Student Debt

Editor's note: This post originally appeared on Idealist.org. It has been republished here with permission from the author and Idealist.org.

Guest blogger Heather Jarvis provides education and training “for student loan borrowers and the people who love them.” Here she sums up what college students, recent graduates, and folks considering grad school need to know about the debt ceiling deal.

Last week the House and Senate passed the Budget Control Act of 2011 [PDF] just ahead of the deadline, and President Obama has signed the act into law. Key student aid programs are largely intact, and I am relieved to report that the new law avoids some of the proposed cuts that would have hurt students the most.

There are three main provisions in the debt ceiling deal related to higher education:

• Funding is provided for the Pell Grant program.
• The in-school loan interest subsidy for graduate and professional students is eliminated beginning July 1, 2012.
• "Repayment incentives," or cost reductions earned by certain borrowers, are eliminated for loans disbursed on or after July 1, 2012.

Now for some Q&A…

Q. Students shoulder $4.6 billion of the deficit reduction (so far)?! How is that possible?

The elimination of the graduate and professional interest subsidy and the loan repayment incentives are estimated by the Congressional Budget Office to produce a savings of $21.6 billion. $17 billion of that savings will go to shore up the Pell Grant program, and $4.6 billion will be used to reduce the deficit. Read on for more details about all of these changes.

Q. I have student loans. What steps should I take?

• Always borrow federal student loans first and only consider more expensive private student loans if you must.
• If you are still in school and you can afford it, consider paying student loan interest as it accrues.  You’ll lower your costs over time.
• Choose the repayment plan that makes the most sense for you. Income-Based Repayment (IBR) is a good option for people with low income compared to their student loan debt.
• Pay off your most expensive loans first.
• Find out if Public Service Loan Forgiveness can help.

Q. Is my Pell Grant safe?

Pell Grants are safe for now; the White House indicates that the funding will be sufficient to keep them at their current level of $5,500. If they  had been cut, students may well have had to increase their reliance on student loans. Thankfully, the Budget Control Act shores up the Pell Grant program by providing $17 billion in funding over the next two fiscal years. However, with spending cuts anticipated in the future, Pell Grants remain at risk.

Q. What should graduate and professional students expect?

Graduate and professional students will pay more for student loans. The Budget Control Act eliminates the in-school interest subsidy for graduate and professional students, so these folks will pay more interest over time.  However, it does not eliminate the interest subsidy for undergraduate borrowers.

Subsidized Stafford Loans have historically been available to both undergraduate and graduate borrowers with demonstrated financial need.  In the case of Subsidized Loans, the government pays the interest that accrues on the loan while the student is in college.  Without the subsidy, students must themselves pay the accruing interest as they go, or have the unpaid interest added to the principle amount of their loan and pay it later.

(Ed. note: You can learn more about financial aid on Idealist.org's financing your graduate education page.)

Q. What about repayment incentives?

To encourage borrowers to repay on time, the Department of Education was previously authorized to provide certain incentives, including an origination fee rebate and interest rate reduction.  Borrowers would earn these benefits by making on-time payments over 12 months.  Beginning on July 1, 2012, the Department of Education is no longer authorized to provide these repayment incentives, but may continue to allow an interest rate reduction for borrowers who enroll in payment by automatic electronic debit.

Q. Is it possible that there will be even more cuts to student aid?

Yes. The Budget Control Act requires Congress to come up with a lot more deficit reduction by Thanksgiving.  Additional spending cuts may come in part from higher education. Stay tuned…

—

About the author:

Former capital defense attorney and long-time public service advocate Heather Jarvis dedicates herself to helping students make informed decisions about their student loans. Since 2005, Heather has helped more than an estimated 25,000 students understand and overcome college debt through in-person and online trainings and resources. As Senior Program Manager for Advocacy and Outreach at Equal Justice Works, Heather played a role in the passage of the College Cost Reduction and Access Act, which made IBR and Public Service Loan Forgiveness a reality.

Want to learn more about Public Service Loan Forgiveness?  Register for one of Heather’s popular free webinars and get the scoop.  Heather provides free tools and information for student loan borrowers and the people who love them at www.askheatherjarvis.com.

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.

Reprinted with permission from C. Cryn Johannsen at All Education Matters. This is a fantastic piece Sarah linked to earlier today; we wanted to make sure everyone saw it in its entirety.

Yesterday morning few people were aware of what had happened to Kenneth Wright's rights in Stockton, California. Thanks to the hard work of numerous advocates, however, that changed within hours of a local news story about the use of excessive force.

