Tag: student loan debt
Right-Wing Media Slam Student Loan Assistance Program

Right-Wing Media Slam Student Loan Assistance Program

Reprinted with permission from Media Matters. 

The Wall Street Journal’s editorial board joined a chorus of right-wing outlets in blasting the federal government’s income-based student loan repayment program, calling it a costly “con” meant to “buy millennial votes.” Yet right-wing media are ignoring the benefits of a program that could relieve millions of student borrowers of a portion of their remaining debt and that is still generating a profit.

Right-wing media lambasted the Department of Education and student borrowers after the Journal reported on November 30 the latest findings from the Government Accountability Office (GAO), which found that the government is on track to forgive $108 billion of $352 billion in student loans as part of federal income-driven repayment plans. The Journal’s editorial board blasted the government on December 1, calling the latest findings proof that the Department of Education’s loan program is a “con” designed to “buy millennial votes.” (The editorial column was the Journal’s second since November 1 lamenting the federal program, which has led to millions of students earning student loan forgiveness.) Earlier that day, Fox News host Jon Scott questioned if the program was a “bailout” for student borrowers. Fox Business host Stuart Varney also called the program “a bailout” on the November 30 edition of Varney & Co., while his guest Steve Costes added that the program is “a shame.”

Federal student loan borrowers have multiple repayment plan options, including income-based plans that require borrowers to pay back loans based on a percentage of their income for a certain number of years, after which the remainder is eligible to be forgiven. The GAO’s findings were for the hypothetical cost in loan principal forgiveness for the 5.3 million borrowers who signed up for income-based repayment plans for loans issued over a 22-year period, between 1995 to 2017. These borrowers will likely see an average of $21 forgiven for every $100 in loans received. Despite right-wing media complaining about the cost of borrower relief for those on income-based payment plans, the GAO found that the Department of Education still nets a profit on student loans.

The reason the government still makes a profit even after loan forgiveness is because many federal student loans have an interest rate at 6.8 percent — a figure that is much higher than inflation or the 1 percent interest rate banks receive from the Federal Reserve. The 6.8 percent interest rate is so high that the GAO’s hypothetical borrower would pay almost double the original principal of their loan if the income-based plan had no cutoff date for forgiveness:

Student loan debt is a leading concern among young people, with The Atlantic finding nearly 30 percent of Americans aged 18 to 29 “cited paying off student loans as their biggest financial challenge.” According to Fortune, “there is little doubt that many Millennials are struggling financially” after a survey by PwC found that 79 percent of the 42 percent of millennials that have student loans struggle to pay those loans. Evidence shows student debt can impact personal wealth, delay homeownership affect personal decisions to marry or start a family, and that it has “cripple[d] retail sales growth.” The financial stress of student loans has a “devastating toll” on borrowers’ mental health, according to Complex, which cited findings by researchers that “student loans were associated with poorer psychological functioning.”

While right-wing media push many myths about student debt, student concerns are valid; according to a November 21 op-ed published by Investopedia, Americans with student loan debt have “a challenging road ahead of them in the present and the future” due to workers being unable to save for retirement. The op-ed, which was authored by a financial adviser, even questioned whether people with student loans “will be able to retire” at all. The increasing debt burden can even hinder career advancement as graduates can be forced to take jobs that may have no chance of wage growth or career development so they can make debt payments on time.

Conservative media have labeled higher education as a “privilege” and suggested students ought to choose fictional cheaper colleges. Some outlets have even defended schools that take advantage of students and leave them with significant debt. But research shows college matters now more than ever, and the cost to attend is rising across the board. The student debt crisis is especially damaging for poor students and students of color, who more frequently attend cheaper open-access and community colleges and are still forced to borrow in higher numbers to pay for their education.

Blaming students for the student loan debt crisis ignores the facts and distracts from finding real solutions to America’s skyrocketing student debt burden.

