgiven. I’m not clear on the details, but I’m also hearing that somehow it proposes to roll private debt into federal debt so it would apply, too.

Student loan debt is financially crippling millions of people and having negative effects on the economic recovery efforts.

Suze Ormond gives a very good explanation here of why student loan debt is contributing to the economic crisis in America. Not to mention the personal cost for young people trying to start out in life with the double whammy of a poor economy and serious loan debt. What’s even less certain is how this will affect Americans for generations to come, with some calling young Americans “The New Lost Generation.”

When you can barely afford to pay your loans, you aren’t buying cars. You aren’t buying houses. You aren’t spending a lot of money on consumer items or vacations. You’re trying to scrape up enough money to pay that bill so Sallie Mae will stop sending you threatening letters.

Think what would happen if suddenly, all of the people sending most of their paychecks to student loan companies had hundreds of dollars more to spend on other things.

 

•   Think how many people would move out of their family home and get a place of their own.
      Think how many people would buy a car.
      Think how many couples would decide to get married.
      Think how many people would be able to start saving for retirement, or be able to afford health insurance.
      Think how many people would buy clothes, shoes, electronics, or better-quality food.
      Think how many people would stop considering suicide as the only way out of an apparently impossible financial crisis.
      And now think how all that money flooding into the economy would improve things in America.

This is one economic problem that is not going to get better over time without action. It’s actually getting worse. It’s not only students themselves suffering. With nowhere else to go, many have moved back in with families and are relying on family support. That’s making it very hard for their parents to retire.

To date, the government has done little to nothing to help out people with existing student debt, despite economists screaming from the rooftops that student loans are a bubble about to burst and when it does, it could tip the country right back into another full-blown recession or even depression. At the very least, it’s likely hampering efforts to get the economy back on track.

It’s telling when you consider where the government chooses to help. The government bailed out the banks. It bailed out the auto industry. It put in place measures to help people facing foreclosure. It’s looking at addressing credit card rules. But what has it done to help people with student loans, which – again – is now a larger problem than credit card debt?

This is a groundbreaking measure and it needs people to get behind it immediately and show their support, to let Congress know what such a relief could mean to a generation of young people struggling under a mountain of debt unlike anything our country has seen before.

I fully support The Student Loan Forgiveness Act of 2012 as a way to help stimulate the economy, remove a financial and emotional burden from millions of people, and help pull the country out of the sinkhole it entered nearly four years ago.

The Student Loan Forgiveness Act of 2012 will stop the bleeding. We need other things to happen, too.

• 
      We need representatives to call for student loan reforms to stop the problem for future generations.
      We need representatives to call for colleges and universities to bring down tuition for current and future students.
      We need representatives to support community and technical colleges.
      We need to change the tenor of conversation about higher education in America.
      We need media to start asking the hard questions about why this happened in the first place.

But first, we have to put a tourniquet on the debt that is bleeding Americans dry.

If you support this bill, contact your representatives and senators and tell them so immediately. Call them. Email them. Write letters.

For more information, check out http://forgivestudentloandebt.com/

You can track the bill through GovTrack here.

Sign the petition here!

And SPREAD THE WORD!

SOURCE

[RubySlippers]

Not on merits of this legislation the issue also needs to be making school so easy and the debt easy to get into especially for students that should not be going to college.

I would say this is not a good move your just encouraging students to go into debt and then take the bailout with no consideration that they might be better off not going to college. Why not if you go get your degree in art history, end up working at Target for $10 an hour and have $200 discretionary income you pay $20 of that over ten years and your bailed out where is the incentive not to go I would go just to party for four years and then worry later.

It might be fine coupled with making money to go to college dependent on the student being employed after the education this would include the degree program being commited to and announced so they can decide if giving the money for art history or engineering is a good investment. And based on grades, references and the like to weigh the risks after all if they drop out its a bad risk over a student who wants to go to school to be a lawyer and is a high performer motivated to do that.

But as is it doesn't give the student any real commitment to weigh matters with the parents to take on debt for school and not tying the money to what degree is being sought.

