So say Nicole Allan and Derek Thompson, who argue in this month’s issue of The Atlantic that the economic returns of college far outweigh the burden of student loan debt.
“Horror stories of students drowning in $100,000+ in debt might discourage young people from enrolling in college, but they are as rare as they are terrifying,” Allan and Thompson wrote in the article. “The economic value of college, meanwhile, is indisputable.”
Allan and Thompson looked for crisis in the wrong places. Six-figure calamities are indeed rare, but millions of Americans are caught between stubbornly weak labor markets and increasingly costly higher education.
In a sweeping study of the private student lending market released today, a new federal consumer protection agency compares private loans to subprime mortgages and urges Congress to consider letting borrowers discharge such loans in bankruptcy.
The study, months in the making, touched a nerve as the Consumer Financial Protection Bureau began gathering information about private loans and concern grew about student debt. Almost 2,000 people — borrowers and their family members, as well as representatives of banks, research groups and higher education organizations — wrote in to describe their experiences with student loans and to urge the bureau to act.
The result was a report examining the varied private student loan market, which makes up less than 15 percent of all outstanding student debt but is often criticized because its loans offer fewer protections than their federal counterparts. The consumer protection bureau found that loans made just before the financial crisis were among the riskiest, made to students with low credit scores and often without co-signers or involvement from their colleges’ financial aid offices. A majority of those students had not exhausted their federal borrowing options beforehand.
“Our findings reveal that students were yet another group of consumers that were hurt by the boom and bust of the financial crisis,” Richard Cordray, the bureau’s director, said in a conference call with reporters Thursday afternoon. “Too many student loan borrowers were given loans they could not afford and sometimes for more money than they needed. They are now overwhelmed by debt and regret the decisions they made.”
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Between 2005 and 2008, private student lending boomed, increasing from about $7 billion to over $20 billion in 2008. At its peak, private lenders made loans to students with low credit scores and no co-signers, often allowing borrowers to take out loans that far exceeded the cost of attendance at their colleges.
Happy Monday, folks. I’ve been off the grid for a few days for a desperately needed re-charging. The news all around is dire these days and information overload can be a bit much. A piece will be forthcoming on how acts of kindness to one’s self can be revolutionary and necessary for change.
Google’s harvesting of e-mails, passwords and other sensitive personal information from unsuspecting households in the United States and around the world was neither a mistake nor the work of a rogue engineer, as the company long maintained, but a program that supervisors knew about, according to new details from the full text of a regulatory report.
The report, prepared by the Federal Communications Commission after a 17-month investigation of Google’s Street View project, was released, heavily redacted, two weeks ago. Although it found that Google had not violated any laws, the agency said Google had obstructed the inquiry and fined the company $25,000.
On Saturday, Google released a version of the report with only employees’ names redacted.
The full version draws a portrait of a company where an engineer can easily embark on a project to gather personal e-mails and Web searches of potentially hundreds of millions of people as part of his or her unscheduled work time, and where privacy concerns are shrugged off.
The so-called payload data was secretly collected between 2007 and 2010 as part of Street View, a project to photograph streetscapes over much of the civilized world. When the program was being designed, the report says, it included the following “to do” item: “Discuss privacy considerations with Product Counsel.”
In 1997, Microsoft et al. lobbied to reduce Washington State’s Royalty Tax from 1.5% to .5%, a threefold reduction. This wasn’t low enough. The company decided to open a small Reno, Nevada office to dodge the tax completely.
Between 1997 – 2011, the company used its Nevada office to avoid $1.51 billion in Washington state taxes, interest and penalties. If you include impacts from the company’s lobbying and calculate its savings at the original 1.5% rate, it’s saved $4.37 billion.
Since 2008, Washington State has cut $4 billion from K-12 and Higher Education. We rank 31st in K-12 spending. 18% of University of Washington freshman are now foreigners (because they pay more) up from 2% six years ago. We rank 47th nationally in 18-24 yo college enrollment and 48th in K-12 class size.