Older Parents Face College-Debt Crunch

Older Parents Face College-Debt Crunch

By George Erb, The Seattle Times (TNS)

SEATTLE — Higher education is a priority for this tight-knit Maple Valley family.

Walter Lowe and his wife, Annerose Lowe, are determined to help their five children earn college degrees and start their careers without taking on mounds of student debt.

But the Lowes are also older parents in their 50s and 60s. They have a six-figure mortgage, limited savings and a break-even cash flow that makes additional savings difficult.

How could they help their children pay for college without wrecking their retirements?

After examining the family’s values and finances, a volunteer financial planner steered the Lowes toward alternatives for paying for college and urged them to leave their retirement savings alone.

“We have to protect our retirement funds,” Walter Lowe said.

Middle-class families grappling with the rising cost of college often find solutions in borrowing. The result has been an explosion in student debt. In Washington state, 58 percent of students who graduated from four-year schools in 2013 carried an average debt of $24,418, according to The Institute for College Access & Success.

That’s not an outcome the Lowes want for their children.

Walter Lowe, 67, is the family breadwinner, earning about $60,000 a year as a full-time faculty member for the English department at Green River College. He supplements his income by working as an adjunct instructor at Green River. By teaching an average of six additional courses a year — three during the summer — he is able to increase his income by $15,000 to $20,000 a year.

Social Security also pays the Lowes $12,648 a year for their 16-year-old son. Walter Lowe signed up for a dependent, minor-children benefit by filing for Social Security at full retirement age, and then suspending his own benefit. The payments, however, will end when their son turns 18.

According to Zillow, the current market value of the family’s home is about $279,600. But the Lowes are about five years into a 30-year mortgage on the property, with an outstanding balance of $177,000.

Their youngest son is in high school and has college plans, while their youngest daughter is working part time at Starbucks and studying nursing at Green River. Their older son this summer landed a full-time job on a technology help desk. Another daughter is five months into a new job with a property-management company; she is currently using her income to pay down credit-card debt. Their oldest daughter is living out of state.

The family is also paying off an $8,500 car loan and $5,000 that the Lowes put on a credit card for their daughter Francine’s studies last year at a university in Florida.

The Lowes do not get a tuition break at Green River because of Walter Lowe’s job, but their children have lowered their expenses by studying at the college while living at home. Three of the Lowes’ children have Green River degrees.

For savings, Walter Lowe has accumulated about $573,000 in a work-related retirement account. But the Lowes have had to repeatedly tap their household savings account, mostly for home repairs. More than a year ago the account balance exceeded $20,000; today, the balance is about $7,000.

Money is tight. “There was no give or take anywhere,” said Diane Jochimsen of Arlington, a certified financial planner with Seattle-based KMS Financial Services.

She urged the Lowes to abandon any notion of either tapping or borrowing against Walter Lowe’s retirement account to pay for their children’s college educations.

“You can finance college,” Jochimsen said. “I don’t know any way to finance retirement. Would anybody give you a loan for retirement?”

A better path to a secure retirement is for Walter Lowe to keep putting money into his retirement savings plan, Jochimsen said. She also encouraged Annerose Lowe to find work when her children become independent, which would increase her Social Security benefit when she retires.

“I did not want them to be destitute when they’re older,” Jochimsen said.

Luckily, Walter Lowe loves his job and wants to keep working until he turns 74. Meanwhile, Annerose Lowe, 56, wants to become a certified home-care assistant after her children become independent.

Jochimsen next urged the family to pursue other ways of paying for college for their children. She suggested federal student aid as well as various scholarships, grants and loan programs.

Because of the Lowes’ close family ties, Jochimsen advised them to make college funding a group project, in which everyone participates in finding solutions.

“We are going to do that,” Annerose Lowe said. They are planning an initial family meeting that could become a monthly session.

The Lowes still need to look into alternatives for paying for college and keep building their retirement savings. But they also say that Jochimsen gave them a path to follow.

