Student loan debt has become a defining issue of the Occupy Wall Street movement. The nation's cumulative student loan debt surpassed our cumulative credit card debt in 2010, and is heading north of $1 trillion; currently two-thirds of graduates take out loans, an average of $27,000 a head.
The growth of this particular kind of debt makes young people furious. It's a betrayal of the American social contract that says if you work hard and invest in yourself through education, you'll be able to build a better life. In my first book, Generation Debt, I explored how we got here and told stories about the emotional and cultural impacts of student loans; lately, with DIY U and the free Edupunks' Guide, I've been focusing more on the underlying issue of soaring college tuition and innovations that might be able to cut the cost spiral -- not to mention the growing world of free and open education.
These innovations are great, but they don't help the graduates who are already saddled with so much debt. So here are some proposals to offer student borrowers relief that #OccupyWallSt could take up, ranked from the most radical to the more feasible.
1) Forgive all student loan debt. This idea has a Facebook page, a petition with 300,000 signatures, and it's even been introduced in Congress. There are real fairness issues here because college graduates, even those with student loans are relatively more privileged with higher earning potential than non-college graduates. Still, if included as part of a radical call for bailing out the American people across the board -- mortgages and credit card debt included -- it has emotional resonance and could actually jumpstart the economy to boot.
1)a. You could help out those who most need it by canceling the student loan debt of non-graduates, defaulters, people who meet certain income requirements, or people who attended for-profits or other colleges with unacceptably low graduation rates (half of all student loan defaulters attend for-profits). See also: bankruptcy protection.
1)b. The radical direct action variation of this is for people to stage a debt revolt and simply stop paying their student loans. Advantage: Unlike with a mortgage or auto loan, they can't repossess your brain. Disadvantage: You will never have credit again, and people in your life who have worked hard to pay off their own loans might see you as a deadbeat.
2)Rein in private student loans.
Private student loans, those offered by banks like Citibank and Wells Fargo, are growing three times faster than federal student loans. They are much more expensive, with higher fees and interest rates ranging up to 15%, varying by your creditworthiness.
Private student loans could be abolished outright, or they could be required to offer the same interest rates and repayment options as federal student loans, which would severely restrict their availability. If we don't do something to tame the private student loan beast, it doesn't much matter what happens with federal student loans -- the volume of private loans is set to outpace the volume of public loans by 2025, according to Mark Kantrowitz of finaid.org.
3) Reinstate bankruptcy for student loans.
Student loans are unlike any other kind of debt in that they are almost impossible to discharge in bankruptcy, barring permanent disability. For federal loans, the government can garnish your wages, seize your tax refund, your federal disaster relief payments, and even your Social Security. Even private, unsubsidized student loans, the ones with 10 and 15% interest rates, have been nondischargeable in bankruptcy since 2005.
Alan Collinge of Student Loan Justice has been organizing on this issue for several years. Bankruptcy protection has failed three times in Congress; there are currently bills in the House (sponsored by Rep. Steve Cohen of TN) and Senate (sponsored by Sen. Durbin)
This is an issue of basic fairness. There's no reason to treat student loan debt so differently from other types of debt, other than as a gift to the banks.
4) Expand Income-Based Repayment and Public Service Loan Forgiveness.
Depending on how much you make and how much you owe, you have the right to lower your monthly payments on FFELP and direct student loans through Income-Based Repayment. President Obama just announced that he's accelerating access to the plan so that graduates can pay just 10% of their income, with all loans forgiven after 20 years. Meanwhile, people who work in the military, for the government, for nonprofits, police, firefighters, teachers, social workers, have the right to have loans completely forgiven after 10 years of repayments.
One issue with these programs is simply that they're undersubscribed. Another is that you may end up paying more by stretching out the payments, and you're harnessed to that payment for 20 years. But they're a hell of a lot better than default, and in the absence of bankruptcy protection, they're the least bad option for people currently facing unsupportable student loan debt.
Follow Anya Kamenetz on Twitter: www.twitter.com/Anya1anya
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1) Tax breaks for people who already paid. They shouldn't be abandoned.
2) Investing in public higher education for all. Anyone who wants to go can.
If there are concerns about government revenue, then the 1% should be taxed more since they don't pay their share at all. Sorry naysayers, but when you look at the total social picture of an educated society and improved demand, the math favors this solution and it's the right thing to do.
The so-called "moral hazard" issue is bogus, especially after trillions of dollars of bailouts for an oligarchy of rich bankers. It's not about bad student "consumers"; it's about a predatory system between the banks and universities, who are soaking up public money. The money goes straight into universities and banks, it funds risk-free bonds, it's an undemocratic boondoggle.
What I am proposing is that graduating high seniors, along with award of their diploma, be gifted a portion of the bill for their education. The figure I am proposing is just 10% of the cost of their education, $30,000. This would be given them as a debt to the state in which they reside, who would use the monies to fund tax cuts. If the student refuses to sign for the debt, then they won't receive their high school diploma, and their high school credits will be forefeited.