Lindy West’s piece at Jezebel this week, “A Complete Guide To Hipster Racism,” has been blowing up my Facebook wall (and probably yours too) for good reason. As justice-minded folks have critiqued HBO’s ‘Girls’ for its lily-white representation of New York City, the pushback to the pushback has gotten ugly fast — whether it’s show story editor Lesley Arfin making jokes about Precious, or Vice founder (and old-school hipster racist) Gavin McInnes knowingly throwing the word ‘lynching’ around. At the core of every statement defending the whiteness of ‘Girls,’ and the ‘ironically’ racist jokes that accompany it, is the argument that only bad people are susceptible to racism, so therefore it’s okay for us good people to pretend to be racist, for comedy’s sake. Anyone who doesn’t like it is the real racist. There’s a bunch wrong with this argument, both in terms of logic and basic decency, and West does an excellent job of debunking it piece by piece.
Some observers claimed that SB 1070 would increase racial profiling of Latinos. The key question was how police would decide whether there was, as Section 2(B) provides, a “reasonable suspicion … that the person is an alien and is unlawfully present in the United States.” The fear is that “foreign-looking” people, especially Latinos, will bear the brunt of the mandatory immigration checks. Concerns with racial profiling contributed to the considerable public attention received by SB 1070 and Arizona v. United States.
As discussed above, the oral arguments focused on federal preemption law, not racial profiling. Counsel for the US government emphatically denied that racial profiling was at issue in the case. Counsel for the state of Arizona, as well as the justices, eagerly accepted that denial. The justices therefore did not ask questions about whether Section 2(B) of SB 1070 might result in the racial profiling of Latinos.
Unlike some of the other plaintiffs in related cases challenging the Arizona law, the US government had not made any claims that SB 1070 violates the Equal Protection Clause of the Fourteenth Amendment because it was adopted with some kind of invidious discriminatory intent. Claims of discrimination will likely have to wait another day, with the issues possibly addressed in the other cases challenging SB 1070 or in a new challenge based on the application of Section 2(B) by police.
It should be readily apparent that there is a serious disconnect between the public debate over Arizona’s SB 1070, as well as similar state immigration enforcement laws, and the legal arguments in the Court.
A lawyer has won her bid for a new student loan repayment hearing after a state judge determined that her initial proceeding was rife with errors made by an administrative law judge.
Manhattan Supreme Court Justice Alice Schlesinger (See Profile) found that the ALJ appeared to lose control of the 2009 hearing and made the “shocking” pronouncement that the attorney, Marisa Rieue, owed $108,376, including principal and interest, in unpaid loans in the absence of concrete evidence to support that conclusion.
“A review of the hearing transcript reveals that it would be a waste of judicial resources and improper to transfer this case to the Appellate Division based on substantial evidence because the record is barely comprehensible and defective in countless ways,” Schlesinger wrote in Rieue v. New York State Higher Educ. Servs. Corp., 107745/09.
She added, “While the rules of evidence are not strictly applied in administrative proceedings, the hearing must be conducted in an orderly fashion so that it is fundamentally fair, and all exhibits offered into evidence must be appropriately authenticated and explained by a proper party, with evidentiary foundations established where appropriate.”
Rieue, who once worked in the litigation bureau of the state Department of Law, has an unpublished phone number and could not be reached for comment.
Though many politicians sympathize with those who are saddled with exorbitant student debt, Foxx, who chairs the House subcommittee on higher education, had a different take. Appearing on G. Gordon Liddy’s radio show, the North Carolina congresswoman recounted her own experience paying for college, where she worked her way through and graduated after seven years. Foxx then pointed to her own experience as justification for why she has “very little tolerance for people who tell me that they graduate with $200,000 of debt or even $80,000 of debt.” “There’s no reason for that,” she concluded:
FOXX: I went through school, I worked my way through, it took me seven years, I never borrowed a dime of money. He borrowed a little bit because we both were totally on our own when we went to college, totally. [...] I have very little tolerance for people who tell me that they graduate with $200,000 of debt or even $80,000 of debt because there’s no reason for that. We live in an opportunity society and people are forgetting that. I remind folks all the time that the Declaration of Independence says “life, liberty, and the pursuit of happiness.” You don’t have it dumped in your lap.