People across the country - and even the globe (my own work was being retweeted by people in Stockholm and London) - learned that Wright's door was broken down by federal agents, he was handcuffed in his underwear, and thrown into a patrol car for 6 hours. Although the initial report from News10 suggested that the warrant for Wright's estranged wife was for her defaulted federal loans, the story quickly changed over the course of the day. (News10 took the story down once it went viral and has provided an updated version that discusses the use of excessive force. There is no mention of defaulted loans. In addition, News10 released the warrant that indicates that fraud was being committed. However, it is truncated and the entire warrant remains sealed).

It is common knowledge among higher education finance experts that the Department of Education's Office of Inspector's General (OIG) conducts search warrants. Moreover, these cases, as Press Officer Sara Gast explained to me in a recent email, are generally related to investigations of "bribery, fraud, and embezzlement of federal student aid funds." Such investigations are generally limited, Gast told me, to 30 - 35 search warrants a year. But the general public is not privy to this type of activity. (When I followed up with Gast by phone, she provided me with Press Secretary Justin Hamilton's direct line. As of this writing, a call from Hamilton has not been returned).

While Wright's estranged wife may be involved in fraudulent activity, there are two crucial points about this unfolding story. First, it spread like wildfire throughout the blogosphere because it was fueled by fear. Bloggers on the left and the right picked up on the story, and that led to major media outlets putting out reports, too. There is good reason for why it became so hotly discussed. There is a growing number of indentured educated citizens who are fast approaching financial disaster. Thousands and thousands of them have shared their stories with me over the past 2 years. The use of force by the Department resonated with countless readers. Many of them wrote on Facebook pages and tweeted, "It's scary. What if that happened to me?" . . . "I'm close to defaulting on my loans. Will the Department break down my door?"

We all know that there is no way out of this debt, especially if you fall on hard times. The system has been rigged in such a way that allows companies, like Sallie Mae, to benefit from keeping people in debt. Sallie Mae has $146 billion of federal loans on its books. One analyst said, "They have this cash cow which is the legacy portfolio." Hear that, folks? They are making money off of indentured educated people! Make no mistake - they don't want this 'cash cow' to go away. No one talks about the fact that FFELP is still alive. The administration might have put an end to it, but those loans are still out there and part of these loan sharks' portfolios. So, if you default on any federal loans, you're life is pretty much ruined, whereas the IRS has the power to resolve issues with distressed taxpayers. Both parties can come up with a solution and move on. Student debtors have no such luck. But since we're seen as a 'cash cow,' why would anyone in power want that to change? I'm sure those guys over at Sallie Mae, who live in luxurious mansions on the east coast don't want this to change. Neither do the schools. They all control the money, whereas the rest of us are victims of these hucksters. But I digress.

Second, the use of such excessive force was uncalled for. Why an individual who is being sought for fraud warrants a SWAT team -- as it was originally reported -- suggests how far right this country has moved. Wright must have been traumatized when he was handcuffed in his underwear and thrown into a patrol car for 6 hours. His children, who are 3, 7, and 11, had to have been disturbed by the incident as well.

Moreover, this story has fueled numerous and ongoing conspiracy theories. But the elements of the story, along with a great deal of speculation (which was justified), lent themselves to that. It should come as no surprise since the characteristics of American conspiracy theorists are the same as Christian fundamentalists. Fear is also what adds fuel to conspiracy theorists' fire. (They also the need to simplify complex situations. In addition, conspiracy theorists oftentimes - not always - fail to comprehend systemic issues and place too much emphasis on individual agency. Mind you, I am not suggesting that conspiracy theorists are unintelligent, but I do wish to make clear that I do not identify with this type of thinking).

One thing is clear, regardless of how you think or how you identify yourself politically, the Department is tone deaf and reviled across the board. They are as hated, as I've already stated, as Sallie Mae. I had always thought that, but yesterday's outrage drove that home. If they don't get it together, along with the politicians and self-interested lobbyists in DC, we might very well experience a revolution in this country as well. People don't like it when they feel that their future has been stolen from them. A lot of folks want their future back. DC better start listening . . .

We know what democracy means. We won't settle for economic slavery.

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.

Wednesday Rutgers University's John J. Heldrich Center for Workforce Development released a survey of college students (PDF) and some of the only numbers I have seen on youth "underemployment."

So many statistics today show data on the unemployment levels in the US which are based on those that are filing for unemployment. If you're still working your college job part time, or you don't qualify for unemployment, or your unemployment has run out - these numbers aren't counting you. This leads many to assume that the unemployment rate in the US is higher. Since the youth unemployment rate is almost double the national average it would only stand to reason that these more accurate numbers would also show the true unemployment level for youth to also be double.

