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:
The New York Times reports today that aggressive lobbying by top student lenders like Sallie Mae may derail Obama’s plans for reforming the student loan industry.
Obama’s plan is to cut out federal subsidies to private lenders and loan the money directly to students instead, a plan that a Congressional Budget Office analysis says could save approximately $80 billion dollars over the next ten years. That money would then go to “expanding direct Pell Grants to students, establishing $10,000 tax credits for families with loans, and forgiving debts eventually for students who go into public service, administration officials say.”
The Associated Press is reporting that Obama will name CEO of the Chicago Public Schools Arne Duncan as his choice for Secretary of Education on Tuesday morning:
Duncan has run the country’s third-biggest school district for the past seven years. He has focused on improving struggling schools, closing those that fail. Obama highlighted this work by choosing for the announcement a turnaround story for Duncan — Dodge Renaissance Academy, a school Duncan closed and then reopened.
Duncan is a 1987 graduate of Harvard, magna cum laude, who played professional basketball in Australia for four years before returning to the United States to direct the Ariel Education Initiative, which focused on increasing educational opportunities for inner-city youth. Apparently, Duncan is popular with both the pro-No Child Left Behind faction and the teachers’ unions.
Well, I’m a little disappointed. I was hoping, in spite of indications to the contrary, that Obama would appoint someone whose major focus was reforming higher education. I did find this quote from Duncan on the Huffington Post, in which he mentions student loans:
“Oh, there are lots of challenges and, obviously, huge opportunities,” Duncan said. “I think there’s a huge amount of work that has to go on on the early childhood side. There’s a huge amount you’ve got to do in the K to 12 sector. And higher ed, particularly the student loans, presents some huge, huge challenges.”
Not exactly a call to arms, and he could easily be talking about access to loans during the credit crunch rather than more radical reforms decreasing the necessity of huge debt loads for college students, but I will hold out hope until I’m proven wrong. More as this one develops.
There is an excellent video clip on YouTube that shows Obama talking to a Wayne Community College student and her financial officer about her loan debt. Apparently, this is from this past June, but I didn’t come across it until today (thanks to Financial Aid Finder), and I thought it was worth posting.
At one point during the clip, the student (Marilyn Pace, who is studying to be a dental hygienest) breaks down in tears, and Obama comforts her. There isn’t really anything about substantive policy here, but I do think it bodes well for Obama that he has reached out to real people in real need and seems to understand that loans aren’t always the answer.
Amid speculation that Hillary Clinton and Bill Richardson are on Obama’s shortlist for Secretary of State, news about who will be the next Secretary of Education has taken a back seat. Still, a few updates:
First, Jim Hunt, former North Carolina governor declared last week that he is out of the running. From Hunt, who has worked on education issues across the board from early childhood to the college level:
“I just spent several days with the top Obama people,” Hunt said. “Many encouraged me to do it. I told them I would not go to Washington.”
Additionally, Pulitzer-Prize winning columnist Clarence Page showed skepticism about the Colin Powell speculation:
As for Gen. Colin Powell, who served as President Bush’s first secretary of state, Page said the speculation of Powell being appointed secretary of education was “wishful thinking,” even though he thinks Powell would do a great job.
As I’ve mentioned elsewhere, Presidents tend to pick experts in primary and/or secondary ed. for their Secretary of Education. However, the ever-rising cost of tuition combined with the current economic downturn is rapidly escalating into a crisis in college accessibility and affordability. Furthermore, as Steven Teles of the Reality-Based Community blog points out:
…[M]uch of what the Department of Education actually does concerns higher education. The federal government’s programs in higher education are incredibly complex, overlapping, contradictory, badly run, and politically embedded. Fixing them will require a Secretary with an intimate knowledge of their workings.
So far, the federal government has seemed more concerned with shoring up access to loans than reducing students’ need for them. Obama’s Secretary of Education should be someone willing to use his or her position as a bully pulpit to stop colleges from raising tuition and to press Congress to find better ways to fund education than simply giving students more loans that they can’t really afford. Read more…