New Obama Plan Doesn’t Help Past Borrowers

November 9, 2011 Leave a comment

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?!?!

Categories: News, Policy Tags: ,

The Opportunity Costs of Higher Education

November 9, 2011 Leave a comment

NPR did an excellent story a few weeks ago inviting callers to share stories about what they have had to give up because of their student loans.  People spoke about taking jobs they hated, not pursuing lower-paying public service careers, and even not having children.  I’d love to hear more stories from my readers so please share in the comment section.  In the meantime, I’ll start:

1. A bedroom.  Since graduating with my MA, the only times I have ever had a bedroom have been when I lived with someone else.  I currently live alone in a studio in a shady part of town where my dog must be walked by sundown or not at all.

2. A bed.  In fact, I’m so concerned with finances at the moment that I opted to buy a half-broken futon instead of a bed when I moved into my new place because it was cheaper.  Nothing like sleeping on a lumpy “couch,” even while holding a professional position, to make one think, as per Gob from Arrested Development, “I’ve made a huge mistake.” Read more…

The Default Trap

November 8, 2011 Leave a comment

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:

“Short of a lottery win, for student loan borrowers like Thompson, there is literally no way out. The government can garnish the income tax refunds and eventually the Social Security checks of defaulters. Changes to bankruptcy law in 1984 and 2005 mean borrowers can’t charge off their obligations the way they can escape mortgage, credit card and even gambling debt when they file — unless they can prove “undue hardship.” But just 29 of the 72,000 student loan debtors in bankruptcy in 2008 were able to do so, according to Mark Kantrowitz, founder of the student aid website Finaid.org.”
Read more…

Student Loan Bubble?

November 6, 2011 Leave a comment

Here’s an interesting piece in the Huffington Post about whether student loans are really a bubble about to burst akin to the mortgage crisis.  I found this part particularly interesting:

First, one thing that’s important about the possible student loan bubble is that it poses much less of a threat than housing debt did to drag down the entire economy. Yes, many individual borrowers may find themselves in trouble. But total student loans probably amount to less than 10 percent of outstanding mortgages. Every single student loan could default and it still probably wouldn’t match total mortgage defaults during the recent downturn. More importantly, unlike mortgages, Wall Street isn’t knee-deep in securities comprised of bundled student loans, as it was with mortgages. (It also helps that it’s also harder to speculate in student loans; an investor can flip a house, but not a brain.)

If huge numbers of defaults on student loans would not significantly harm the economy, then, presumably, generous loan forgiveness would not either.  Read more…

If Corporations are People…

November 5, 2011 Leave a comment

If corporations are people, then we need to ask what kind of people they are and whether we, as a society, want to continue to incentivize their more nefarious aspects. 

So what kind of people are private student loan lenders?  Deeply disturbed people.  Psychopaths.  Mobsters who want to corner the market so that you have no choice but to borrow money from them and then come after you with a metaphorical baseball bat when you can’t pay your debt. 

These lenders lack empathy and have no conscience.  They delight in your failure because when you default on your student loans, they can add late fees and compound your interest and ensure that by the time you can pay, you will owe thousands – sometimes tens of thousands – of dollars more than you originally borrowed. (Note – this goes for government loans too).

And those in the government who continue to support them?  Those are the corrupt policemen who take kickbacks in exchange for their support. 

See, the problem with calling corporations people is that they can’t be punished like people.  No one is going to put Sallie Mae or Citibank in jail.  No one is going to give them a psychological evaluation and deem them unfit for human society.  No one is going to pump them full of psychiatric drugs so that they can function at a normal level and stop hurting others.

And when it’s not just a few corrupt people but a large swath of your government that is in collusion with them, how do you fight back?  I have some ideas that I will post about soon, but, in the meantime – what are your ideas?

A Few Student Loan Stories

November 5, 2011 Leave a comment

I found this interesting article about Occupy Albany that, among other things, covers a few protestors who are concerned about student loans.  From the article:

Jasmine Shea spoke about the frustration of having studied and worked hard only to be left struggling to survive.

 “I’m a worker. I’m 26. I went to school. I’m still paying off my student loans. I got a job in radio broadcasting. That’s what my career was. Due to the economy, the station that I was at went under and they changed their format. So I had to find a minimum wage job working at Dunkin Donuts. I finally found a part-time job working as a waitress to try to pay off my medical bills. I’m here because I make so little that if they keep on taxing me more I won’t be able to survive. I think it’s time that the rich and the corporations had to start paying their fair share of taxes. Because if I’m living off ramen noodles and dollar menus what else am I going to live off of if you’re going to take more money from me? It’s hard struggling.”

Paul Ryan – Stripper?

November 3, 2011 Leave a comment

This is a couple of weeks old, but I just happened to see it today.  Apparently, Paul Ryan (R-WI), thinks that instead of receiving Pell Grants, students should rely on even more student loans and then work three jobs to pay them back.  Here is Ryan’s exchange with student Matthew Lowe at a town hall meeting in Muskego, WI:

LOWE: I come from a very middle-class family and under President Obama, I get $5,500 per year to pay for school, which doesn’t come close to covering all of the funding, but it helps ease the burden. Under your plan, you cut it by 15 percent. I was just curious why you would cut a grant that goes directly to the middle- and lower-class people that need it the most.

RYAN: Cause Pell Grants have become unsustainable. It’s all borrowed money…Look, I worked three jobs to pay off my student loans after college. I didn’t get grants, I got loans, and we need to have a system of viable student loans to be able to do this. Read more…