According to Rutgers

"In order to better understand the American public’s attitudes about work, employers, and the government, and to suggest ways to improve workplace practices and policy, the Heldrich Center began conducting a series of nationwide surveys titled Work Trends. Since 1998, more than 20 surveys have polled employed and unemployed Americans on critical workforce issues. While prior Work Trends surveys had focused on a cross‐section of workers, the prolonged “Great Recession” prompted a closer examination of the experiences and opinions of unemployed workers. A new paper highlights the key findings from the Heldrich Center’s effort to capture the experiences of American workers during the worst labor market in a generation."

And highlight it does. According to the paper just over half of 2006-2010 college graduates are working full time. According to the chart below - 47% of 18-34 year olds are looking for full time work. (click to make bigger)

Nearly
 three 
in 
four 
(73%)
 Americans 
in 
a 
random
 sample
 of 
employed
 and 
unemployed
 said that they were impacted by the most recent Great Recession between 2007 and 2009. Whether it was them personally, a family member, or close friend, lost a job. The survey also says that the average starting salary for students graduating from four-year colleges in 2009 and 2010 was $27,000 - this is down from $30,000 for those who started entry level jobs in 2006 to 2008.

According to a piece in the NYTimes yesterday

"Among the members of the class of 2010, just 56 percent had held at least one job by this spring, when the survey was conducted. That compares with 90 percent of graduates from the classes of 2006 and 2007. (Some have gone for further education or opted out of the labor force, while many are still pounding the pavement.)

Even these figures understate the damage done to these workers’ careers. Many have taken jobs that do not make use of their skills; about only half of recent college graduates said that their first job required a college degree. . . . .

An analysis by The New York Times of Labor Department data about college graduates aged 25 to 34 found that the number of these workers employed in food service, restaurants and bars had risen 17 percent in 2009 from 2008, though the sample size was small. There were similar or bigger employment increases at gas stations and fuel dealers, food and alcohol stores, and taxi and limousine services.

This may be a waste of a college degree, but it also displaces the less-educated workers who would normally take these jobs. . . . "

Other Quick Stats from the Report

• Seven percent are unemployed, and seven percent are working part-time and looking for full-time work.
• Twenty-one percent are in graduate or professional schools.
• Among those working, up to one-third of the recent graduates said they accepted a job that paid less than they expected or was below their level of education or was not in their field of interest.
• Eighteen percent took a job without health benefits.
• The median starting pay for 2009 and 2010 graduates was 10 percent lower than in 2006 and 2007
• Half the graduates said they'd taken jobs that didn't require a bachelor's degree.
• The survey found that the male graduates were making more than the women. "There is more than a $5,000 difference in starting salaries, with a median for men of $33,150 compared to just $28,000 for women," the report said.
• Nearly one-third of the graduates said they had quit a job since graduation. Twelve percent said they'd been laid off. Twenty-three percent said they'd worked for temporary agencies or done seasonal work.

On the heels of Kevin's excellent (and widely read) piece about college affordability, and Jill Biden's speech about the virtues of community colleges, I wanted to highlight a new policy that went into effect over the holiday weekend - Income Based Repayment. Here's a quick video explaining the concept and the policy:

Essentially, the program allows qualified borrowers to pay back their loans at a rate commensurate with their income and expenses, rather than on a fixed yearly plan. If, after 25 years of payments, the loans are still not paid, the remaining balance will be forgiven. That time frame drops to 10 years for borrowers who work in government or the nonprofit sector.

The program has received good coverage so far in the LA Times and the New York Times. It's not going to solve all our problems, or make college affordable for all Americans, but it does offer some relief from the staggering debt burden facing young Americans, and that's a good thing.

Following up on Craig's post about The Youth Job Market, there are four stories about Millennials in our new (bad) economy that are worth reading today.

First, check out today's New York Times article on the rise in applications at state universities. Parents and students are looking or bargain educations during the economic crunch, even as state universities are facing severe budget shortfalls:

“That’s the conundrum,” said Megan Galbraith, a spokeswoman for SUNY, the nation’s largest public university system under a single governing board, with 438,000 students on 64 campuses statewide. “There’s increased demand for what SUNY has to offer in this economy. But with this budget, there will be challenges meeting that demand. Our campuses are increasing class sizes. Services may be diminished. Even in residence halls, you might see more tripling up. It’s that type of ripple effect in the quality of the student experience.”