[Trieste]

Ruby, I question your perspective on the subject, given your education level.



Don't get me wrong, I would not mind it if suddenly the $60k worth of debt hanging over my head were to be forgiven after only ten years. What might be more progressive and better in general, however, is making student loans subject to the same consumer protections as other debts. Currently, student loans are not able to be written off in a bankruptcy. I understand why this is, but at the same time it's dragging people trying to get back on their feet back down. Furthermore, the Dept. of Ed. has the same recourse as the IRS to collect on student debt. This means they can confiscate your tax return, garnish your wages, and reach into your bank account to take your rent money. You don't just get threatening letters from Sallie Mae. They wreck your life if you owe them money. So maybe instead of just writing off the debt but keeping the problems, the government could do things to address the pitiful minimum wage, the ridiculous markups that students have to pay for their books, the skyrocketing tuition and fees, and the absolute lack of consumer protection for students.

This move is essentially blowing sunshine up our asses and I don't like that feeling one bit.

[SilentScreams]

I don't have the statistics on hand at this moment. I will post them though, once I have a little time away from work but the government created this problem in the first place. The introduction of student loans administered by the government has allowed colleges and grad schools to raise their prices.

As I said, I'll post the stats later but since the huge loans that have been government has been giving out the tuition costs have risen dramatically because the schools don't have to worry about the burden their students can bear since the schools are getting their money from the government. They have no reason to keep the costs low as they get theirs regardless if the five years after school the graduate defaults on her payments or not.

[Iniquitous]

You do realize Ruby that student loans cover more than just four year colleges right?

Trade schools use federal student loans, two year colleges use federal student loan, etc. My ex husband used federal student loan to go through his trade school for auto body mechanic before he joined the military. I used federal student loans to go through graphic design classes. I know people who have gotten federal loans to become a truck driver.

Most of the trade schools are pretty damn guaranteed to get a job once they complete the classes. Honestly, I think it needs to go back to the way it was way back when. If you went to a college in the state you resided in all you paid for was your books/food/living quarters. I’ve talked to a lot of older people who remember how cheap it was for them to go to college and get their degrees.

Also - one thing to consider Ruby. Even if you go to a University and spend 6  years to get your Master’s degree but don’t find a job in that field you majored in - other jobs do look favorably upon having that Master’s degree. It’s a point in your favor so to speak. I know the company I currently work for actually has promotions from within but the only way you get promoted is if you have at least an associate degree. Doesn’t matter what the degree is in, just so long as you have it.

[DarklingAlice]

Now, in fairness, I work at a medschool rather than a normal 4 year uni. And I think medschool loans (as well as other professional loans) get paid back at a higher rate (anecdotal, nothing to back that up). However, the reason tuition rises is most emphatically not just because of government loans. The operating costs of a university are pretty damn high, and not all of that is going to be covered by generous government or private grants. And these costs are rising all the time. Just as an example, in the past year, at least two reagents our lab uses have jumped in price $150+ per unit. And that's just two reagents in one small lab in one year. Universities do have operating costs and as these increase so will tuition, regardless of government loans.

[Samael]

Tuition Inflation

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A good rule of thumb is that tuition rates will increase at about twice the general inflation rate. During any 17-year period from 1958 to 2001, the average annual tuition inflation rate was between 6% and 9%, ranging from 1.2 times general inflation to 2.1 times general inflation. On average, tuition tends to increase about 8% per year. An 8% college inflation rate means that the cost of college doubles every nine years. For a baby born today, this means that college costs will be more than three times current rates when the child matriculates in college. This section of FinAid provides detailed information about the rate of increase of college tuition.

http://www.finaid.org/savings/tuition-inflation.phtml

I'm reading this, and I'm just blown away by what huge debts are loaded on the shoulders of students.
I mean, Jesus, the increase is just mind-boggling...

The next Generation goes into their adult life already trying to wrestle with a ton of debts to their name, and they haven't even started to work yet.

[AndyZ]

Why the crap are colleges ramping their rates so much, by the way?

Edit: Samael, if this is significantly off topic that you want me to withdraw the question, I will.