“We have a lot more confidence that we can navigate this,” Walter Lowe said.

(c)2015 The Seattle Times. Distributed by Tribune Content Agency, LLC.

Walter Lowe, 67, with wife Annerose, 56, and three of their five children: from left, Henry, 23; Elliott, 16; and Francine, 20; at their Maple Valley, Wash., home. (Sy Bean/Seattle Times/TNS)

Debt Buyers Bury Hard-Hit Consumers In Lies

Debt Buyers Bury Hard-Hit Consumers In Lies

Good news, people: The “boom” is back! Yes, good times are here again, thanks to an economic boom that’s being generated by (of all things) bad times.

As you might know from your own experiences, tens of millions of Americans have been hit hard, knocked down and held down in recent years by the collapse of jobs and wages. This calamity has led to a second blow for millions of the same families, who find themselves suddenly buried in piles of overdue bills for credit card charges, student loans and other consumer debt.

But the good news is that there’s a bright silver lining in that dark financial cloud. Only it’s not for the indebted families, but for a booming breed of finance hucksters known as consumer debt buyers. Believe it or not, in the warped world of high finance, “there’s gold in them thar hills” of bad debt, and where there’s gold, there are diggers.

Whenever a corporation issues a statement declaring that it’s committed to “treating consumers fairly and with respect,” chances are, it’s not.

After all, why say such a thing, when actually practicing it would make a statement unnecessary? Indeed, with names like Encore Capital Group and Sherman Financial, these miners of human misery buy bales of these unpaid bills from banks and other lenders, paying pennies on the dollar. Then they unleash packs of their hard-nosed, aggressive collectors on the families. If they still can’t extract payment, the corporate debt profiteers turn to their meanest dog: The courts.

Debt firms routinely file thousands of lawsuits a day against financially devastated Americans. They know that most debtors can’t understand the legal gibberish filed against them, can’t afford a lawyer, can’t take time off to go to a court hearing, and can’t mount an effective defense against the corporate lawyers. So, some 95 percent of these lawsuits produce default judgments against hapless borrowers — meaning debt buyers can then confiscate the wages of borrowers or freeze their bank accounts.

This boom in vulture capitalism is disgusting — but, worse, it’s subsidized by us taxpayers! We pay for the judicial system — the judges, courtrooms and endless rounds of hearings. Predatory debt corporations have perverted our so-called justice system into their own subsidiary for squeezing profits out of destitute debtors.

This is why New York attorney general Eric Schneiderman has started going after these for-profit corporate debt collectors. He found that Encore, based in San Diego, filed nearly 240,000 lawsuits against debtors in a recent four-year period, using the courts as its private collection arm. Problem is, Encore’s bulk filing of lawsuits against the hard-pressed borrowers is rife with errors, out-of-date payment data, fabricated credit card statements, etc. With debt buyers scooping up millions of overdue bills each year from lenders, tons of them are missing original loan documents, payment histories and other proof of debt.

Debt predators, however, scoot around this lack of facts by simply having their employees sign affidavits asserting that the level of money owed is accurate. Judges, overwhelmed by the unending flood of lawsuits filed by Encore et al, have accepted those affidavits as true, thus ruling in favor of the corporations. But Schneiderman found that — surprise! — affidavits were simply being rubber-stamped by company employees, with no effort to ensure the truth of the information. An employee of one large debt buyer testified that his corporation ran an assembly-line scheme in which he signed about 2,000 affidavits a day.

This is no minor scam — 1 in 7 adults in the U.S. is under pursuit by debt collectors. It’s hard enough for struggling families to claw their way out from under the economic crash without having lying, cheating, predatory corporations twist the court system to pick their pockets and shut off their hope of recovery.

To find out more about Jim Hightower, and read features by other Creators Syndicate writers and cartoonists, visit the Creators Web page atwww.creators.com.

