President Obama recently signed into law a $787 billion stimulus package on top of Bush's grossly mismanaged $700 billion TARP bailout from last September. Several weeks ago, the Federal Reserve basically printed an additional $1,000,000,000,000 to inject more funds into the monetary system which will undoubtedly have the effect of diminishing the purchasing power of the dollar. Since last fall, the government has paid out trillions of dollars in bailouts, handouts, loans and giveaways, with no end in sight as our leaders try anything and everything to try and get our spiraling economy under control. While some of what Washington has already done may act to stimulate the economy, much of the trillions of dollars already spent will, no doubt, turn out to be just money wasted.
Tax rebate checks do not stimulate the economy - history shows that people either spend such rebates on paying off credit card debt, or they simply save them, doing little to nothing to stimulate the economy. Presumably, that is why they were removed from the final version of the stimulus bill. The tax cuts that were included, however, amount to a whopping $44 per month for the rest of 2009, decreasing to an even more staggering $33 per month in 2010. This is hardly "relief" as it is likely to help nobody.
The Wall Street financial institutions, auto manufacturers, insurance companies and countless other irresponsible actors have now received TRILLIONS of taxpayer dollars(as demonstrated above, that's a number with *12* zeros at the end of it) to bail them out of their self-created mess. This, too, does nothing to stimulate the economy. It merely rewards bad behavior and does nothing to encourage institutional change. There is a better way.
How many times have we heard from our leaders in Washington that education is the key to solving all of our underlying societal problems? The so-called "Silver Bullet." For decades, presidents, senators and members of Congress have touted themselves as champions of education, yet they've done nothing to actually encourage the pursuit of one on an individual level.
Some of us have taken advantage of Federal Stafford Loans and other programs, including private loans, to finance higher education, presumably with the understanding that an advanced degree equates with higher earning power in the future. Many of us go into public service after attaining such degrees, something that's also repeatedly proclaimed as something society should encourage. Yet, the debt we've accrued to obtain such degrees have crippled our ability to reap the benefits of our educations, causing many to make the unfortunate choice of leaving public service so as to earn enough money to pay off that debt.
Our economy is in the tank. There isn't a reasonable economist alive who doesn't believe that the economy needs stimulating immediately. The only debate now centers on how to go about doing it. While the new stimulus plan contains some worthy provisions, very little of it will have a significant and immediate stimulating effect on the economy. The Obama Administration itself doesn't expect to see an upsurge in the economy until mid-to-late 2010.
Instead of funneling billions, if not trillions of additional dollars to banks, financial institutions, insurance companies and other institutions of greed that are responsible for the current economic crisis, why not allow educated, hardworking, middle-class Americans to get something in return? After all, they're our tax dollars too!
Forgiving student loan debt would have an immediate stimulating effect on the economy. Responsible people who did nothing other than pursue a higher education would have hundreds, if not thousands of extra dollars per month to spend, fueling the economy now. Those extra dollars being pumped into the economy would have a multiplying effect, unlike many of the provisions of the new stimulus package. As a result, tax revenues would go up, the credit markets will unfreeze and jobs will be created. Consumer spending accounts for over two thirds of the entire U.S. economy and in recent months, consumer spending has declined at alarming, unprecedented rates. Therefore, it stands to reason that the fastest way to revive our ailing economy is to do something drastic to get consumers to spend.
This proposal would quickly revitalize the housing market, the ailing automobile industry, travel and tourism, durable goods and countless other sectors of the economy because the very people who sustain those sectors will automatically have hundreds or, in some cases, thousands of extra dollars per month to spend. The driving factor in today's economy is fear. Unless and until the middle class feels comfortable enough that they'll have their jobs, health insurance and extra money to spend not only next month, but the month after that, etc., the economy will not, indeed, cannot grow fast enough to stop the hemorrhaging.
Let me be clear. This is not about a free ride. This is about a new approach to economic stimulus, nothing more. To those who would argue that this proposal would cause the banking system to collapse or make student loans unavailable to future borrowers, please allow me to respond. I am in no way suggesting that the lending institutions who carry such debts on their balance sheets get legislatively shafted by having them wiped from their books. The banks and other financial institutions are going to get their money regardless because, in addition to the $700 TARP bailout, more bailout money is coming their way. This proposal merely suggests that in return for the trillions of dollars that has been and will continue to be handed over to the banks, educated, hardworking Americans who are saddled with student loan debt should get some relief as well, rather than sending those institutions another enormous blank check. Because the banks are being handed Trillions of dollars anyway, there would be no danger of making funds unavailable to future borrowers.