MSNBC notes that NY isn't the only state where students are bargain hunting and colleges are trying to negotiate the economic pinch. Community college across the entire country are facing these same decisions as young and old alike try to gain more education and skills training to face a tougher job market:

Almost 1,200 community colleges serve more than 10 million students across the country, according to the American Association of Community Colleges, and they are at the uneasy intersection of two trend lines as the economic recession enters its 15th month.

Tough times are fueling eagerness among workers who have lost their jobs to upgrade their skills and résumés. At the same time, the recession is forcing traditional four-year colleges and universities to cut enrollments and sharply raise tuition, freezing out many would-be students who are themselves feeling the pinch of the recession.

At Left in the West, Matt Singer of Forward Montana looks at a small ray of hope that Obama's budget offers students in the closing of the (more expensive and inefficient) FFEL loan program:

Something funny happened on the way to privatization. Rather than saving taxpayers much money, in a range of programs, we simply wedded the worst of government (unresponsive monopoly) to the worst of the private sector (excessive profit) without getting the best of the private sector (meaningful competition) or of government (meaningful political accountability).

Student loans is one area where that happened. Many loans currently processed are federally guaranteed, but handled through for-profit companies like Sallie Mae. The fact that the loans are backed by the feds means that taxpayers shoulder all the risk, but private companies rake in fees for, well, not much.

The Obama Administration proposed moving the federal student loan system to one entirely handled through direct loans, which cut out the middle-man.

Finally, the LA Times offers a column that will surely try the patience of many of us who work with and for young people - The Millennial Generation Test. The piece quotes reporting from the thoroughly debunked Millennial-hater Jean Twenge, and uses as evidence a single anecdote that is in direct contradiction to recent studies on Millennial attitudes towards major institutions. In the end, the author professes the hope that Millennials will "man up" and thrive in response to the current economic climate, but that's not very comforting after 3-400 words claiming we're all a bunch of narcissistic cry babies . . .

Recent right-leaning editorials have picked up a new theme that may surprise you--their great concern for future generations and how today's policies will affect them. Check out this quote from the Rome Sentinel (Feb 9) in reference to the American Recovery and Reinvestment Plan:

"It is not too late to stop the ill-designed bill in Congress that, financed as debt, is more a generational theft act than a stimulus bill. Larded up as it is, the "stimulus" bill is still a "porkulous" bill even after the so-called concessions to moderates.

"The bill, more than 1,000 pages long, is a perverse form of thrusting unnecessary debt on our children.

"Congressman Michael Arcuri and Senators Charles Schumer and Kirsten Gillibrand cannot escape responsibility for what will become known as The Generational Theft Act of 2009."

Did the GOP call it generational theft when they sent young Americans to fight and die in Iraq under false pretenses? What about when the national debt nearly doubled in the last 8 years? They certainly didn't call it generational theft when they opposed higher environmental standards to ensure a healthy earth for future generations.

Is the GOP aware that this bill aims to help "our children" by investing in them?

A 2007 Tax Foundation report by Chamberlain and Prante found that "[o]ver a lifetime, government spending follows a U-shaped pattern with large education and welfare spending in youth [aged 25 and under] and large Social Security and Medicare payments in old age."

I think it's reasonable, as a tax-paying adult between the ages of 26 and 54, to assume the "burden" of repaying an older generation for being your fiscal steward in addition to providing more and more opportunities for future generations to become the most wise, peaceful, and equal generation of its time. This type of behavior is ideally seen at the national-level and at the family-level.

Millennials will face new challenges when caring for the Baby Boomer generation as they near towards retirement. What they don't need are unnecessary financial burdens that make it difficult for them to succeed early on in their adult lives. Young people are already saddled with a "burden", and the GOP needs to recognize and respect that reality.

Imagine for a moment that you are trying to traverse a hill. The hill represents how much taxes you expect to pay over your lifetime. One end of the hill is the start (the beginning of your life), the top of the hill is middle-age, and the other end of the hill is, well, six-feet-under. At both ends of the hill, you pay relatively little in taxes, and the top of the hill is when you pay the most in taxes. This is what tax-paying looks like throughout the course of one's life. For some generations, traversing this hill was made easier (but not faster), because the government helped invest in the well-being of the tax-payer very early on in life.

This is not the case with Millennials. The rising cost (PDF) of college and beyond has not resulted in a proportionate increase in services or resources. When you place this fact of rising costs into the context of rising college attendance, the effect is magnified. The share of young people that have attended college has increased 21 percentage points from the 1970s to the present (PDF, pg. 5). What's more is the fact young people with post-graduate degrees on are on the rise, too. What all this amounts to is a more difficult (but not slower) journey over the hill. It's almost as if Millennials have to carry a heavy backpack (read: student debt) and still keep pace with everyone else. Now add to that the fact that the end of the hill for Millennials is much farther away than it is for previous generations due to longer life expectancy.

