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!
Thank you for your articulate and realistic perspective to what is really going on with these student loan rip offs. I agree with you whole heartedly on your story. There needs to be some kind of bail out or the U.S. is only going to sink deeper into a deficit due to the fact that many of us may never be able to fully pay back this kind of debt in our lifetime. We need to wake up to what is really going on behind the scenes with the government and private sector lenders and realize the inequality of how this financial system works. It's definately not to the benefit of the average working class individual, that much is certain. Something needs to be done soon to address this financial crisis, which is now exceeding credit card debt in this country. The system is broken and we need a sensible solution to fix it so that we can educate and train our workforce so that our country can thrive and prosper, not go bankrupt.
While I don't believe that loan forgiveness is the answer, I do believe that something needs to be done to help the millions of Americans struggling with student loan debt. I don't have the end all solution, but I do have an idea that would undoubtedly provide an avenue of relief that doesn't yet exist while simultaneously stimulating the economy and spreading awareness.
Congress needs to put in place tax incentives for people and corporations that want to help alleviate student loan debt by making charitable contributions. Right now, however, any donation given to an individual is considered a gift, not a charitable contribution, and therefore cannot be used as an income tax deduction. If donors were able to write-off donations to student debt then everyone in the equation would see benefits. Student debtors would gain ground on their loans, donors would get a tax deduction, and the economy would see more cash in the pockets of consumers. While loan forgiveness would be wonderful for many people, I just don't see it as attainable or logical. However, there are other creative and bipartisan ways that we can provide help! Visit my petition below to help, and more importantly spread the word.
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So even if this one idea was a viable option, when do you think Congress would ever get around to putting in place tax incentives for people and corporations that want to help alleviate student loan debt by making charitable contributions? Once again, here’s an idea based around big corporations who are always entitled to breaks and selecting who they choose to help. This could only be part of the solution, because I don’t think big corporations (entitled to bailouts themselves) are going to help alleviate student loan debt for every individual who is suffering under the weight of one. What really bothers me when I read these student loan stories that bring tears to my eyes, is a common theme throughout many, which is that people did not understand the implications of what could happen to them if they lost their job, experienced a serious health crisis or some other unforeseen life issue that came up which would affect their ability to pay back in a timely manner. I don’t think young people (even older in some cases) understand the implications of interest or what compounded interest is when a loan is in forbearance. These implications need to really be emphasized by college advisors because this is a serious problem for way too many people. You have people on here who feel like committing suicide and their health is getting worse from the depression and stress caused by a situation where there is no reasonable way out. There needs to be far more education in our high schools for young people and parents about what they’re facing when they sign these loan papers, including what can happen if they’re unable to pay it back. We want a trained workforce, but yet, we’re setting up serious road blocks preventing people from pursuing the “American Dream”. Why is it that people can file bankruptcy in situations where they grossly mismanaged their money, but when it comes to a student loan, and we hit hard times, there isn’t a reasonable option? We just end up getting punished for trying to improve ourselves and society. I’m thankful some people have an out with credit cards if they become ill or their company lays them off, since I know people who have been there. While I don’t think anyone on here is asking for total forgiveness, I think we’re looking for a sensible pay back solution that still allows us to eat and pay our rent or mortgage. A solution that doesn’t allow the loan cancer to spread because you can’t afford large payments. I read the story about the young lady with $300 grand in student loan debt. Why didn’t anyone explain to her what the repercussions were with taking out these loans? Why did lenders keep allowing her to take more loans out when she was clearly in over her head? It’s like vultures swirling over a merciless victim or victims, when a parent or cosigner is involved as well. I think many of us were misled and never imagined what would happen if we lost our job and couldn’t pay our loan back. I’m sick of people who have never walked a mile in our shoes, judging. What ever happened to compassion for others? We had it for corporate bailouts. This too, like wall street, is having a serious impact on our economy and quick solution needs to be implemented soon before education only becomes an option for the very privileged or those lucky enough to earn a scholarship with the best of grades.
I agree with you that this is only part of the solution.
But, don't you think that if these incentives were in place, then innovative people would find ways to make it easy for potential donors to make charitable contributions to student debtors? Take lilyslist.com for example, a website that allows its users an easy way to accept gifts towards their student loan debt. The website has been operating for over two years from what I can tell and they only have just over 100 users!!! Why so few? This website should be wildly successfull. Do you know why it isn't? Because there are no incentives in place for donations to student debt. Corporations donate HUNDREDS of MILLIONS of dollars to charities annually because it lowers their taxable income. If they were smart they would donate it to the young educated population of student debtors in America who are going to pump the money back into the economy. It makes so much sense it drives me crazy!!!!!!!