[Samael]

Why the crap are colleges ramping their rates so much, by the way?

Edit: Samael, if this is significantly off topic that you want me to withdraw the question, I will.

Honestly, I think this is a pretty damn good question, and definitely is part of the topic.

[AndyZ]

That was one of the questions that has come up about Occupy Wall Street.  I've seen quite a few interviewed about this topic, and how they're protesting the banks who gave them these inordinately high loans.  It makes more sense to me to protest the universities for making everything so inordinately expensive.

I disagree with the prospect of having the student loans just be paid off because it's only treating a symptom.  If you passed this, then there's no reason that the universities couldn't skyrocket their prices, just relying on the government to pay for something that would be way too expensive for anyone but the richest to afford.

Part of the deal with Medicare is that doctors get reimbursed only a fraction of what the visit would normally cost, and doctors have the choice as to whether or not they get accept Medicare patients.  I would not hold an objection to a similar plan, but I doubt it would go over for the same reason that school waivers don't: the question of private schools and religious schools.  Would the reimbursements in the bill be given to those who attended religious universities?  I doubt both sides will accept either answer, so it never happens even though public schools are atrocious.

[DarklingAlice]

http://www.finaid.org/savings/tuition-inflation.phtml

I'm reading this, and I'm just blown away by what huge debts are loaded on the shoulders of students.
I mean, Jesus, the increase is just mind-boggling...

The next Generation goes into their adult life already trying to wrestle with a ton of debts to their name, and they haven't even started to work yet.

Why the crap are colleges ramping their rates so much, by the way?

Edit: Samael, if this is significantly off topic that you want me to withdraw the question, I will.

As I mentioned in my last post: the operating cost of running a university does not rise at a rate equal to inflation. This means that the cost of attending that university will not rise at a rate equal with inflation. Unless you assume that a magical money fairy should appear to make up the difference then students are going to have to pay that cost.

I doubt both sides will accept either answer, so it never happens even though public schools are atrocious.

Lies. Damn Lies. Check the statistics.

[Trieste]

After reading the bill itself (text here), I can say that it isn't even as much of a band-aid as it appeared on first glance. It only forgives up to a little over $45k, and that's only provided you have never missed a payment and you agree to have the payments taken directly out of your bank account.

The good thing that comes out of this bill is that it caps interest rates on student loans, which is something that does need to be done. However, again, most of the bill seems to be just a short-term fix.

[AndyZ]

As I mentioned in my last post: the operating cost of running a university does not rise at a rate equal to inflation. This means that the cost of attending that university will not rise at a rate equal with inflation. Unless you assume that a magical money fairy should appear to make up the difference then students are going to have to pay that cost.

What's causing them to skyrocket?  What are these new costs?

Lies. Damn Lies. Check the statistics.

I assume you mean that my part about public schools was atrocious?  Perhaps I should have clarified that I meant elementary through high schools.  If there's any argument that the public elementary through high schools are doing a horrendous job, let me know.

Also, by the phrase "public university," does this mean that it's entirely or primarily government funded?  I've heard of community colleges where this happens; it may or may not be the same thing.

[Callie Del Noire]

I think that some parts of college costs are hideously high (books for example). One of the most annoying things about my book costs (which I am only paid a few hundred bucks for on the GI bill) is the 'custom books' that the school occasionally comes up with. A 'custom' imprint that costs 3x what the book down at Books-a-Million costs or one that you can't buy from anyone BUT the campus store.

[Trieste]

What's causing them to skyrocket?  What are these new costs?

One example Alice gave was reagants. Just in case you don't know what she was referring to (and you may, I don't know), reagants are chemical components used in a lab. They are, by their nature, one-use-only. An example from home would be adding vinegar to baking soda. The vinegar and baking soda are your reagants, and once you react them, they are gone. You can't get them back. If you want to do the reaction again, you have to get more vinegar and baking soda. The only thing is that some of these things cost hundreds of dollars for a small bottle.