That's why the higher education provisions in the American Recovery and Reinvestment Plan are so important, allowing for students to access money from the government at a more reasonable rate than private firms offer; increased work study money means that already busy students who need money can earn it while gaining valuable skills in a student-friendly work environment. The bottom line is that the stimulus plan lightens the backpack of debt that young people are carrying very early on in life, so that their fiscal stewardship can be just as good as previous generations.

On Tuesday, Mike linked to and quoted a post at Tapped that summarized the first ten pieces of legislation on which the Senate will vote. The topic of student debt was buried deep within the description of S.7:

S.7 -- Education Opportunity Act of 2009. "To expand educational opportunities for all Americans by increasing access to high-quality early childhood education and after school programs, advancing reform in elementary and secondary education, strengthening mathematics and science instruction, and ensuring that higher education is more affordable." An education omnibus bill that will no doubt be split up into separate pieces of legislation.

As 2009 arrives and legislative priorities fall into place behind the stimulus bill, a trailer for a documentary on student debt has come along that captures the struggles many recent college grads are facing in paying student loans while simultaneously weathering this rough economy. Default -- the title of the film -- explores the stories of borrowers whose lives have been turned upside down by skyrocketing interest rates and a poor economy. Here's the trailer:

A summary of the film at its website explains the problem.

In 2005 private student loans were exempted of ALL consumer protections. No matter when their loans were taken, many borrowers now find themselves in a paralyzing predicament of repaying two, three or multiple times the original amount borrowed, with no bankruptcy protection, no cap on fees and penalties and no recourse to the law. The consequences are dire, with stories of borrowers in financial and emotional ruin.

Beyond these personal accounts, DEFAULT will explain the differences between federal and private student loans, a subject often overlooked by colleges and high school counselors. It will also give detail on the rise of the private lending industry and of college debt.

While the media has focused on the disaster that sub-prime mortgages have turned out to be, only superficial attention has been given to financial giants which have been profiting by approving loans to low-income students with variable interest rates up to 25%.

The woman speaking near the end of the trailer about the pressure on our generation to step in for retiring Boomers in fields like law, medicine, and engineering is absolutely correct -- the price tag for not only the education for those careers, but for the loans students have to take out to finance that education, is harming us. In the last ten years, seniors with student loans saw their debt more than double from $9,250 to $19,200, a 108% increase (58% after factoring in inflation). Keeping in mind that tuition has increased at public colleges and universities from 2001 to 2006 by 40% after inflation, many students may not even be able to get to their careers in one piece.

While we need to remember that not every Millennial is a college graduate or student, this is an excellent example of an issue that directly impacts us. While the issue would probably be best dealt with by a younger Congress (not the oldest one ever), we have no choice but to work with what we have. We should be pushing our representatives and senators to do something about this issue, letting them know we're not going to forget about it.

With skyrocketing interest rates and disappearing consumer protections in the student loan industry facing us, it's up to us to repair the problem. Contact your representative and/or senator now.

Update: Add Florida to the list, as the University of Miami caves to Sallie Mae:

According to excellent reporting in the St. Petersburg Times, many University of Miami incoming freshmen were surprised this summer when they received pre-filled out master promissory notes from loan giant Sallie Mae even though they never actually applied for a loan. The students were particularly shocked to see that the notes included personal information, such as their Social Security numbers and birthdates, which they had not authorized the university to release.

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

Higher Education Watch is reporting a disturbing piece of news. Sallie Mae and other corporate lenders are using state Freedom of Information Laws in a bid to force colleges and universities to hand over private information about students and their financial status. So far these types of requests are known to have been filed in New York, Pennsylvania and Oregon.

According to Higher Ed Watch, Sallie Mae will not challenge any schools that refuse to comply with the request, and insist that their intent in making such requests is to inform students of "all of their financial options." That is a hard pill to swallow. Sallie Mae is a company that profits by pushing more costly private loans on students over loans that come directly from the federal government. As Higher Ed Watch notes, a more likely explanation is that Sallie Mae and other lenders are targeting schools where they have failed to be included on the preferred lender list - a listing of private lending institutions that school financial aid offices provide to students who need to fill in the gaps in their funding after grants and federal lending options are exhausted.

What can be done? Students at schools can engage their financial aid offices to see if Sallie Mae or other lenders have issues such requests, and activists can work towards strengthening the Family Federal Education Rights and Privacy Act. FOI laws were created to increase transparency in government, not to allow corporations to exploit young people trying to pay for an education.