Waiting for 'Superman,' the highly-regarded documentary about the failures of our school system, is heightening national concerns over our education system. At the same time, inadvertently, The Huffington Post launched an Education page, and President Barack Obama unleashed a plan that would essentially reward teachers for guiding students to better test scores. Don't get me started on the latter. In any event, all of this focus on the school system is making me wonder, at what point will the student loan/lending crisis be addressed and scrutinized?
If we can bail out banks, we can bail out former students who are knee deep in student loan debt. People like, well, me. I've been out of college since 1998, and each month, I've been paying off my loans...only, I'm not. I'm only paying the interest that's been accruing. I wish I was more sensible when I was 18, and realized that perhaps getting a college education wasn't worth paying for...for my entire life.
My point of view is echoed by Robert Applebaum, a former attorney who launched a student loan forgiveness group on Facebook 1 1/2 years ago and has since led the charge as part of a not-for-profit aiming for some kind of student loan reform. Rather than sulk in self-pity and drown in debt (I'll do that anyway), I spoke to Applebaum about the prognosis for student loan forgiveness. As I found out, he's forming a sub-rally to coincide with Jon Stewart's Rally to Restore Sanity on Oct. 30 to push the issue further. I vent, he acts. Here's the interview.
For those who don't know what you do or why, can you explain?
Just nine days after the inauguration of President Obama, with the economy teetering on the brink of complete collapse a mere four months after we had already shelled out $700 billion of taxpayer money under the TARP program, I was infuriated that my vote for a fundamental change to the way Washington does business was proving to be a farce -- that the foxes were still guarding the hen house and that the only solution these so-called experts could come up with was to throw an additional $787 billion at the very institutions that had caused the mess in the first place.
My initial purpose in writing the essay was to offer an alternative means of stimulating the economy -- a novel, bottom-up approach to rebuilding the economy that focused on giving a helping hand to educated, tax-paying, middle-class Americans who were struggling in the wake of the near-collapse of the entire economy. My point was that if the goal was truly to grow the economy, rather than maintaining the status quo, then I had a better, more efficient idea of how to accomplish it. The idea I put forth was to forgive the student loan debt of all Americans so that the extra money they'd have in their pockets each and every month thereafter could be used to spend on ailing sectors of the economy, reigniting consumer spending which normally accounts for 70% of our entire GDP.
To prove my point, fast forward to today and you'll note that, while Wall Street and the banks are doing just fine, the job market continues to be abysmal and consumer spending continues to lag significantly behind normal levels. Until that aspect of our economy is fixed, we will continue to spin our wheels in a stalled economy where the middle and working classes bear the greatest brunt of the economic downfall.
Have you been given any inkling that Washington is listening?
Early on, after what started out as a simple essay that I never expected anyone to read, had morphed into a true grassroots movement where people from all walks of life expressed their support for what I had proposed, I was optimistic that our new president would listen to the very people who helped get him elected. I knew it was too late for Congress and the president to scrap what they had already passed as a stimulus package in favor of what I had proposed, however, by that time, my proposal became less of an economic stimulus plan and more of an exposé of the abuses of the entire student lending industry. That wasn't what I had set out to do when I originally authored the proposal, but it's certainly the direction that the nearly 300,000 people who've since joined took it. Washington ignores a group of that size at its own peril.
Do you really think student loan forgiveness is a reality?
Most people are unaware of the inequities that student loan borrowers face as compared with those who carry any other type of debt. For reasons that defy common sense and decency, student loans have been stripped of nearly all basic consumer protections that almost every other type of debt enjoys -- including gambling debt. As a result, a very necessary check on the power of the lenders over student loan borrowers has been curiously removed, paving the way for unconscionable abuses that plague the entire industry.
As to whether I believe that full, across-the-board student loan forgiveness is likely to become a reality anytime soon -- the answer, unfortunately, is an obvious "no." I'm not so naive as to believe that our leaders in Washington care more about the plight of the middle class than they do about their corporate sponsors, even though I continue to believe that it would have worked to stimulate economic growth as I had predicted. That said, I believed I still had an important role to play in terms of finally bringing about common sense reforms to the student lending industry. By advocating for something so radical and unlikely, attention could be properly focused on what was actually achievable, beginning with restoring basic consumer protections to student loans.
I understand you're forming a rally on the same day as Jon Stewart...explain.
When Stewart announced a few weeks ago that he would be holding a Rally to Restore Sanity on the National Mall, it seemed to me that the goals of the student loan reform movement dovetailed nicely with that message since what we're really hoping to achieve is the restoration of a modicum of sanity to the student lending industry. Along with StudentLoanJustice.org, we're encouraging our respective supporters to use this unexpected opportunity to be seen and heard on an issue that affects millions of Americans who did nothing but seek to better their lives through higher education, only to find themselves worse off than if they had never gone to college at all.
The core message of the Rally to Restore Sanity is one that resonates with the vast majority of our supporters -- that the middle class is not a special interest, that the well-intentioned but short-sighted policies of the last 30 years have resulted in the greatest gap between rich and poor in our nation's history and that students who borrowed money to pay for school did so to get ahead, not to be saddled with debt for the rest of their lives from which there is almost no escape.
If loan forgiveness isn't a reality, what can be? Perhaps a similar deal can be established like loan forgiveness in exchange for taking classes or working in some capacity?
The good news is that the media is finally beginning to focus on this extremely important issue, particularly in light of the recent news that total student loan debt has surpassed total credit card debt in America. As such, the public is beginning to realize that we're on the verge of another credit bubble that's just waiting to pop. As we've seen from the sub-prime mortgage mess, when the bubble bursts, everybody feels it. Therefore, if full, across-the-board student loan forgiveness is a non-starter, then certainly things like the restoration of bankruptcy protections to student loans, both federal and private, must be on the table. In addition to restoring basic consumer protections, Congress or the courts are going to have to take a long, hard look at the unintended consequences of burdening an entire generation of students with so much debt, particularly given today's dismal job prospects.
We need to build upon well-intentioned ideas like Income Based Repayment and Public Service Loan Forgiveness that have fallen far short of their intended goals by excluding private loans from participation in such programs. We need to eliminate the abhorrent practice of capitalized interest that keeps student loan borrowers indentured to their educational debts for life, and we need to ban the practice of securitizing, bundling and selling student loan debt as if student loan borrowers are commodities to be bought and sold on the open market. The entire point of obtaining a college degree or beyond is to be able to find a well-paying job and enjoy a better standard of living after you graduate. If we're routinely failing to achieve that modest goal, then we need to change how we pay for higher education in America. There is no shortage of good ideas about how to ease the burdens on borrowers and to make college more affordable for everybody.
The biggest problem, as I see it, is that everyone but the students has a seat at the policy-making table and, as a result, the students are, predictably, the ones left holding the bag. We cannot continue to shift all of the burdens of society onto those who can least afford to shoulder them and the only way we're ever going to be able to alter that trend is to give student loan borrowers a voice as well.
I encourage you all to respond below...pro or con.