InsideHigherEd.com is reporting today that a group called Occupy Student Debt will announce a new movement – the Pledge of Refusal to Pay Student Loans. I have discussed the Pledge previously here and here, but to recap, the basic idea is that once the Pledge has 1 million signatures, signees will stop paying their student loans.
The risk is great – not only will students face the ruined credit score that all loan defaulters face, but they will also face the possiblity of garnished wages, and they won’t be able to save themselves via bankruptcy. But some debtors think its worth it:
Pamela Brown, a Ph.D. student in Sociology at the New School, has taken on debt for her graduate degree, although she hopes to go into public service and take advantage of a program that forgives borrowers’ loans after 10 years. Her loans are currently deferred because she is still enrolled in college. But if the need arises, she is willing to default in protest, she said.
“Even if the majority says, ‘Hey, that’s not for me. I don’t want to take a risk like that,’ there are enough people, I think, out there who feel that their situation is dire enough to take that chance in an effort to change things,” said Brown, who is one of the organizers of Occupy Student Debt. “For me, it’s an issue of justice.”
But Occupy Student Debt is not just about helping those who sign the Pledge. The group’s other proposals include tuition-free colleges, interest-free private loans, public access to the financial books of private and for-profit institutions, and the writing-off of all current student loan debt.
Even if the Pledge doesn’t succeed, this is a huge triumph for student loan debtors. Finally, the issue of student loan debt is getting some serious media play and a serious movement dedicated to fixing the system. I can’t wait to see what will come of it. So, what do you think? Would you sign the Pledge?
Slate.com published an article by a couple of Yale law professors today proposing a unique solution to the problem of law school grads with enormous debt and dwindling job prospects: pay students to quit school. From the article:
Law schools might analogously offer to rebate half of a student’s first-year tuition if the student opts to quit school at the end of the first year. (If the student has taken out government loans, this rebate would first go to repay this debt.) A half-tuition rebate splits the loss of an aborted legal career between the school and the student. Each has skin in the game, so students will not go to law school lightly, and law schools will have better incentives not to admit students likely to fail.
It’s actually not a terrible idea. My only suggestion would be to offer another chance for a rebate after the second year as well. Since most students expect to work for free during their first-year summer, it’s typically not until the end of the second year that students start to get an idea of what their post-grad job prospects are going to look like. If a student has a great deal of difficulty securing a paid summer job during their second-year summer, then it is very likely that same student is going to have similar difficulty securing a well-paid post-grad position.
A couple of weeks ago, I wrote a post on NYU Professor Andrew Ross’s idea for a Pledge of Refusal to Pay Student Loans – the goal being for signers to stop paying once the petition got one million signatures. I’ve had an average number of hits on the post since then, until today, when I woke up and found that it was, by far, my most popular post today with a lot of people finding it because they were directly searching for the Pledge.
To my knowledge, the Pledge is still in the works, but I did a little research, and found another blog post over at A Post-Academic in NYC on the topic, written the same day as mine, that provides more information. Here are some interesting points from that post, but I’d encourage you to take a look at it yourself as well:
Here are a few things to know about the pledge:
- Signing a pledge is not legally binding. The goal is to raise the issue of education as a human right.
- People cannot default on their loans individually without serious consequences. But we have strength in numbers to change the conversation about debt.
- Many of us are on the hook for so many bazillions of dollars that we’re going to be paying until we’re dead anyway, so why not sign? It can only help us.
- We need to keep our eyes on the prize, which is federally-funded higher ed. We have to keep in mind that we are not asking for a lot. I read the other day that Bank of America has $53 trillion dollars (that’s “trillion” with a “T”) tied up in those nasty derivatives, which even the bank knows is a time bomb waiting to go off. So spending a few billion for college is like pocket change by comparison.
- The pledge would also include an option for people to sign who are not indebted but who want to support those who are. Anyone working in higher education today is implicated in the growing indebtedness of American students, for example. Parents might also want to sign.
The Republican candidates for president debated at Oakland University just north of Detroit a few days ago, and several students expressed concerns about the current student loan crisis. Apparently only two candidates had the chance to answer their concerns – Ron Paul, whose opinion I have already blogged about, and Newt Gingrich, who had this to say:
Calling the current student loan program an “absurdity,” Gingrich said he supports forcing more students to take part in work-study programs. It would be a “culture shock for the students of America to learn we actually expect them to go to class, study, get out quickly, charge as little as possible, and emerge debt free by doing the right things for four years,” he said.
Having held a few work study positions back when I was in college, I decided to check Newt’s math. Many work study positions, including those I held, are paid at the federal minimum wage, and they also have limitations on the number of hours a student can work. During the school year I was limited to 10 hrs per week so, for example, when I worked in my school’s foreign language lab in Spring of 1998, I made $5.15 per hour (minimum wage in that year – and for many years after) or a grand total of $51.50 per week before taxes. Tuition at my university at that time? Approximately $17000 per year.
But let’s pretend those pesky limits on hours hadn’t been there. To earn my tuition, in an imaginary utopia where there were no taxes, I would have had to work 3300 hours per year, or 63 hours per week – with no time off and while going to school full-time. And remember, this is if work study wasn’t taxed, which, of course, it is. Yes, Newt, that seems realistic. Read more…
Ok, I have no idea how I missed this before (blame starry-eyed optimism), but I just read that the new Obama plan doesn’t help those who took out their first student loan prior to 2008 or students who graduated in 2011 or earlier. I’m not even going to try and be eloquent here: WTF?!?!
If there’s one thing worse than shelling out mortgage-sized payments on student loans each month, it’s not shelling them out.
Here is the story of Casey Zimmerman Thompson, a resident of rural Maryland who borrowed a total of $7100 in student loans in the 1980s. Zimmerman Thompson claims that she has paid approximately $18000 towards the loans since then. Despite that, she still owes over $9800. That’s right, 25 years after she took out her original loans, she still owes more than she borrowed.
The reason? Due to various economic setbacks throughout her life, including a medical condition that ended a former career and unpaid child support from her abusive ex-husband, Zimmerman Thompson defaulted on her loans several times. And, as anyone who has ever defaulted on a student loan knows, coming back from such a setback can be nearly impossible. From the article: