college debt

h/t ThinkProgress

Rep Hansen Clarke has posted a video on his congressional YouTube account talking about how he supports cutting the national debt but believes we should help students cut their debt. Good for him! Way to speak out for young people!

Given the imminent threat of an economic crisis, elected officials on Capitol Hill are looking for ways to make drastic cuts in government spending. If everything is on the table that means access to Pell Grants for students who can't afford higher education is also on the table.

The U.S. Public Interest Research Group (US PIRG) has launched a campaign to urge leaders not to cut Pell and has some high power names behind its advocacy program. With tweets throughout the day with the hashtag #SavePell, members called on colleagues and Americans for support in the Pell Grant program.

NancyPelosi
Education is one of the best investments we can make in our nation's future & why we're working to #SavePell goo.gl/8YKf2

edworkforcedems (The democratic leaders of the Ed and Labor Committee)
We're doing all we can to #SavePell from cuts that would hurt our #students & economic competitiveness http://usat.ly/qSPNUL

He also had many many other tweets throughout the day about Pell Grant data and information. (see graphic below)

WhipHoyer Rep. Steny Hoyer
Dems are fighting to #SavePell, investments that will help us out-educate competitors, ensure we can #MakeItInAmerica bit.ly/r4JshZ

Whip Hoyer also asked his twitter followers how the Pell Grant has impacted their lives and then RT'd each of those stories.

SenatorCardin Senator Ben Cardin
Cardin on #SavePell day: Fighting for Pell Grants is not about the next election--it’s about the next generation. http://goo.gl/4hJUv

SenWhitehouse Sheldon Whitehouse
We must work together to #savepell grants. Our budget can't sacrifice the future of our kids or our economy. #pell

The U.S. Department of Education released state-by-state data on the Federal Pell Grant Program for the 2012-13 academic year. The data compares the current $5,550 maximum award to what the Pell program would look like under the GOP budget proposal.

Click to grow the image.

When I saw this article was posted by Amanda Fairbanks at Huffington Post I immediately turned my head and thought…. surly this can't be true. I'm in debt - I've been in debt since college - both credit cards and student loans. (I was irresponsible) My debt has prevented me from taking jobs I wish I could take because I can't afford them. It's prevented me from doing a lot of things like traveling the world (a dream of mine), going to law school (a previous dream of mine), and grown up things like … not moving states every year or so because I'm looking for a new or higher paying job or better benefits. I know I'm not alone.

Surly - SURELY those other young people out there wouldn't see this as a good thing. And certainly this wouldn't be something that would increase someone's self esteem?! I saw a great documentary on CNBC about students in debt that can't sleep at night and sob on camera because they feel so lost and afraid.

Via Fairbanks piece:

""Debt can be a good thing for young people -- it can help them finance goals they couldn’t otherwise, like a college education,” said Dwyer, whose findings appear in the latest issue of Social Science Research, an academic journal."

When looking up information on this study I found that you had to pay $31.50 to the damn Social Science Research magazine er research book or whatever just to see the methodology behind the survey. I put it on a credit card…. Email me if you want a free copy I'll give you mine....

Here's what I learned on page 732 under the "Data and Methods" section.

"We use multiple years of the National Longitudinal Survey of Youth 1979 – Young Adults sample (NLSY79-YA) up to 2004 to evaluate the impact debt holding has on youth during a time of high credit use. The NLSY is administered biannually by the Bureau of Labor Statistics and the Young Adults sample is made up of the children of female respondents of the 1979 NLSY cohort…..

We limit our sample to youth at least 18 years of age, who are not in high school, and are responsible for at least some of their financial obligations to ensure that all respondents included in the analysis were eligible to access credit, resulting in a sample of 3079 respondents. The age range for this group is from 18 to 34, but the majority of the respondents are in their early to mid-twenties, with a median of 22 years and 80% aged 25 or younger. We control for age in all analyses and conduct supplemental analyses stratified by age, which we discuss further in the results section."

So, how do you rank good or bad self-esteem?

"…The Pearlin Mastery Scale is composed of seven items intended to assess respondents’ sense of control over their life: ability to solve problems in life, feeling pushed around or bullied, amount of control they have in their every- day lives, ability to do what they set their minds to, amount of helplessness when dealing with everyday problems, sense of control over what happens in the future, and ability to change important things that happen in their lives (Pearlin and Schooler, 1978). The alpha value for the mastery scale is .68. The Rosenberg Self-Esteem Scale includes ten items to assess respondent self worth: I am a person of worth; I have a number of good qualities; I am inclined to feel I am a failure; I am as capable as others; I feel I do not have much to be proud of; I have a positive attitude; I am satisfied with myself; I wish I had more self-respect; I feel useless at times; and I sometimes think I am no good at all (Rosenberg, 1989). The alpha value for the self-esteem scale is .83. Measures were coded so that a higher value indicates greater mastery or self-esteem."