Another example would be equipment. In order to remain relevant to current scientific fields of study, universities have to upgrade to recent equipment. Equipment that I have personally used in my own research includes HPLC (ours is ancient, but it works, and the cheapest price for an HPLC that I found online is $10k), and  LCMS (over $500k per machine). The reagants for my personal lab work were probably close to $500, and that's not counting the equipment and reagants that my lab was already stocked with. An electron scanning microscope, which is vital to the education of modern biology, biomedical, and nursing students, runs upward of $500k and can be up to a mil. And that's just one college in my university, which has at least five colleges (Nursing, Arts and Sciences, Visual and Performing Arts, Business, and Law) that I can think of off the top of my head. Each college has its own expenses such as subscriptions to relevant journals and databases.

And then there are salaries. Universities, including - maybe especially - public universities (will get back to that in a minute) have to offer salaries that are at least comparable to if not competitive with the salaries that professionals would make working in their field instead of researching and teaching for the university. For some schools, the prestige of teaching at the school helps offset that (e.g. being offered a teaching position at Yale or Harvard is prestigious so in theory you wouldn't have to pay someone as well for it, although with a $30 billion endowment, Harvard can certainly afford to pay its professors very well) but for most schools like mine, you have to offer something comparable monetarily. Some people are willing to teach at public universities out of altruism, and that's fantastic, but that is not the majority of the workforce. So if someone can expect to be making easily $400k/year plus bonuses in the private sector, the school can't exactly offer them $80k a year to teach. And those salaries are not going down.

All of these costs and more add up to increase the cost of education nationwide.

Also, by the phrase "public university," does this mean that it's entirely or primarily government funded?  I've heard of community colleges where this happens; it may or may not be the same thing.

A public university does not have to be entirely or even primarily funded by the government. For instance, the university that I attend is a public university that only gets about 20% of its costs from the state. Everything else is fundraised, donated, endowed, or funded through student fees.

[Callie Del Noire]

Which is where corporate sponsorship and endowments come into play (or given the recent downturn and reduction of tax write offs, doesn't). I have said in another thread we need to make corporate tax benefits pay off for domestic US rather than the companies solely. It won't completely help to reduce the costs that Trieste listed (not by a long road in some areas) but investing in the education system by endowments, trusts and donations that are tax write offs would be helpful.

We need find ways to encourage 'building' our education system. I know that it won't fix the problems completely but some smart reforms will help.

[Anjasa]

I really think we need to change the last year of high school and how we treat 17 year olds. We treat them like students, we don't teach them the realities of what it means to pay bills or rent or buy groceries. We go into adulthood, not understanding the realities we're about to face - certainly not hidden costs.

How can we trust someone who has never paid a bill to understand the consequences of taking out a student loan? Or the realities of the job market post graduation?

I paid off my student loan, and I couldn't be happier to be rid of it. I know other people who are working for years in low paying jobs after dropping out of University part way through, struggling to pay back their loan.

[ExisD]

As someone who is about to start taking over payments I was in favor of it before I looked at the particular tenants of the bill. After seeing the particulars for what would be capped and how much that would affect my loans along with several of my friends.

There are several people I personally know who are unable to pay off just the monthly interest on their loans so it gets worse for them each month. They graduated with significant debt and haven't found well enough paying jobs in the current economy. I'm actually very frightened for many more friends in the same or similar majors, actually any major that is not Business or Computer Science my own included, who are graduating this year. I know one person who's been trying to get a career position for 6 years and the average graduation-to-job gap seems to be 4-6 months for people with 3.5+ GPAs and 1.5-2 years for <3.0.

[Beguile's Mistress]

Having worked in areas related to Human Resources for a number of years I see a disturbing trend in people just out of college, either just graduated or in the job market for a few years, who are over-educated and under-qualified for the type of career they want to enter.  Also, some of these degree holders really have no idea what their career choice entails.

I would love to see more school districts put manpower and funding into career counseling for students all through high school and I would love to see parents learn to take a realistic look at their children's abilities and encourage them toward careers and trades where they can find fulfillment and jobs. 