Photo: FrankieLeon via Flickr

College Tuition Hits Home For Obama

College Tuition Hits Home For Obama

By Christi Parsons, Los Angeles Times (TNS)

PALO ALTO, Calif. — He’s getting sappy on college campuses, wringing his hands about his tuition savings plan and waxing nostalgic about his own years as an undergraduate.

President Barack Obama is hurtling toward a deadline that looms over him much like the end of his time in office does — the day his first child leaves for college.

Like other parents, he’s thinking about how much it will cost to provide a higher education for his daughter Malia, a high school junior whose recent tour of colleges on the East and West coasts was hard to hide from social media.

Unlike most fathers, though, Obama thinks he can do something about it. Personal experience is clearly informing the president’s public policy.

In his State of the Union address last month, Obama proposed eliminating so-called 529 college savings plans, though the White House backed off the idea once it became clear that it would be unpopular. He also began pushing a proposal last month that would make the first two years of college free to all students as long as they were willing to take their core classes at a community college.

Fatherhood and work have intertwined throughout Obama’s career. Not long after his daughter Sasha was diagnosed as an infant with meningitis, Obama, then a state senator, introduced a child-health bill in the Illinois Legislature.

As his girls and their friends progressed in school, he began to criticize President George W. Bush as underfunding the federal No Child Left Behind initiative. In his 2004 campaign for U.S. Senate, while Malia began first grade, he talked about investing in after-school programs and early childhood education.

Obama has hounded colleges to get their costs under control for years. Nowadays, though, the president is being uncharacteristically public about what’s going on at home, mentioning the prospect of being a college dad — and the question of paying tuition — in speeches.

In one, he explained why he had changed his mind about backing the 529 proposal.

“I have 529s for both Malia and Sasha,” he said this month in Indiana. “The problem is when you looked at the statistics, the people who used them most were folks who were a little on the high end. And so our thinking was you could save money by eliminating the 529 and shift the money into loan programs that were a little more broadly based.”

It wasn’t entirely clear whether he was worried about the effect on public policy or on himself.

“There’s probably a little bit of transference, remembering his own excitement at qualifying for these great schools but also carrying that underlying anxiety about affording it,” said Carl Sferrazza Anthony, a presidential historian who studies first families.

That’s not necessarily a bad thing, said Anita McBride, the former chief of staff to Laura Bush, whose daughters Jenna and Barbara began college a few months before their father was sworn in as president.

“All of our leaders do better when they have that sensitivity about what’s going on at the ground level,” McBride said. “He’s not just dealing with this based on a briefing he got from the secretary of Education,” she said of Obama. “He’s walking through it personally.”

Obama will not be the first president to send a daughter off to school while running the country. Decades ago, Margaret Truman and Lynda Bird Johnson commuted across the capital to George Washington University.

Secret Service agents accompanied Amy Carter to Brown University, Chelsea Clinton to Stanford University and Bush’s twins to Yale University and the University of Texas.

Michelle Obama is taking care to keep Malia Obama’s deliberations private, but visiting colleges in the age of Twitter means never having to announce that you’re touring the University of California at Berkeley, Stanford University, New York University and Columbia University.

Thanks mostly to the proceeds from writing best-selling books, it has been years since the president needed to worry about money, said a close family friend, but he remembers struggling to pay for college.

“It’s still fresh in his mind,” said Valerie Jarrett, a senior adviser to the president who has known the Obama family for years. “That’s the difference between him and other people who talk about this. For them, it’s theoretical. For him, it’s real.”

Obama recently recalled that he and his wife shared not just the bonds of love but “the bonds of debt.” He began at Occidental College, an then graduated from Columbia University before entering the work world and eventually Harvard Law School. Michelle Obama went to Princeton University and to Harvard Law School.

Photo: President Barack Obama speaks at the White House Summit on Countering Violent Extremism in the EEOB building Feb. 18, 2015 in Washington, D.C. President Barack Obama defended his decision not to call war against ISIS a religious one during his remarks. (Olivier Douliery/Abaca Press/TNS)