I take issue with this - because I'm satisfied with myself, I have done a lot I can be proud of, and I don't feel like a failure - but I feel a lot of anxiety around my debt and I've made decisions based on that debt. Yet by this classification system I would have high self-esteem around my debt. That's not exactly a great methodology...

Here's the kicker from page 733

"Because many respondents have no debt, we create spline functions for both education debt and credit-card debt. The spline splits each form of debt into two component variables: (1) a dummy variable indicating whether the respondent has any debt, and (2) a continuous measure of the total debt held with zeros for non-debt holders. The simultaneous esti- mation of the effects of these two variables models debt more accurately than a simple linear function, enables us to distin- guish the effect of having any debt from the effect of having more or less debt, and reduces the bias due to the skew of the underlying debt variables (Wojtkiewicz, 2003)"

Seriously? No….. seriously?

First of all - those who graduated between the years 1979-2004 are probably not in debt anymore! The only people I can see who MIGHT still be in debt would be people who graduated in the last 10 years with their BA and didn't get an advanced degree. Graduates in 2004 had an average rate of 66.4%. Debt keeps going up....

"About a decade year before that, it was less than half who had student loans to pay back. Also over that past decade, the debt levels for graduating seniors with student loans more than doubled from $9,250 to $19,200, which is an 108% increase."

Secondly, that dollar amount also has increased. In 2004 that number of debt was $17,600. Today that number is closer to $25,000 asFairbanks quotes.

So, essentially - a majority of these people had lower amounts of debt than today - have had more time to pay off that debt, and graduates prior to 2004 weren't being hit with the economic recession that we've been dealing with for the last since even 2006 and 2007.

This whole study seems remarkably out of touch with TODAY's youth who are saddled with high costs of education, high unemployment, predatory lending, and the Department of Education's SWAT team coming after them for loan defaults.

I call this a BS study for those reasons. I don't think it's helpful to try and pretend that young people are positive about being poor, in debt, jobless, and without health care. It does a serious disservice to economic or education policy and to those of us who do advocacy around youth or economic issues for young people.

Update3: Probably one of the best commentaries on this has come from Cryn Johannsen which I encourage you to read.

Update2: Now you can even view the warrant online! Basically its an ongoing "criminal investigation" not due to student loan non-payment but because its criminal no one will comment on details.

UPDATE: The Department of Ed is saying that the story is false and had nothing to do with the woman's student loans. The Dept press office tweeted:

"False story circulating suggesting that the Department of Education raided a Sacramento man's home because his wife was late paying loans.

Herb Green is tweeting about it
We'll bring you more as this story develops.

-----------------------------

The Department of Education isn't generally seen as the threatening powerhouse that say the Department of Defense or even public safety offices are. Until now....

Last week a father of 3 had his door broken down by a SWAT team looking for the man's wife who had defaulted on her student loans. They threw him to the ground, handcuffed him, put him in a patrol car for 6 hours, and traumatized his kids.

"The U.S. Department of Education issued the search and called in the S.W.A.T for his wife's defaulted student loans.

"They busted down my door for this," Wright said. "It wasn't even me."

According to the Department of Education's Office of the Inspector General, the case can't be discussed publicly until it is closed, but a spokesperson did confirm that the department did issue the search warrant at Wright's home.

The Office of the Inspector General has a law enforcement branch of federal agents that carry out search warrants and investigations.

Stockton Police Department said it was asked by federal agents to provide one officer and one patrol car just for a police presence when carrying out the search warrant."

Jeeze... education is becoming a serious deal.

I've been meaning to write about this for a while but things have been pretty busy

As if the pathetic job market for young people and the high percentage of us moving home doesn't suck enough, for many of us we graduate with exorbitant student loan debt. Whether it's a federal loan, or a high interest loan we got swindled into or credit cards we got thinking we could handle but it turns out we can't, we're all facing some pretty steep challenges.

But I don't want to be another Debbie Downer. If any generation can get us out of this mess its us. Why? Because we're better, smarter, faster, more educated, more technologically savvy, more innovative, and more likely to take crazy risks some of which actually do pan out.

This week USAToday writer Cryn Johanssen did a piece on the sometimes insurmountable difficulties with the Department of Education and student loan issues.

"There are several ways the federal government, specifically the Department of Education, could help ease the problem of student loan debt for millions of borrowers. One of the major problems is the way in which the Department is lenient in theory but not in practice."

The piece begins by saying that the things put in place to help support those who can't pay their loans or fall into default in truth those rarely are the case. If you're disabled or encounter an illness there are supposed to be forgiveness. But the processes to go through to actually get the forgiveness is so tedious and impossible that many people can't seem to manage.