[DarklingAlice]

I assume you mean that my part about public schools was atrocious?  Perhaps I should have clarified that I meant elementary through high schools.  If there's any argument that the public elementary through high schools are doing a horrendous job, let me know.

Also, by the phrase "public university," does this mean that it's entirely or primarily government funded?  I've heard of community colleges where this happens; it may or may not be the same thing.

I actually think all elementary through high schools are doing a horrendous job. Regardless of being public or private. But yes, I assumed you meant universities as we are discussing college tuition. And my public university is consistently ranked in the top 20 of the nation (and generally within the top 50 worldwide).



Trieste already gave a nice window into what the costs are and I just want to follow up with a general question: this notion that universities just charge as much as they can get away with, where is this even coming from? A university is a business with an operating cost just like any other. Tuition is regulated by what costs the university sustains, what the markets will bear, and what is necessary for the university to be able to re-invest in itself. E.g. tuition at my school will cost (averaged across programs) ~$15,000 a semester (twice that for non-resident students). I get that from a naive view that seems like a lot of money, but you have to balance it with the fact that goes to salaries for ~3,000 people, facilities maintenance, need based financial aid grants, research technology, and all the administrative costs attending those. I really just don't get where this idea of the greedy university with its arbitrary price points originates.

EDIT: Changed a numerical goof.

[gaggedLouise]

The demands for education that employers will lay down as "standard", as baselines to take an application seriously, have been raised a great deal in the last twenty to forty years. But the complexity and demands set by the things the employees are gonna do, that often hasn't seen a major elevation. (Okay, lots more people use computers these days on the job, but once you've learnt the routines, and know what you're supposed or allowed to do with the pc, ipad or phone, that side of the work often isn't very challenging).

Many jobs are now more "pre-packaged duties" and with less individual responsibility than those kinds of positions used to entail: nurses, freight, bus and train drivers, journalists, many kinds of factory workers and small workshop technicians, even some lines of teachers (above high-school level) are more firmly reined in today and scripted with exactly what they are supposed to do and say, no matter how they see the day-by-day or specific-task circumstances on the job. But at the same time the level of programs you have to take - and thus the debt you have to incur to get in - have risen massively.

Though most of them would deny it, I think it's obvious that tech industries and factories, office personnel suppliers, traders, newspapers and news agencies today often demand a university or advanced professional training exam more as a sorting-out-beam, a means of stopping the flood of applicants, than for the actual knowledge they think those schools will impart in their exiting students. These employers - or their hiring department guys, who are often working by a set policy - want papers to prove that the applicant has the patience and medium-range drive (or slightly above medium, but not a Marie Curie drive?) you'll need to get through to an exam on decent time, and the social skills that are informally trained and passed on at a university (getting into the "school spirit" as it used to be called) - they are not that interested in brilliant and outstanding academic credentials or innovative research as such. I know several people (and have heard of many more) who felt that a too consistently great exam could be a hindrance when they left university, or even before then, looking for a job on the side to help pay their rent and books, because it invited the jibing question "so, don't you know anything *else* than how to score in the academy?" The packaging of knowledge in a set form, and the papers for it, are becoming more important than the actual knowledge, or will to take on challenges, that a person may acquire at this or that school - or in life.

As a professor of law at the academy I've studied at put it twenty years ago, "the rampant educomania is well on its way to wringing the neck off the view that most people have an innate capacity to understand, to take on new challenges, to grow in work, but this is a capacity that often needs to be allowed to develop in joint work and contact with other people". (Experience integrated into you, into how you'll handle a situation or a problem, is what counts, not just the number of books and degrees you have clocked)

Of course the professed talk is that we live in a society where "excellence in knowledge, and the ability to question received ideas, is king", but in reality that's not what employers and corporations want; many employers are looking more for somebody that's mouldable once he/she gets in. Paradoxically, a heavy debt burden which you have to acquire to even have a go at getting the foot in can make you more mouldable, because you have to "get in and play by all the rules or keep out". When this kind of thing happens in a recession, or in a period with high unemployment even if the wheels be rolling fast in many places, it risks creating a huge army of people with long studies but little real experience at the stuff they will actually be doing after their exams, and perhaps low on skills (or cahnnels) in selling themselves to future employers.

