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!
In 2000, I decided to go back to school for a graduate degree in order to better provide for my family. After four years (one year shy of obtaining my doctorate) my wife and son both suffered medical issues and I was forced to leave school to find employment. Without the degree that would afford me the ability to repay my student loans my earning potential was limited. My wife was unemployed and for a while I was unemployed. I finally found a job in the non-profit sector that barely pays enough to keep my house, health insurance, and children fed.
My student loan defaulted and went to collections where I was allowed to pay $100.0 per month, (despite the fact that did not even cover the interest.) In the meantime, my loan has more than doubled and I now owe $194,000. (More than I owe on my house). Although the cost of living and cost of having health benefits keeps increasing, I have not had a raise in seven years. I drive a 12 year old car, I haven't taken a vacation in 8 years, I don't buy jewelry and I do most of my shopping for food at discount stores. But I am credit card debt free and never defaulted on my mortgage (so no government relief). And, since I am not a bank, a political crony, or a rich Wall Street fat cat,no government relief.
I don't resent people who have worked hard and earned what they have. But the politicians are doing it on my back! The elected officials who vote on the issues affecting my life, vote themselves raises, maintain gold standard health insurance, and get lifelong pensions no matter how short a period of time they serve. No wonder they don't think Social Security or Medicare are necessary. No wonder they are in no rush to focus on Student Loan forgiveness. They don't really care because it doesn't affect them.
Our politicians forgot that they are in office to serve the people and not the other way around.
This is not the way student loans or the government are supposed to work. And really, for all the political wrangling Democrat vs. Republican; Liberal vs. Conservative; Right vs. Left- it really doesn't matter because they all seem to have the same focus. Keep themselves in office, and keep the money rolling in. Very sad.
At least there's now some momentum in this "Student Loan Forgiveness" direction. Yet it remains the case that "the peasantry" - students, the middle class, those who actually work for a living and ultimately pay for all the high-level corruption - continues to get but crumbs, compared to ongoing Welfare Payments to financial and political elite elements, that have essentially bought out all three major branches of the federal government.
The $700 billion GWB era Wall St. Welfare handout figures cited - as with the more recent $787 billion figure cited - actually have no relation to the true scope of the related fat-cat welfare streams of recent years.
The GAO itself - the US Government Accounting Office - has confirmed that, just during a 30-month 2008-10 period, the Fed handed out a full $26 TRILLION - you read that right - to certain shadowy investor groups in the United States and overseas; thus reimbursing "secret shareholder" pool and international crony networks for erswhile enormous gambling losses (plus "A few for the road"), with current and future generations of middle-class taxpayers and citizens, natch, once again picking up the tab.
The current "Student Loan Forgiveness" movement's objectives should be far more ambitious; requesting, I would suggest, at least an 80% near-term write-off of total Student Loan debt, according to a formula considered equitable (ie: at least $800 billion in immediate relief).
The public has become so brainwashed by the Corporate Media and so accustomed to being lied to - all the biased "think tank" and paid-pundit types that fill the airwaves, the "serial government contractors" and their slinky lobbyist pals - that they still don't understand the true scope of the historic and ongoing crimes re: high-level governance priorities and activities.
The Fed began as a criminal enterprise in 1913. Both the Fed and the IRS were fundamentally unconstitutional since inception, thus unlawful from inception. If you expect those who are the secret shareholders and Board members of major criminal enterprises to "be honest and play fair" and "report honestly" on their own behavior, it might be time to wake up and smell the coffee.
Now that the GAO itself has documented a whopping $26 trillion that the Fed handed out during a less than three-year period - vast amounts they never voluntarily disclosed - who's dumb enough to believe their revised claim that most of this money has been "repaid" by their "partners" (the international financial mafia network that sucked up the bulk of these unauthorized wealth transfers).
The majority of these huge payments were principly gifts and unilateral wealth transfers, not "loans." For starters, probably none of the main recipients of the Tens-of-Trillions handouts (assuming honest accounting) have had business operations during the post-handout period, that even theoretically could allow the kinds of repayments the Fed wants us to believe have transpired.
Punchline? The American public has been saddled with unknown Tens-of-Trillions in value dilution - alongside related future "public debt" and "tax collection efforts" - on the part of major felonious elements operating at the top our own society, misrepresenting their true intentions.