A recent investigation by ProPublica and The Center for Public Integrity blasts the department, asserts that the system “is broken,” and adds, “these borrowers, whose ailments often make it hard for them to navigate a complex bureaucracy, confront a byzantine system that has resulted in many applicants’ being rejected for unclear reasons, and has led many others to simply give up. Despite demands for improvement from Congress, the courts, and its own internal watchdog, the [department] has repeatedly failed to heed basic recommendations for fixing the process. Since the publication of their report on February 13, 2011, the department responded immediately and has promised to make changes. How those changes will be implemented, however, remains to be seen.

I encourage you to check out the rest of the story. We have to figure out some way to make this better. If you have any ideas or hell just want to sound off and vent your frustrations we'd welcome it. Leave them on the Future Majority Facebook page. We're with you all the way so please know if you're facing the rough job market, you're scared about repaying your loans, and you're feeling hopeless - you're not alone. We can all work together as a generation to fix it and give us all a shot at the American Dream.

For years Future Majority has reported, and reported, and reported and reported, on the ever increasing cost of education, however substandard that education may be for the return on investment.

Last night CNBC ran its special The Price of Admission about what they are calling the student debt crisis in America.

Several things struck me as interesting - I actually watched it twice I was so shocked national media was giving attention to this story. First, the raw numbers that CNBC says show the average amount of credit card debt students have, has now eclipsed the average amount of student loan debt and the number of people that owe student loan debt amounts to over $1 TRILLION dollars in the US.

In the past several years, safeguards have gone in place to protect youth from unfair and predatory credit card practices. Campus card recruiters that give out free t-shirts, posters, pizza, etc... to youth for applying for credit cards have been banned by many colleges and the media attention alone has hopefully encouraged parents and students to get the facts on high interest rate credit cards. Similarly, Congress enacted regulations that prevent credit card companies from giving credit cards to anyone under the age of 18. These kinds of tactics have obviously helped curb the credit card debt problems of the Millennial Generation, but comparably less has been done to help when it comes to student loans.

Secondly, the report interviewed Iowa Senator Tom Harkin who has been on the front lines of both college affordability and questioning the lack of regulations on for-profit colleges. As recently as September Harkin held hearings on these kinds of education institutions asking why the federal government subsidizes them when so many youth are unable to find work and so many of their students fall into loan defaults.

"I certainly agree that, at their best, for-profit colleges offer a valuable alternative model for higher education. But this Committee’s ongoing investigation has brought to light disturbing practices that appear to be systemic to this industry, and that raise serious questions about the enormous taxpayer investment in these schools," Harkin said this fall.

Harkin's committee reported findings from an investigation by the Government Accountability Office which visited "15 campuses of 12 companies and found misleading, deceptive, overly aggressive or fraudulent practices at every one of those campuses." Not just one or two... but all of them.

The CNBC report shows footage from the GAO with financial aid councilors using every means necessary to avoid questions about loans, cost, or alternative solutions for funding to "get" students to enroll in their colleges. A whistle blower who previously worked for a for-profit college was interviewed quoting nearly the same script as the GAO investigation video and revealed that "councilors" were trained to be more emotional with their prospective student - truthfully it was more emotional manipulation to get the student to enroll and further accept large interest loans. The young man said that he was instructed to "check up" on students to make sure things were going well for 14 days after the loan was signed because regulations allow two weeks for the student to cancel and the colleges want to keep the students on the hook. The for-profit colleges disagree with the whistle-blower saying they check up on students as an act of good faith.

Harkin's most interesting statement was his opinion that the student loan crisis will become the next housing crisis. And the most alarming part of the report was the striking detachment, disinterest, and cluelessness from Education Secretary Arnie Duncan who seems more insistent in getting kids enrolled in college than promoting personal financial responsibility and financial stability for the generations graduating into the unstable job market.

Interspersed with heartbreaking accounts of students who can't afford to make payments, a young married couple who will pay over a quarter of a million dollars in interest on their loans, and parents who must pay for loans their deceased son took out for his education, the report shows no clear solutions, path, or even political will to solve the problem (aside from Sen. Harkin). If Harkin is correct and this is to be the next housing bubble, if the new conservative Congress is intent on financial responsibility, where then is their concern and what is their plan?

Yipee... Another batch of news about the Millennial Generation struggling for jobs and being in debt. Not only does Reuters below talk about the stats FM readers know well - but a piece in AOL Jobs says that age discrimination is more likely to protect people over 40 than people under 30. Add to that a piece CNN run yesterday on the increase in student loan debt some Millennials are carrying.

Reuters:

"All of us know people who still bear the marks of their distinctive coming-of-age experiences: the grandmother raised during the Depression who reuses her tea bags; the child of the Cold War who favors an assertive national security policy; the uncle who grew up in the 1960s and sports a pony tail," said a recent study of Gen Y by the prestigious Pew Research Center.