Briallen has a Ph.D. from Princeton University and is a lecturer in the English department at Yale University. Johanna is a high-school graduate working full time at a bakery for slightly above minimum wage.
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[Briallen] can’t imagine her life without higher education, but as a non-tenure-track academic in a tough job market, she has limited job security, and she owes more than $800 a month in student-loan payments. Her student debt makes it impossible for her to save money or start a family anytime soon, and she is entering her mid-30s.
Johanna is 20. She was an honor student at her Jesuit prep school and was considered to be obvious “college material” by her teachers, but she graduated after the 2008 crash and couldn’t count on getting a job after college that would enable her to make student-loan payments. … Johanna was wary of graduating with substantial debt and no family safety net, so she took a year off to work and save money and try applying to college again. Her financial-aid offers the next year were no better. She ended up taking classes at the local satellite campus of a state university while living at home and working long hours at a salon to pay her own way.
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After learning that she’d spent almost all of her hard-earned savings on classes she was not even required to take, Johanna lost her faith in the wisdom of investing in higher education. She left school and is now working full time for $13,000 a year. She’s proudly debt-free and self-supporting, and in her limited free time she is pursuing reading, writing, and the free or cheap cultural and educational opportunities available to her.
The burden of paying for college is wreaking havoc on the finances of an unexpected demographic: senior citizens.
New research from the Federal Reserve Bank of New York shows that Americans 60 and older still owe about $36 billion in student loans, providing a rare window into the dynamics of student debt. More than 10 percent of those loans are delinquent. As a result, consumer advocates say, it is not uncommon for Social Security checks to be garnished or for debt collectors to harass borrowers in their 80s over student loans that are decades old.
That even seniors remain saddled with student loans highlights what a growing chorus of lawmakers, economists and financial experts say has become a central conflict in the nation’s higher education system: The long-touted benefits of a college degree are being diluted by rising tuition rates and the longevity of debt.
Some of these older Americans are still grappling with their first wave of student loans, while others took on new debt when they returned to school later in life in hopes of becoming more competitive in the labor force. Many have co-signed for loans with their children or grandchildren to help them afford ballooning tuition
Bankruptcy lawyers have a frightening message for America: They’re seeing the tell-tale signs of a student loan debt bubble that is placing increased financial pressure on families struggling with their children’s mounting debt. According to a recent survey by the National Association of Consumer Bankruptcy Attorneys, more than 80 percent of bankruptcy lawyers have seen a substantial increase in the number of clients seeking relief from student loans in recent years.
In most cases, those clients could not meet the tough federal hardship standards that are necessary to discharge a student loan through bankruptcy proceedings. Instead, many of these unwary parents or guardians who co-signed the student loans face the prospect of losing their life savings, cars or homes to collection agencies for aggressive private lenders.
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“Obviously, in the short term, student loan defaults are not going to have the same ripple effect through the economy that mortgage defaults did,” Brewer told The Fiscal Times. “My concern is that the long-term effect may be even graver, because people who need student loans to try to get a higher education or retraining” will be unwilling to run the risk of taking out a student loan. “Our best and brightest won’t necessarily get the education that they need to move us forward,” he added.
The amount of student borrowing skyrocketed from $100 billion in 2010 to more than $1 trillion last year – or more than all the outstanding U.S. credit card debt. At the same time, student loan defaults rose to 8.8 percent in 2011, up from 7 percent the previous year.
The Millennials are the first generation of Americans who cannot count on doing better than their parents. On this week’s Moyers & Company, Bill Moyers talks with a Millennial who has dedicated herself to tackling these issues. In the same broadcast, Moyers talks with conservative economist Bruce Bartlett, who wrote “the bible” for the Reagan Revolution.
Seeta Persaud is the main writer for CMP. Nancy A. Heitzeg is the Editor of Criminal Injustice, published every Wednesday at 6pm CST. Robinswing is the Editor of SistahSpeak.
