Biden Promises to Help Fix the Student Loan Crisis
There are those who always raise the issue of “I paid for mine, you pay for yours. I know of no other debt created by borrowing money where the penalty is a life time of servitude and the means of retirement in Social Security is also attached too.
Principal remains untouched and whatever money paid goes to interest atop of interest and penalties. By the time salary catches up and if it does, the interest and penalties have grown.
Allen Collinge of Student Loan Justice is finally getting national Coverage on TV.
Biden expected to tackle student loan debt crisis, what the impact would be, “Rebound,” January 25, 2020
President Joe Biden campaigned on a promise to help solve the student loan debt crisis, and many are expecting him to tackle that soon. On the campaign trail, he spoke about favoring some student loan debt forgiveness but was hesitant on the idea of wiping out the debt completely.
Student loan debt forgiveness, in any form, is very controversial. While some believe it is necessary for millions of Americans who are unable to pay these loans back. Others worry it will raise the national debt to help those who are unable to repay their loans.
Neal McCluskey, with the Cato Institute
“You have to remember, people who earning a bachelor’s degree or advanced degree, greatly on average, increase their lifetime earnings. Starting when you get a bachelor’s degree, about $1 million more than someone who gets a high school diploma.”
McCluskey says student loan forgiveness sounds good to those with student loans, but he says it becomes “very problematic” for everyone else.
While many who graduate with an advanced degree do tend to make more on average, that is not always the case.
“I went to college because I was unhappy with my life. I wasn’t finding good jobs because I didn’t have an education, so everyone your whole life was saying, ‘If you want a good future, you go to college,” said Chad Albright.
In 2005, Albright enrolled at Millersville University of Pennsylvania, studying communications and public relations.
“I worked full-time went to school full-time,” Albright added.
In order to fund his education, he had to take out tens of thousands of dollars in student loans.
“As soon as I graduate comes the great recession and no jobs available,” explained Albright.
He struggled to find work and pay back his student loans for four years.
“I was frustrated not being able to find a job. I even tried to join the military”
However, that didn’t pan out either. Overwhelmed with a growing student loan debt due to interest and feeling hopeless about the possibility of ever repaying the debt, he made a decision to leave the U.S. and his debt behind.
In 2011, Albright moved abroad.
Albright: “The only thing college did is ruin my credit rating and forced me to leave my country, given how hard it is to repair your credit these days. I haven’t seen my mother in over three years.”
Alan Collinge Founder of Student Loan Justice
“People are committing suicide, fleeing the country. Young people and middle-aged people are unable to buy homes,” said Alan Collinge, Student Loan Justice.
Alan Collinge has fought for more than a decade for loan forgiveness and an end to predatory student loan practices.
“Student loans, unlike every other type of loan, has been uniquely stripped of fundamental consumer protections. There are no bankruptcy protection, for all intents and purposes, for student loans and no statute of limitations.“
“Fair debt collection laws, truth in lending laws, these have all been vacated from student loans.”
This the first time in his fight for student loan debt forgiveness and protections that he is cautiously optimistic. A new administration in the White House and a majority Democratic majority in the Senate and House could lead to student loan forgiveness and better protections
“Bankruptcy protections absolutely must be returned for loans that cannot be canceled. In fact, bankruptcy is probably the more important and fundamental right that has to be restored,” said Collinge.
At this point, it will take either full loan forgiveness or bankruptcy protection for Albright to come home. On principle, he refuses to pay back debt never leading to a job and being allowed to rack it up with little protection.
“I see the U.S. as tyranny. They have me and 40 million other people in a debtor’s prison,” said Albright.
Biden must fix what Biden fucked up. He was a sponsor of that bill that made student loans untouchable by bankruptcy.
Yes, I also know. Thanks.
Forgiving student loans does nothing to address the problem. Given the unfairness of it to other people with debts, to people with medical debts that we’re unavoidable (short of death or incapacitation) and of course to all those people who either paid for their education without loans or paid back their loans I don’t think it’s a great idea.
First though – fix the problem. Whether it’s bankruptcy changes or changed to how higher education is funded or whatever- that has to be the first step.
Medical, automotive, household, credit card, etc. debt is dischargeable through bankruptcy. I was not one who could lay out 4 years of tuition at $28,000/year or more for each of my three. Together, we paid what was left over after grants and scholarships. So you comment on being unfair to people like myself falls flat. A student loan is no different than buying a car with a thousand down and a $28,000 loan to be paid in five years except one can physically see and touch what they are getting and the knowledge it will work after the loan is paid with the proper maintenance.