To avoid the moral hazard that this plan could potentially create, going forward, the way higher education in this country is financed MUST be reformed. Requiring students to amass enormous debt just to receive an education is an untenable approach, as demonstrated by the ever-growing student loan default rates. Having a loan-based system rather than one based on grants and scholarships or, ideally, public funding, has, over time, begun to have the unintended consequence of discouraging people from seeking higher education at all. That is no way for America to reclaim the mantle of the land of opportunity.
A well-educated workforce benefits society as a whole, not just the students who receive a higher education. It is often said that an undergraduate degree today is the equivalent of a high school diploma 30 or 40 years ago. Accepting the premise as true that society does, in fact, place the same value on an undergraduate degree today as it did on a HS diploma 30 or 40 years ago, then what is the rationale for cutting off public funding of education after the 12th grade? It seems to me that there is some dissonance in our values that needs to be reconciled. That, however, cannot come to pass until the millions of us already shackled with student loan debt are freed from the enormous economic burdens we're presently carrying.
Many of the vocal nay-sayers to this proposal seem intent on ignoring the fact that Washington IS going to spend trillions of dollars, likely in the form of handing blank checks over to more and more banks, as a way of getting the economy under control. Normative assessments of how things should be are fine, but they don't reflect reality. Accepting the premise that Washington will spend Trillions of dollars in unprecedented ways (a good portion of which will just be trial and error, since we're in uncharted waters), what is the argument against directly helping middle class people who are struggling, rather than focusing solely on the banks and other financial institutions responsible for crisis to begin with?
Further accepting that there is an aggregate amount of outstanding student loan debt totaling approximately $550 Billion, (that's Billion with a B, not a T), one is forced to ask again, what is the objection to helping real people with real hardships when all we're talking about is a relative drop in the bucket as compared with what will be spent to dig us out of this hole?
In a perfect world, I share these biases towards personal responsibility and having people pay back what they owe and making good on the commitments they've made. But we don't live in a perfect world and the global economy, not just the U.S. economy, is in a downward spiral, the likes of which nobody truly knows how to fix.
This proposal will immediately free up money for hardworking, educated Americans, giving them more money in their pockets every month, addressing the very real psychological aspects of the recession as much as the financial ones. Is it the only answer? No, of course not. But could it help millions of hardworking people who struggle every month to get by? Absolutely. Given the current economic climate, as well as the plans to spend trillions of additional dollars that are in the works, one must wonder what is so objectionable about giving a real helping hand to real people with real struggles.
2009 and the new Obama Administration is supposed to be about change. Nothing in the new economic stimulus package represents a significant departure from the way Washington has always operated - it's merely a different set of priorities on a higher scale, but it's certainly not materially different from any other economic stimulus package passed during the past few decades. Washington cannot simply print and borrow money to get us out of this crisis. We The People, however, can get this economy moving NOW. All we need is relief from debt that was accrued under the now-false promise that higher education equates with higher earnings.
Free us of our obligations to repay our out-of-control student loan debt and we, the hardworking, middle-class Americans who drive this economy will spend those extra dollars now.
If you believe that there's a better way of climbing out of this economic crisis, one that empowers us to directly spend money, start businesses, free up credit and create jobs, then please join this group and encourage others to do so as well. There's strength in numbers - the more people to join this group, the louder our voices and the greater the chances of being heard by President Obama and Congress.
Support real change we can believe in!
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I was happy being a lymphatic therapist when the government said I needed a higher education. Naturally, I stopped paying cash for my degree and took out loans to attend university full time. A year later, the government said I needed either a Masters or a PhD to return to lymphatic therapy. I magically ended up with 100k student loan, and I also went homeless during undergrad. My therapy experience permits me to guild, mentor, and teach, but I can not perform services with reinburstments, despite the government saying I can still do lymphatic therapy for cash only. Patients are on a 3 month waiting list to get therapy because the clinic can not find therapist. A few of the patients pay out of pocket for me to treat them.