"We don't yet know which formative experiences the millennials will carry forward throughout their life cycle."

AOL Jobs:

"No age group is immune to the fever of downsizing and and layoffs that has swept the country over the last few years, but the generation that is hardest hit will probably surprise you. Despite all the news you hear about older, more experienced, more expensive workers being let go, the generation suffering the most job losses is the Millennial generation, or those who have entered the work place since 1999, give or take a few years. . .

Do the math, and you find unemployment rates for younger workers have increased 4.7 percentage points, while unemployment rates for older workers have only risen 2.9 percentage points. Why? It goes on beyond the last-hired, first-fired syndrome. It seems that many employers are terrified of age-related lawsuits.

If you thought laws against age discrimination protect everyone, you would be, in a word, wrong. The Age Discrimination Employment Act that was passed in 1967 and still holds, only protects, "individuals who are 40 years of age or older from employment discrimination based on age." Some states have passed additional, more all-encompassing age discrimination laws, but legally, those over 40 are far better protected."

Via CNN:

So the economy is still a bit finicky and jobs are hard to come by but here's an interesting advertising kick I found this weekend from a law firm specializing in consumer debt renegotiation for young people who are suffering from the high youth unemployment rate, school debt, and credit card debt.

"Even as they struggle to find jobs, many Millennials are burdened with educational and credit card debt. According to the Pew study, 2008 graduates left school with an average of 24 percent more debt than 2004 graduates -- and nearly double the average of 1996 grads."

They continue to quote the average Millennial carries "more than three credit cards and that a fifth maintain a balance of over $10,000."

So all those Sallie Mae people who are upset about the student loan sharks being shifted to the the warmer and fuzzier Federal Direct Loan program, they can now have other options to hassle young people about debt consolidation.

The Student Aid and Fiscal Responsibility Act (SAFRA) is by far the greatest step ever taken in Washington to combat the control of giant banking moguls over our country's youth. Consistently, we have seen the cost of higher education climb pricing many young people out of the opportunity for a better future. At the same time assistance available to young people has actually gone down.

Twenty years ago, 60% of young people who were able to pay for college on Pell Grants today that number has dipped to half of that. The bill is the first meaningful step in a long-term solution to the predatory private lenders who take advantage of students.

Among other things, the bill will

• Invest $40 billion to increase the maximum annual Pell Grant scholarship to $5,550 in 2010 and to $6,900 by 2019. Starting in 2011, the scholarship will be linked to match rising costs-of-living by indexing it to the Consumer Price Index plus 1 percent.
• Strengthen the Perkins Loan program, a campus-based program that provides low-cost federal loans to students, by providing the program with more reliable forms of credit from the federal government and expanding the program to include significantly more college campuses.
• Keep interest rates low on need-based – or subsidized – federal student loans by making the interest rates on these loans variable beginning in 2012. These interest rates are currently set to jump from 3.4 percent to 6.8 percent in 2012. (This compares to loans that Courtney mentioned whose loans can have a 7.2 percent or even 10 percent interest rate).
• Provide loan forgiveness for members of the military who are called up to duty in the middle of the academic year.
• Convert all new federal student lending to the stable, effective and cost-efficient Direct Loan program. Beginning July 1, 2010, all new federal student loans will be originated through the Direct Loan program, instead of through lenders like Sallie Mae that are subsidized by taxpayers in the federally-guaranteed student loan program. Unlike the current lender-based program, the Direct Loan program is entirely insulated from market swings and can therefore guarantee students access to low-cost federal college loans, in any economy.

This was one of the biggest promises the President made to young voters this past election, and it came dangerously close to being thrown under the school bus by elected officials willing to sell out to any bidder. Luckily, youth across the country emailed, called, and tweeted elected officials begging for the change they were promised. The result was a commitment to the original bill that stops these wasteful subsidies and moves the program under the already existing Direct Loan program, and the Student Aid and Fiscal Responsibility Act will be folded in with the health insurance reform bill.

There must be reform, and Washington MUST choose students over the banking industry. Washington subsidized the banking industry with as much as $87 billion over the last 10 years, which has lead to a nationalization of the banking industry that continues to make CEOs richer while young people face a race to the bottom.

The best investment Washington can make in its future is with an investment in the nation's youth. With young people who are trained and well educated our country can spur a new cycle of innovation capturing the entrepreneurial spirit of a generation. But with tens of thousands of dollars in debt, these students can't take any risks even if they could begin a new cycle of growth and progress in these dire economic times.

This bill is the first major step in what could be the greatest overhaul in education. There is such possibility ahead, and nested in that is the glimmer of hope we'd nearly lost to the banking lobby.

Crossposted from Firedog Lake