It's easy enough for universities and colleges to raise their education fees, and raise them steadily, even rapidly, without really showing that the education they offer counts for an average of their students. Universities, trade schools and "elite schools" get a lot of fawning coverage in the media today, and it is easy for them toi provide rosy footage of what they offer - you interview the success-story students and rely on the fact that everyone wants to come across as a winner: few people will answer openly, in a gallup or at a town hall meeting, that a few years after exam they have landed in a debt trap or aren't getting near the kind of jobs they feel they were trained for, still fewer will stand up in a newspaper interview with name and picture and describe such a situation.

Both the schools themselves, corporations and the media are peopled by folks who have climbed up the ladders on the set conditions, who have paid their dues and who are not going to admit a great deal of critical questions and sharp angles. At the same time, politicians more or less consciously use universities and schools as a way to keep people out of open unemployment and tidy up the statistics of their region a bit.This all needs to be discussed a good deal more openly than is being done today; if employers don't really trust the quality of the educational systems they are praising, and if on the other hand we get less and less taxes or savings to keep those schools going and functioning, then in the end we're in for a great deal of future trouble.

[TheGlyphstone]

I actually think all elementary through high schools are doing a horrendous job. Regardless of being public or private. But yes, I assumed you meant universities as we are discussing college tuition. And my public university is consistently ranked in the top 20 of the nation (and generally within the top 50 worldwide).



Trieste already gave a nice window into what the costs are and I just want to follow up with a general question: this notion that universities just charge as much as they can get away with, where is this even coming from? A university is a business with an operating cost just like any other. Tuition is regulated by what costs the university sustains, what the markets will bear, and what is necessary for the university to be able to re-invest in itself. E.g. tuition at my school will cost (averaged across programs) ~$15,000 a semester (twice that for non-resident students). I get that from a naive view that seems like a lot of money, but you have to balance it with the fact that goes to salaries for ~30,000 people, facilities maintenance, need based financial aid grants, research technology, and all the administrative costs attending those. I really just don't get where this idea of the greedy university with its arbitrary price points originates.

Universities might have an argument for high costs. Textbook companies, though, have no excuse for their absurd markups, particularly with all the new gimmicks they keep inventing to eliminate the secondary book market.

[gaggedLouise]

I'd agree with Trieste that the rise in tuition fees is partly explained by the need for universities to attract, develop and keep the best people as teachers and researchers, or they will tend to drift off to corporations or state bureaucracy - and this is a legitimate reason - but another potent factor is the growth of internal bureaucracy. The people who hold those upper-to-middle-range office-suite jobs are *also* well paid, sometimes much better than post-doc researchers or assistant professors. Many universities also hire an army of consultants and project officers (or even lobbyists)  to do what, for various reasons,  they don't want to have their ordinary office or faculty staff commissioned to do.

The real bureaucrat top brass may even have salaries that dwarf those of most department head professors - and often don't matter one bit to most of the floor population of students, doctors and researchers. Except that we need to pay up, every term!

[DarklingAlice]

Universities might have an argument for high costs. Textbook companies, though, have no excuse for their absurd markups, particularly with all the new gimmicks they keep inventing to eliminate the secondary book market.

Well, the argument is similar: without those gimmicks text book companies can't make it worth their while to print textbooks. It is a limited market after all and those companies aren't printing text books out of the goodness of their heart. However, I really question the need for textbooks in the first place. Neither my undergraduate nor the majority of my graduate program made use of them (and the three that my grad program used were probably well worth the ~$60 apiece I spent on them, two of them are currently on my desk in my lab). Frankly I see the majority of textbooks as a crutch that could almost always be replaced by original sources.

[Serephino]

I know Penn State recently raised tuition because our wonderful governor slashed the hell out of the education budget.  He decided schools don't need it.  They can pay teachers less, or have fewer of them.  And if that doesn't work, they can get cheaper equipment.  The gas drilling company needs the money so much more than schools...