If I've persuaded you at all, please sign my petition at
You may be on to something worth signing, but let me play the devil’s advocate here for a moment. Would your proposal help benefit privileged people even more by choosing select people who they wish donate to and receive a tax write off? I don’t want to see a scheme that allows the rich to get richer while the rest of us still struggle to get back on our feet financially. I’m trying to be open minded, but I’m a bit skeptical. I want to see equality in this process. I understand that making a charitable contribution would benefit someone rich and help stimulate the economy, but charities select their own recipients as well. I hear you say that you do not agree with student loan forgiveness, so can you give me a hypothetical scenario on how your proposal would help out the young lady with a $300 grand in student loans for example? How would this process work? Would this money go into a pool that would help everyone and be paid out on a sliding scale based on income? I’m desperate for any and all sensible solutions at this point and I appreciate your input here. I’m just fed up and beyond stressed. I’m not trying to be a jerk either. I’m just trying to figure out how this would work. I need to start enjoying life again.
I’m just brain storming here, but how about a proposal based on federal poverty guidelines that creates a sliding scale that phases out at a specific income? For example, say you forgive 50% of the loan (or something like that) for someone who is eligible for a student loan forgiveness program based on the federal poverty level?
I hope you realize that I'm not trying to offend you with my subject title here. I've gotten ahead of myself many times and had someone tell me those exact words when I needed to hear them most. The last thing I want to do is involve a federal agency that is gonna make me fill out applications to determine what poverty level I fall under and sliding-scales and blah-blah, your losing me. People already file tax-returns every year, forget adding extra paperwork and more agencies. My idea is simple. Put the incentives in place, and then let innovation take over.
As for your $300k student debtor, once my proposal is in effect it will be up to her and every other student debtor to solicit their own donations for a while until some more substantial fundrasing efforts begin to emerge, AND THEY WILL EMERGE. Don't worry right now how it's going to all work, because without my proposal becoming law your wasting your time.
I think all options should be considered. Not just one idea. Lets be open minded to all solutions, since I don't believe just your plan would solve the whole crises. I understand no one likes filling out paper work, but it's almost unavoidable, unless someone just cuts you a check and walks away. But if a corporation wants a tax deduction for a charitable contribution, they'll have IRS paperwork as well. However, I'll get my tin cup out to solicit whenever your plan is implemented.
It’s very frustrating to read the cold hearted comments on here by people who think that those of us with student loan debts are trying to get a free ride. I read a comment from one guy who worked three jobs to pay off his loans. Well, kudos to him. Because of my health problems and raising two kids, I have a hard time keeping up with one full time job. Here’s my story.
I live in a rural part of the US and grew up with parents who never attended college. Besides me, there was my sister. My dad worked in construction and went through long bouts of unemployment. My mother worked cleaning nursing home rooms. They struggled financially throughout our years growing up. I knew when I finished High School, I wanted something better for myself after listening to my parents argue about money most my life and worrying about whether we’ll have enough to eat. We were so poor, we didn’t even have indoor plumbing. I went to a technical college and received an associate’s degree which I nearly paid off. I started applying for jobs and didn’t have much luck. Then I finally landed a job as an administrative assistant for a human services agency. After a couple years of working there, I was encouraged and felt pressured by my boss to further my education because if I didn’t, I was led to believe that someone more educated than me might come up through the ranks and threaten my position or any ability to advance. I enrolled in a business administration bachelors program at a private liberal arts college. I could attend class in the evening and take a course during the day on my lunch break. Living in a rural area, there are not many options for a reasonably priced institution for higher education. I would have had to drive an hour to the nearest community college, and with my kids and job that was not an option. I was told this program would cost $15 grand. I signed the loan papers with Direct Loans. It took me over two years to complete this program and I graduated with honors. Six months later, I received the bill $22,000. I called the College and talked to the admissions advisor about this. Somehow I misunderstood that the $15 grand only covered the core of the program. What they advertised didn’t factor in the costs for the additional liberal art courses such as fine arts, history, physics, political science, etc. During that time, I went through divorce and was on my own, living in a trailer park, struggling with two young kids on one income. I put the loans into deferment and forbearance so I could pay rent, pay creditors, medical bills, utilities