I put all of my money into a 3rd party to apply to grad school and lost about $1500.00 because the 3rd party vender could not resend forms to doctors that I followed for variation of hours. I missed out on attending medical school this year. The bank harassment forced me into any available school. I am not attending Oriental Medicine School, working 3 jobs (7 days a week and often 12 to 17hr days) and I can not afford to pay a rent. Again, the government created more regulation that states I can not work in particular areas. The government also permits "employers" to force me to sit in a small room for 9 hours without pay. I had several jobs pay on average 2.15 to 6.00 per hour as a 1099. That is below minimal wage, but it is legal.
Where do I turn to improve my situation? No where, because the government will be there to regulate me out of work.
You said, above, that:
"...debt that was accrued under the now-false promise that higher education equates with higher earnings."
While you are correct here, the "false pretense" example you give is, strictly-speaking, not illegal: Consumers know that a certain salary is not guaranteed by the college. (Why, everyone knows that! No college can 'guarantee' you a job.)
However, Robert, you are onto something: There are other lacking notices in this loan that make it illegal:
Making reference to this article, http://en.wikipedia.org/wiki/Higher_education_bubble which cites to this resource, http://thirstforjustice.net/Higher-Ed-Tuition-Costs.html we see a legal brief posted by, perhaps one of the smartest legal minds alive: (and the author is apparently a fan of yours, as he cites to your "Million Signature" petition in both the outset and the closing)
In the brief, linked in the top-left corner of the Advocacy page, http://thirstforjustice.net/Student-Loan-Abuse_Brief.pdf addresses your legal point:
See e.g., chapter 1, which is titled: "I. DUE PROCESS: Lack of Notice and Void for Vagueness issue."
My point: The students, when taking out the loan, are NOT told that their loan lacks the bankruptcy safety-net (as well as ALL other Standard Consumer Protections) -- and, it is this lack of notice that makes it a 'vague law', which is Constitutionally prohibited (and against current case law):
Prohibition Against Vague Laws is a standard of American case law that states that a given statute is “Void for Vagueness” (VFV), and thus unenforceable if it is too vague for the average citizen to understand its meaning or application. For example, a statute might be Unconstitutionally void for vagueness if a citizen of average intelligence cannot generally determine which conduct is prohibited, who are regulated, or what punishment may be imposed. The VFV doctrine is normally applied to criminal statutes, but applies to civil statutes also. The U.S. Supreme Court, in Grayned v. City of Rockford, 408 U.S. 104, at 108-109 (1972) [footnotes omitted for brevity], Justice Thurgood Marshall writing for the court, held: “It is a basic principle of due process that an enactment is void for vagueness if its prohibitions are not clearly defined. Vague laws offend several important values.
First, because we assume that man is free to steer between lawful and unlawful conduct, we insist that laws give the person of ordinary intelligence a reasonable opportunity to know what is prohibited, so that he may act accordingly. Vague laws may trap the innocent by not providing fair warning.
Second, if arbitrary and discriminatory enforcement is to be prevented, laws must provide explicit standards for those who apply them. A vague law impermissibly delegates basic policy matters to policemen, judges, and juries for resolution on an ad hoc and subjective basis, with the attendant dangers of arbitrary and discriminatory application.
Finally, where a vague statute "abut[s] upon sensitive areas of basic First Amendment freedoms," it "operates to inhibit the exercise of [those] freedoms." Uncertain meanings inevitably lead citizens to "steer far wider of the unlawful zone' . . . than if the boundaries of the forbidden areas were clearly marked."
There are so many other problems, but these are just a few that "jump out." Do take a further look into this, and, if I were you, I'd download this research for further study.
Oh, I just now noticed: The current US Law on bankruptcy violates The U.S. Constitution, in Art. 1, §§8—9:
Section 8 only allows UNIFORM bk law to be written:
“The Congress shall have Power...To establish...uniform Laws on the subject of Bankruptcies throughout the United States.”
And, article 9 prohibits ex post facto Laws from being passed -but who really cares about the Constitution anymore? I think the VFV argument the author makes is, by far, the strongest argument yet for overturning the current Federal Law:
Since you're a lawyer, I'd ask, could this brief be used in a court of law to overturn the law on this head?
I feel everyone's pain. I just recently recieved a PhD and I have a son in college. I am so sorry I went back to work on my PhD. I not only have my own debt, but I have Parent Plus debt for myself. When trying to come to some type of amicable payment schedule Great Lakes Borrowers are unbearable. If I give them the payments they are asking for--I will be homeless and begging in the streets. This student loan debt is keeping me up at night. Sometimes I say I would be better off dead at least they would wipe out my debt. I feel hopeless and helpless. I don't know what to do. I know I will not be able to pay off all this debt along with living everyday.