With a student loan you are going on the verbal promise that the education you receive will result in a better job at a higher salary than a high school or a grade school education as sold to a young person by society and the schools needing the income to pay for the physical infrastructure , instructors, profs, and maintenance. Then if they sneak off like Corinthian Colleges, Everest College, Heald College, WyoTech, ITT Tech, Westwood College, Kaplan University, Anthem College, Brown Mackie College, Brightwood College, Argosy University, The Art Institutes, College of New Rochelle, Concordia University, Green Mountain College, Marygrove College, etc, the student is left holding the bag if you withdrew for a semester to go back to work so you can afford to pay for more education, changed your major, or never received a diploma and you have completed the education.
There are many more for profit and nonprofit schools that have gone bankrupt. There is a lemon law covering automobiles but nothing today that will cover you for a flawed education that did not lead to a job you were trained for by the school. So why shouldn’t. Obama had put such a law in place which fairly covered both for profit and nonprofit schools. DeVos trashed the bill stating if penalized for profit schools which is BS. Alan states the problem rather well:
Since 1993, Joe Biden has helped created this predication for thousand of former student of which 17% are older than 50 who no longer having earning potential and another 18% are between 40 and 49 years of age.Why would you want to hamstring the earning potential of tens of thousands of people? These are usurious contracts which apply interest on top of interest, penalties, etc.
Restore student loan protections .
[The rat race has progressed to the point that now people do not even need a job to participate. Just preparing oneself for employment is enough to join the rats. They don’t call it rat week for nothing.]
Credentialism and educational inflation are any of a number of related processes involving increased demands for formal educational qualifications, and the devaluation of these qualifications. In Western society, there has been increasing reliance on formal qualifications or certification for jobs. This process has, in turn, led to credential inflation (also known as credential creep, academic inflation or degree inflation), the process of inflation of the minimum credentials required for a given job and the simultaneous devaluation of the value of diplomas and degrees. These trends are also associated with grade inflation, a tendency to award progressively higher academic grades for work that would have received lower grades in the past. …
You do not think the Chinese and Asians are instilling a great amount of pressure on their students to get good grades while they are in US schools? That grade is even more important for them.
Maybe I am too old. I did get a technically oriented Masters Degree out of a Jesuit school. I did tell one of the Brothers I needed to be home due to my wife’s miscarriage. I told him I was leaving and he relented and let me take the test early. You could get a C there and still pass. I can tell you about OWU and Lake Forest also if you like.
I was a pretty happy dad as each of my three graduated with descent grades and my daughter was the first to get an advanced degree in teaching while she instruct ER nurses.
The grade acceleration is an old meme which I never experienced. not really topical Ron.
Not having been raised in a family where people attended college in preparation for work, then I decided to consider college only for what usefulness that I found it to have for me. A niece, daughter of the younger of my two half-brothers from my mom’s first marriage, did get a degree and briefly worked for the state department, which she left in moral disgust, to the become an FBI agent. There was also a second cousin, grandson of one of my dad’s nineteen siblings, that got a degree and became a civil engineer. The remainder of my extended family on both sides were lucky just to graduate high school.
So, I compressed four years of college bar drinking into just a single semester and when money got short I looked for job.
Allowing student loans to be discharged through bankruptcy proceedings is a first step but fixing the way higher education is financed and accomplished is equally important. I attended a state college in California eons ago when books cost more than the tuition. Today it’s more accurate to describe these institutions as “State-assisted” with that assistance declining annually. My elder daughter attended a University of California and just five years later my younger daughter paid MORE to attended a so called “more affordable” institution in the California State College system. California State institutions have become incredibly larded with layer upon layer upon layer of bureaucrats that didn’t exist when I attended college – that may be a California-centric problem – but the extravagant costs of “higher-learning” certainly aren’t.
The student loan crisis is an easy fix. Have the Fed buy all of those loans up; lower the interest rate to zero and extend all of the terms to 100 years.
Then the hard work is to make college affordable. Do that.
If one’s parents pay for their education then that is elitism rather than debt peonage. We should have made more higher education available by public participation in eliminating tuition or other such means. Debt right-offs are about the least efficient means of financing higher education. If it is so necessary to the public good then the public should pay for it. I have plenty problems with the private FIRE sector, but matching witlessness with bankers is not the way I would handle things. It is the bankers’ own field of expertise. One cannot win that way.
Besides, credentialism is ridiculous. It wastes time from lives that will always turn out to be shorter than we want AND it wastes educational resources and lowers standards and its market saturation has radically increased the cost of college. Hell, the bankers are the only ones that are really benefiting from it. Since credentialism leads to grade inflation, then that is not off topic either. We pay more and get less. The amount of debt is directly a result of the institutional economic rents imposed to satisfy an irrational demand. Every part of any system is connected in some manner to every other part. That is what makes it a system.