and afford to eat. Eventually, the interest accrued and my student loan grew to $31,000. I don’t live high on the hog at all by any means. I paid off my credit cards while I know so many others who filed bankruptcy to get out of paying theirs. I drive an old car, now live in an old house that needs much work and have health issues. This past year, I had two heart attacks and I’m 40 years old. I’m exhausted and do not feel well a majority of the time. I do everything I can for my health and my kids. I considered going to part time at work, but because of this student loan, I’m trapped working full time and I’m very stressed out. The minimum payment that is required for this student loan is $300 a month because it is now in collections. I had made previous attempts to make payment arrangements but because of my heart attacks, I was in and out of hospitals, didn’t pay attention to the loan and I ran out of time. Three hundred dollars is a lot of money when you’re on a fixed income. I feel very misled signing into this loan. I knew I would have payments, but I never imagined the other life circumstances I would go through that would affect my life and my ability to make these large payments. I regret going back to school. My kids are teenagers and I’m actually discouraging them from going to a four year institution, because of my fears that they will end up in a situation like me. I wake up stressed out and sick daily because I feel trapped with this massive debt over my head. I feel like I’m in prison for life with no hope for parole. There is no way out of this. If I don’t pay what’s expected, this massive debt grows and my wages will be garnished, taxes seized and if I make it to old age, my pension will be taken. I’m having problems focusing at work and to top it off, they’re talking about layoffs, which would put us on the street. I don’t know how much more I can take. I wished I would have really researched better what I was getting myself into.
PLEASE, President Obama sign this legislation into law.
I am soon to be 63. I was a non-traditional student when I finally started college at age 40 back in 1990. I ended up graduating with Magna Cum Laude honors in my two degrees, which I did simultaneously. I have a Journalism - Magazine Sequence Degree and a BA in Communication - TV, Film, Radio Degree both from the University of Missouri - Columbia.
I have been and still am a single mom of 40 years to two lovely, successful young women who are also saddled with student loan debt. They are also single Moms raising my three precious grandsons. I diligently pursued my degrees with the hope of improving my financial position for my daughters and myself. However, I am now living the worst nightmare of my life.
I owe over $70,000.00 in student loan debt. Over half of this is accrued interest and penalties because for the last 17 years I have had to defer my loans due to financial hardship.
When I graduated I had such high hopes. Then, after four frustrating years of earnestly applying for positions in my new fields of study and working two or three part-time jobs at a time, I came to the sad realization that no one wanted a 50-year-old woman fresh out of college. And, I still had a teenage daughter at home.
I have worked hard all my life and even started working at age 13. In early 2000 I had to switch gears again and began studies in the insurance profession. I am currently and have worked in the insurance profession for twelve 12 years. Kind of ironic, wouldn't you say?
Enter another setback. In 2004, after I had several good years in my new field, I was severely injured and for the next three years I had three surgeries and was unable to work 26 months out of 36 months. Well, in my field if I can't work I don't get paid. I work on straight commission - no regular payday. I am a 1099 tax payer. So can you see the major problem I ran into? Everything I was able to save went to pay normal living expenses, bills and massive medical bills. I have lost my retirement and I will have to work until the day I die. That is unless I can write a great book or screenplay - LOL. I had to insert some humor because this all weighs on me so heavily.
My student loans have now gone into collection and AES is threatening me with garnishment - Happy Birthday to me on May 2nd when I turn 63. I only made $30k something last year and $5733.00 of that was my Social Security and $2628.00 was a small pension I receive from a previous employer.
This certainly is not how I imagined my golden years to play out. This student loan situation is just all wrong. Plus no one will listen to your requests for help at Sallie Mae. Also, now that my loans are in collection the folks at AES, the collection agency for Sallie Mae, for sure don't listen to me. They are just through-and-through mean, nasty and threatening.
I have lost my home, my credit is shot and I will more than likely never be able to buy a home again because of all this. What I do still seem to have though is my Faith and Hope. My self esteem most of the time is pretty much shot but if it weren't for my Faith and Hope, which I have only by the grace of God, I think I would already be six feet under due to the tremendous stress I live with and have lived with for far too many years.
I know I'm not the only one in this situation and I am sure there may even be folks in far worst positions than mine. So my greatest and constant prayer is the same now as it has been for years and years - "Dear Heavenly Father please lead me out of this financial dessert that I have wandered in for 40 years."