Meanwhile, the strongest "Student Loan Forgiveness" package that can be formalized amounts to a bunch of hoops people will need to jump through, to receive financial relief for educational activities, still amounting to mere crumbs compared to either the recent Bankster payouts or our government's ongoing Big War and Big Oil love-affair subsidies and such. Better might, thus, be done.
Our nation's Central Bank could and should be "typing money" into the bank accounts of average Americans presently over-burdened by home mortgage debt, student loan debt and credit card debt - assuming the real goal were to improve the lives of average people and "save the economy" - versus simply routing yet more "average person wealth," toward shadowy international criminal and fat-cat crony networks (while claiming motives that do not stand up to scrutiny).
I recommend Ellen Brown's Public Banking website - http://publicbanking.wordpress.com/ - as a resource re: ideas related to replacing the Fed and its international Central Bank counterparts with responsible and lawful monetary institutions, soon.
The dissolution of the Fed should be a key focus of the Forgive Student Loan movement, alongside demanding forensic accounting and law enforcement procedures aimed at recovering assets from these recent handouts. Most of this activity will not stand up to any competent court review, assuming only that the court is following Constitutional and Common law (versus Admiralty law, which has often been unlawfully invoked).
Rep. Alan Grayson of Florida, commenting on the Fed GAO report, wrote;
But the Fed agreed to give back the foreign currency at the original exchange rate, even if the foreign currency appreciated in value during the period of the swap. These currency swaps and the “broad-based emergency program” loans, together, totaled more than $26 trillion. That’s almost $100,000 for every man, woman, and child in America. That’s an amount equal to more than seven years of federal spending — on the military, Social Security, Medicare, Medicaid, interest on the debt, and everything else. And around twice American’s total GNP.
Grayson's following comments relate to the fact that the Fed was sending huge sums to its international cronies - top partners and shareholders in some of the world's most unethical and socially harmful major financial institutions - versus, for example, your local S&L (the type of institution that would be helped most, along with direct subsidies to households, if your goals were actually constructive).
In contemporaneous documents, the Fed apparently did not even take a stab at explaining why it helped some banks (like Goldman Sachs and Morgan Stanley) and not others. After the fact, the Fed referred vaguely to “strains in the financial markets,” “transitional credit,” and the Fed’s all-time favorite rationale for everything it does, “increasing liquidity.”
You can read all of Congressman Grayson's related comments re: this GAO Fed report here;
Want to read the GAO report, itself? It's available as a 266-page PDF at the following address, along with an executive summary;
Folks, it's past time the general public and "average taxpayer" woke up to the extent of major crimes that have so long passed for normal in various high-level government-connected circles. This relates mainly to a broad range of greedy and corrupt private sector based parasites that, over the course of decades, have attached themselves integrally to the body politic of our Republic (and are thus interpenetrate many key government institutions).
Both the Fed and the IRS are high on the list of major Private Sector Parasites that have infected our federal Republic institutions, and many realize it's time to get rid of both - part of a long overdue Spring Cleaning process.
We now need broad public Truth-and-Reconciliation processes regarding many related topics - and compentent and well-publicized prosecutions following Constitutional and Common (not Admirality nor Contract) law. Internet-based reporting can carry much of the weight re: informing the public on these matters, though we can hope that some of the related Spring Cleaning will also result in the Corporate Media soon becoming more responsible.
Again, my recommendation is that the Student Loan Forgiveness movement now alter its objectives, to aim instead for the near-term forgiveneess of approximately 80% of total ($1 trillion) outstanding student loan debt; with the related "forgiveness formulas" designed mainly to insure that forgiveness do not relate to any amounts considered (by some related guidelines) "excessive," frivilous or fraudulent.
The public aspect of all higher education in our nation could and should have been free or nearly free all along; if only the level of corruption and misdirected priorities in our federal government had not instead been serving the parasitic and anti-social Big War, Big Pharma, Wall St and Bankster elements for so long (versus "We the People").
All these major misalignments now need to be reversed, and soon; not just timidly chiselled away at, with a begging bowl in hand.
Mr. Wallerstedt, et al - I'd like to introduce you to a Presidential candidate who agrees about forgiving student debt:
And this page might explain why she probably won't get to talk about it on the debates: www.opendebates.org.
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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