Doing this will help our youth learn that there is no free lunch - even the free lunches they may have received while in school, someone had to pay for. Plus, educational debt is good debt. Studies show that high school graduates make more money over their lifetime than dropouts.
Since it it so important that our nation's youth learn responsibility, as I am proposing, I believe the debt for their youth-time education should be non-dis-chargeable in bankruptcy, just like post-secondary educational debt. This will ensure that our youth do not learn to become freeloaders at such a pivotal stage in their development, leading to a lifetime of avoidable pains.
Everyone will be richer and society will be fairer.
If bankers are removed as intermediaries, costs will come down in education,
health care, and housing. Banks do not add to production these days, they just manipulate money to make paper profits. Their gambling is extremely costly and constantly requires public bailouts. Why should the public build private wealth for the old and rich to deprive the young and poor?
Currently, the government invests in primary and secondary education. You're able to read, write, and count because of this investment. If tertiary (higher) education is fully funded then the investment will yield returns both economic and non-economic. An educated people helps an entire economy, results in an innovative workforce, and makes for a good society.
As for the top 1%, they pays less and less tax each decade. Let them pay more rather than benefit from rentier gains and government subsidies.
President Yudof and Chancellor Birgeneau ($450,000 salary) have dismissed many much needed cost-cutting options. They did not consider freezing vacant faculty positions, increasing class size, requiring faculty to teach more classes, doubling the time between sabbaticals, cutting and freezing pay and benefits for all chancellors and reforming the pension system.
They said such faculty reforms “would not be healthy for University of California”. Exodus of faculty and administrators? Who can afford them and where would they go?
We agree it is far from the ideal situation, but it is in the best interests of the university system and the state to hold the line on cost increases. UC cannot expect to do business as usual: raising tuition; granting pay raises and huge bonuses during a weak economy that has sapped state revenues and individual Californians’ income.
There is no question the necessary realignments with economic reality are painful. Regent Chairwoman Lansing can bridge the public trust gap with reassurances that salaries and costs reflect California’s economic reality. The sky above UC will not fall
Opinions? Email the UC Board of Regents marsha.kelman@ucop.edu
And for the people saying "go to a more affordable college,"...really? Tell me when you find one. State schools have outrageous tuition rates too.
Many 4-year universities don't take transfer credits from community colleges, or the classes there won't count towards their major. Many people are limited to what colleges offer their area of interest. For many living at "home" isn't an option, and therefore you need to factor living expenses in, which requires loans for many. Pacifists, and many others, are not going to join ROTC to get the education they were promised from day 1 would better their lives.
For many, loans are unavailable, and private loan companies exploit that. Also, without student loans, there would be very few doctors, who rely on them for med school expenses, lawyers (who you may hate until you need one), teachers, etc. If education is an investment in the future, it shouldn't come at such a cost.
And we're stuck with the huge bills.
Many people that posted here are poorly informed. This is how it works: When a student is in college, they are only allowed to borrow a certain amount of Stafford (govt) Loans. They often have no choice but to borrow Private (commercial) student loans to pay their tuition. That is where the nightmare begins.
Private (commercial) lenders have been ripping off students for years. They were lending at rates as high as 8 to 12%. THESE ARE PRIVATE LOANS- NOT STAFFORD. Private lenders are corporate GIANTS. These loans have now ballooned. Due to the current job prospects, many of us are not able to pay off these loans- regardless of what we majored in.
I know someone that committed suicide due to his private student loan debt- he was 45 years old.
To all the people that disagree- do you understand that everything else you can buy is bankruptable? A credit card, a fancy vacation, etc.... so, forcing people to pay for something that they can no longer afford is cruel. It is a human rights issue.
Student loans should be dischargeable.
And forgiving student loans would stimulate the economy.
We should not have to pay for students (and their parents) bad decisions to go to schools they cannot afford. One girl wanted us to pay for her $60K in loans to get a social work degree. A social work degree!!! Who thinks its a good idea to run up $60K in debt to get a job that pays $30K when you can find one? Not to mention any cash her parents put out.
A more educated society is good for all. The constitution demands government promote AND provide for the general welfare.
Please read the Constitution before posting nonsense in the future.
We have a bunch of kids that assume they should be able to go to whatever college they want even if they really cannot afford it and now you are asking those of us that were responsible and either worked and paid for school or went to state school to pay for these people. No way!
If you cannot afford to pay $30K per year for school then you have to go to a cheaper school. There are state options that are cheaper than private and in some states they are very cheap. Maybe you can't go out of state because you can't afford room and board and have to live at home or you have to go to community college for the first two years to get general classes done more cheaply. You have to do whatever is needed to afford it, not ask us to pay for your 4 year college escapade.
If you can't afford it then don't buy it.