BTW, the three girls that I raised each got a degree appropriate to their careers. The office accountant got an associates degree in accounting. The nurse first got her two year degree and LPN certificate and then went back after having two kids to get a four year degree and her RN. The youngest rode straight through six years to get her MA teachers degree and certificate to teach special ed.
I worked in a field where most people had master degrees that were only tangential to our field. There was nothing more than that available then and now likely will never be. Large systems computer performance evaluation does not generalize well enough to make it an academic curriculum. Operation research is handy, but for CPE purposes largely obsoleted by SAS language functions and modeling software packages. Some stuff just does not fit well in a box, which is exactly what made it interesting to me.
My understanding is that Chinese kids go to American universities to party. They can skate through school because they come to undergraduate studies already knowing more than American kids will know after they graduate. We may not have the best value in higher ed, but our campus bars and parties are all the rave.
Who has $28,000 to lay out? I didn’t. You knew different Chinese than I did. I worked with them the Thais, Malaysians, Filipinos, Koreans, etc. for years. I will stick to what I said.
“…Then the hard work is to make college affordable. Do that.”
[I know that you don’t believe in Sky-Daddy, so then may Gautama Buddha bless you, Brother. BTW, did you know that Buddha did not believe in God either?]
…What motivates the vast majority of Chinese students to study in the United States? My book focuses on this new wave of undergraduates from mainland China in U.S. higher education and draws from 507 online surveys with students. I also conducted 108 interviews with students in both Chinese high schools and U.S. colleges. I find that more than 90 percent of these students in the United States are privately funded, relying on their own families for support.
These interviews suggest that students are motivated to study abroad because of disappointment with the Chinese education system, which they assert “stifles creativity” and “entails hellish hours of studying.” The ambition to get into a good college without submitting to extreme studying brings them to the United States.
Studying abroad offers liberation from China’s test-oriented education system. Ironically, many of their parents succeeded within this system and obtained professional jobs and middle-class status. Yet parents now want to provide alternatives for their children — and educational opportunities that afford a more well-rounded experience unbridled by test scores than what they themselves experienced…
Looks like I am the one that has gotten too old, or at least old enough to need to update my priors at times. After extensive searching and reading then I have found that partying on US campuses is no longer the big draw for foreign students that it was over twenty years ago. There are a lot of reasons they come here now, curriculum choice, study requirements, and sociopolitical environment being most important. One thing not said except between the lines is that getting a US university education is the best bet at being able to get a great US corporate job afterwards. Also, at first I was remembering what I had read about Japanese students rather than Chinese. I have not known either myself, but I have known a few Koreans and Vietnamese here, but only one Vietnamese that went to college to study accounting at VCU.
To know the enemy is to own them. My Koreans would openly lie to me. The Chinese not so much. The Japanese were arrogant. The Thai withdrawn and grateful. Filipinos are like Americans.
I agree that the “I paid mine, they should have to pay their’s” mentality is big issue. But that issue shouldn’t affect drastically changing the terms. Forcing changes in the terms that make the loan more like a normal loan. There is no reason why these loans should be any more onerous than a mortgage. If those changes were made it would eliminate this issue of “I paid mine”. Yet those who truly couldn’t get out from under them could walk away with an impact on their credit rating that receded over time.
There are many who have been scammed in either for profit or nonprofit educational institutions pre-Obama and even today. There are no safeguards for 18 year-olds or even parents signing off on loans to get their child or the child themselves into an institution. Once you sign, you are owned by the government and there is no-way-out unless you die or become disabled. It is akin to debtors prison. Kenyon offered my soccer playing son a subsidized Stafford loan plus other loans to go to Kenyon (coach wanted him). We thanked them for their time and went over to OWU (also highly rated for an education) and he immediately scored grants, a scholarship, subsidized loans, etc. He was responsible for far less. The moral, go where they want you and offer you funding. If they do not, thank them and leave. But that was me and not everyone is me.
The fact of the matter is for every school to exist, they have to sell the product. How they sell and what the consequences are does matter. People are entrapped by the lure and they are hoping to escape poverty, low wages, sh*tty jobs, etc. and they are trying to improve their stock in life. They are ready-made customers to be taken advantage of by educational institutes and they are taken advantage of by these institutes. Obama was the first to say, a degree/education must lead to a job whether nonprofit or for-profit. Vos didn’t understand it and called it discrimination against for-profit schools. It was not.
There is a surplus of labor today and people are not working or making less even when Covid did not exist. The cost of education is ridiculous.
BTW, the only one that I ever really known and therefore the only one that I have ever owned is myself. So, then I must be my own worst enemy :<)