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!
I wasn't sure if every one had read this article, so I thought I would share.
There were a couple things in there that irked me, but I don't feel like ranting all day, so I will only bring up one of them. One line read, "That's the whole reason of going to school," she says, "not to avoid debt, but to get a job that enables you to pay it off." This bothered me because I did have a job out of college that allowed me to afford my style of living, along with my student loans, and I am not living beyond my means. I was recently laid-off, along with many others at my job, due to this recession. When I started college six years ago, my intentions weren't to be living in a recession. I feel like the people that make comments like that, are in a stable position and just don't know what it is like to work so hard for something and just watch it all crumble around you.
I'm not sitting here and saying that I want society to bail me out because I made the decision to go to college and now I don't have a job, but I am saying that this certainly wasn't in my plans. I do thing think that the government should somehow help us keep our good credit as long as we are unemployed. I have always been a responsible spender, and have never even been close to having a bad mark on my credit report, but now I am in a situation that I have no control over. I am doing all I can right now, and that is to work my ass off to find a job.
I went to a Tech school over a year ago. My dream was to get the job you are trained for and pay off all debts. Yeah right! I never got that job. Things come up and they are out of our control. Things that prevent us from paying back those nasty loans. Things that unfortunately put us on the credit road to hell. We didn't ask for this to happen! I'm not looking for someone to wave a magic wand and erase my debt. But a little help would be appreciated. I am an independent woman who would like to get myself out of my own debts, but I am also not afraid to ask for help when things go wrong that are out of my hands.
To all those who are saying that we chose to be unemployed after college or chose to be in so much debt I must say that this is ridiculous. We didn't chose these things. Who would want to? I graduated a year ago just when the economy started to take a down turn and never found a job in my field after attending a school that touted its network of relationships. The fact that I am paying money through taxes to help people who made poor decisions about their business is absurd. They chose to be in those positions. I didn't chose to make $9.50 an hour in a retail job, struggling to make ends meet, barely able to afford to feed myself. Yes, I did chose to go to a 4 year institution and knew there would be debt I would accumulate. However, when I see my tax dollars bailing out companys who's bad choices put them into this situation, I wonder, I didn't make a bad choice, society tells us we need to go to college, so why am I not being bailed out?
I read a few more posts on here and noticed one theme. It was that people felt tricked into seeking the most prestigious and expensive colleges and degrees because they were promised better paying jobs.
I'd encourage people with good access to the media to speak out to high school seniors and encourage them to figure out what they want to do before running up a debt on a general studies major. Parents should be encouraged to set aside their egos and encourage kids to take on dirtier jobs or go to community colleges for a year or two in lieu of a 4-year university. In Austin, plumbers routinely earn +90k a year because nobody wants to or knows how to fix a toilet, and they'll pay $250 per 1-hour toilet repair to avoid learning how. I've got plenty of friends who went to a trade school, paid 25-30k to learn diesel engine mechanics and now earn around 60-70k per year working for Caterpillar.
The idea that everyone needs a college degree is running my generation into the ground. The vast majority of jobs out there provide on-the-job training and could be done without a degree. It's time for us to society to accept that, and I'll be the first to admit that my 40k degree in liberal arts from UT has nothing to do with my job now, and it was largely a waste of money.
I am a music teacher who has a birth defect in his foot and leg. I decided to be a music teacher due to the fact that there are not many other jobs I can do beings that I can't stand on my feet for 8 hours a day to work. Where I live, there really are no sit down jobs.
During the summers while I was in college, I managed to maintain a full time job and during this time, I would go to work and then come home and do nothing just waiting for the pain to be gone from my ankle.
I managed to get into a college that is well respected in my area and only cost 95 dollars per credit hour at the time. I was diagnosed with epilepsy just previous to going into college and had to find a way to pay my medical bills and for my medication. After the first year in college, my vehicle broke down and I had to take out a private loan to pay part of my tuition and to get a cheap used vehicle to get me through college.
Upon graduating from college, I got a job as a music teacher that only paid $22,000 a year. While trying to pay off my medical bills and what I owed for medication already, I had to keep taking classes to maintain a half time student status so I didn't have to start paying my loans back yet. Now, I am currently working on on my Masters through the same college and that is only costing around 180 an hour or so. It's a really nice school.
As of this past April, the school I was at decided to cut the department I was in down and I lost my job, losing my insurance and will have to begin paying for my own medication again ($500 a month). I was not told of this until the last minute therefore missing any other area job opportunities.
In December, I will have to begin paying back my students loans and at this time, I have no clue how I will do it.
I only owe around 35k which is for 1 B.S. degree, an endorsement, and a Masters. I wouldn't say that was to bad but when December hits, who knows what's going to happen.
Upon reading this, I hope you see another them represented here. I was never out there going to college in hopes for a high paying job. I wanted to educate the young minds of our country in hopes to help them find themselves and be better people and help them to be successful in life. Money don't mean everything to me. I went to a cheaper college and even took some classes from a Community College.
I guess really this is all food for thought. Thanks for reading.
I now your pain. I was planning on being big time chemist when I found a love for teaching. I have big debt from living in an expensive town in graduate school.
I started www.studentloanrelief.org to warn other about taking out debt before they did it.
Shouldn't borrowers and their lenders be working the debt that they can't handle out in bankruptcy proceedings? As a lender, I routinely see people who had declared bankruptcy years ago. They cleaned up their debts and are moving on with life.
Student loans, like money owed in taxes to the IRS, are not exempt in Federal Bankruptcy.
Bankruptcy is forbidden. However, I think that is the only way out that is conceivable..the only thing that Congress can do to give Sallie Mae an attitude adjustment. If we could file for bankruptcy, they would be more likely to work with borrowers and not to screw them over. There needs to be checks and balances to keep greed and corruption under control.
Good points. I didn't see easier access to bankruptcy in the mission statements on this website. This group should also advocate for easier access to bankruptcy discharges or resettlements on student loans. It discourages too-much borrowing, focuses the punishment on lenders and stockholders that were greedy enough to make the loans they knew students couldn't afford, and it keeps taxpayers largely off the hook.