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My student loan interest is 8.25%. These younger people yell and scream about their 3-4%. Mine was $60K now it's $123K and growing. Even though I paid the bill, it still accrued $5400 in interest. I also lost $40K in salary money. Now I can't even afford to put money in a 401K even though I'm almost 60.
I write on the side trying to sell books and my screenplay. I work at home part time formating ebooks. Now I'm trying to see if I can legally take hours off my employer's 40 hour week to pay equal to the student loan bill which they won't pay in enough salary to pay the bill but they can hire high school dipolma's and offshore labor for me to have to work with. If they pay for a new student loan then why aren't employer's having to pay for the old student loan that has to train the high school dipolma's? Well it takes a college degree to figure that out.......D.A. Karr, Amazon.com
Let me provide some insight into why I believe at minimum we must address the cost structure of education and potentially the debt situation. I will use examples from medicine because this is my field. In brief and then expanded below if you want more detail.
#1 Costs and debt for Americans in the system is out of control, higher than ever before.
#2 It shifts the career focus from patients to pocketbooks. That debt distorts the job market away from needed workers and skews the whole healthcare system toward increasing expense.
#3 A consequence of this is foreign medical workers are at the gates of healthcare, making primary care decisions with little experience of our system or culture. This can lead to errors, misunderstanding and poorer quality care.
#4 This system puts Americans and the country as a whole at a competitive disadvantage. Foreign medical graduates can begin to save quickly for returning home and take away subsidized training positions, shifting expertise away from the US. It also takes investment and funding out of the US when we need it the most.
#1 Costs of education adjusted for inflation are the highest they have ever been and wages have not increased comparatively. A senior neurosurgeon in my hospital tells me he graduated med school with approximately $5000 of debt. Today, we typically graduate with >$170000 of debt for a similar education. Wages adjusted for inflation have not increased anywhere near the same rate as debt has.
#2 These jobs, as many are, happen to be a labor of love. However, they are skewing the workforce and the mentality of graduates. Firstly, american medical graduates have shunned primary care even thought the compensation is first rate among american jobs. This is because the debt burden forces us to think in terms of debt repayment and not the jobs we love. It also skews graduates out of the highest end specialties. Here is an example, a neurosurgery trainee with have a wage of 30k/yr for 8 years after medical school after taking out basic repayments. So, the debt burden shifts the focus of students away from better care (both primary care and difficult specialties) and focuses it on high paying short training areas. (Its no wonder dermatologiy is the #1 choice of graduates, despite the limited utility for improving overall care and efficiency). In Australia the primary to specialty % is 80-20% but in the US it is flipped at 20-80%. We overspecialize away from caring for families.
#3 Based on #2 above, primary care jobs (which pay well if you take out the debt burden) are almost exclusively falling in the hands of foreign graduates from India, China and Pakistan. We may be lucky to have them, but if education was more affordable we might be able to train more home grown doctors. Keep in mind, the debt of Indian graduates is usually less then 5k compared to american students 170k average. So this is who we preferentially put at the gates of care for our grandmothers. These residents positions are all partly subsidized by the govt, so foreigners get these good jobs and starting saving and earning advantageously over american graduates that choose the same specialties. They have a significant advantage over americans based on the cost of education and the debt burden. We may be lucky to have immigrants in many instances, but I can also say from experience, they often leave the US to return home after a few years and deepen the workforce hole we are in. This leads me to ….
#4 We are entering a time of global competition with countries where education costs are miniscule by comparison. Yet, in the end, we compete for the same jobs. Should we both get a job, Americans are left in a hole for years while foreigners can stack up savings and take them back overseas, taking their skills with them. We are not as mobile or financially nimble as they are to make investments in local projects or hire more workers. Simply put, the situation disadvantages Americans who want to compete and save money to hire american workers. Instead should a foreign graduate wish to get subsidized training, save $ and leave, the system is just what the foreign doctors and governments ordered! By doing nothing about debt and education costs we are disadvantaging American doctors and our own country! At minimum, we need to acknowledge the extent of the problem. Then, together we can find a solution that values self reliance and fair competition.
As a RN, every word you have said is exactly how Health Care in America is. Thank you for such a detailed description. I have shared your post because there is definitely no better way I could have said this. You should be a Speaker for the Health Care workers.
Thank you so much for your empowering words