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 agree, something has to change. we are doomed until something does. i dare say many are in the same state we are in. how can they rob our future forever...
I went to a technical school, one of those ones that in six months you got a degree in a field of choice for me it was Medical Assisting. I was excited I always loved the medical field, and this was my way to get into it. my total loans were a lot less than many people that have posted here but now a 7K loan has increased to over 20K due to interest and my inability to pay. Why was I unable to pay you ask? When I graduated from the school, and received my licensing, my school was not accredited. I found this out after I had done a free three month externship for a doctor, and began looking for a full time job. When I contacted my job placement councilor she said she could not help me because I was not truly licensed. I tried to pay back the loans, having a child and very rarely being able to find work, I spoke to the loan company and was told that due to my situation the loan would be forgiven, I have even had a lawyer try and find it during a bankruptcy proceeding and he did not find it on my records, but now over 20 years later, they are docking my wages ( that amount to less than 10K a year) and taking my tax returns.
This is putting me in an extreme financial hardship I have contacted the department of education, as well as sent back the documents that they have requested to see if I can get a forgiveness on this debt. When contacting them I have gotten told they never received my paperwork and to send it again. I asked for another copy of the paperwork and never did get it in the mail. So tell me how it is that this is right or just. I support this action and hope with all my heart it goes through.
Thank you I have sent you an e-mail in reguards to your offer for a refferal.
Is there a way the government can control the price of colleges and institutions? Or should there be restrictions on how much it costs ? I purpose that there should be a cap of how much it can cost, and however far over the cap the government must pick up the rest? Easier said then done, but most colleges I assume are in a variety of categories, for instance, Ivy league vs. community college just to give the juxtaposition. So set a limit for each category and then however far over the amount is picked up by the government. To add numbers to this to maybe clarify, if a school was limited to 50 thousand a year, but the school wanted to charge 55, the government would pay the extra 5 thousand, or something of this nature. thoughts?
This was originally written in reply to Eve White, and it's buried down there someplace. I thought it would be prudent to make it a new post, because I know there are others out there with a similar circumstance.
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I took off to aim at medical school in 1998. In 2000, my husband decided to take off with a photographer. My major was Neuroscience (not some BS degree, and we all know they're out there. I went to a state university) .
Since I no longer had a shot at medical school, I graduated with a BS in Psychology, and 42K in loans in 2002.
I did have skills to fall back on, but finding and keeping a job was difficult. I was layed off four times in 2003 (two of the companies simply closed their doors), and was underemployed - making at most $12 an hour, part time, which amounted to about 16K a year at the most.
2010, I caught a break. Two months into a decent job, I phoned "the student loan people". I say that because the loans when into collections, and about twelve calls later, I found the agency who now holds my loans. *I* made the choice to call them and work out a payment plan. They refused to accept the $200 a month I offered (while my income was $1500 a month) and demanded $375.
Ten days after accepting my new job, I was pulled over at a traffic stop. I did not have insurance at the time, and found out at that time my license had been suspended (due to no insurance, it's the law here). To make a *very* long story short, I caved into the demands of the collection agency, and paid them, instead of meeting my responsibilities so I could drive to work. Two days later, an officer was behind me in traffic, ran my tag, found out I was driving on a suspended license, and arrested me. After all THAT was done (after having borrowed another $4000 from family and friends and having every payday consumed with this legal matter), I found my wages garnished.
The collection agency wouldn't listen. In fact, when I told them that I made a payment to them that I could not afford, that resulted in my being arrested, they seemed to escalate their garnishment proceedings, which took less than six months from the initial payment.
I know I should pay back the amount I borrowed, no matter what the circumstances were that kept me from attaining the degree I was pursuing. However, after the collectors were told that I had just barely been working for seven years, made threats for garnishment after I had been at a full time job less than 90 days. However, I had no legal recourse, because the law states that I had to have been involuntarily terminated from a full time job within two years prior. I don't qualify because I hadn't had a full time job (one that put me over the income threshold) since 1996.
This has resulted in embarrassment (I run my name through Google and a mugshot appears!), and financial hardship, all for the sake of their "all or nothing" attitude.
Also, my 42K loan is now stated at 60K... with 10K of fees for the collection agency. Would you believe the SAME COLLECTION AGENCY calls me, at least twice a week? They tell me they have no record of a garnishment.
Those are the facts, ma'am. Their snotty attitudes and snide remarks are a completely DIFFERENT story.
You might ask, "What took you so long to find a decent job?" It was luck. An old friend who knows my skills and work ethic just happened to have a opening (after two years of asking). I am an anomaly. I know people who have been out of work for five or more years that don't have such opportunities, and a similar story. What about them?
My daughter has a Sallie Mae student loan with her parents as co-signers for previous tuition and school fees. She finished the school program she was attending at the age of 19 and the school knew that she could not receive employment due to her age, a fact that they chose not to express before or during admission. She graduated as a chef and no restaurant will not hire anyone below the age of 21 because of workman compensation reasons. So as of now, without any foreseeable change in the future, she cannot afford to pay the loan back due to lack of employment. I cannot afford to pay for it for her because I work in construction and am barely making ends meet myself. My daughter is now living back at home with us where she attending a different school for a different degree and paying for it herself. Due to this situation with Sallie Mae, she says she is not ever going to apply for a student loan again. With the way things are going, will this loan ever be paid off? Yes it will, because Sallie Mae will garnish my daughter's and my own wages. Meaning they will file to have the money taken from me before I even see it which cuts into the money I NEED to pay for food, home and other living expenses. They told me this themselves. To make the matter worse, they also informed me that filing bankruptcy will not do anything against the loan, a verbal spit in the face. So in the end we have no chance of ever getting our heads above water again. I will be forced to file bankruptcy anyway to help offset the garnishment of my wages and will most likely lose my house placing my wife, my daughter, and myself on the streets. I shudder to think what would becomes of our dogs. By the way, this is also the same company the United States government has bailed out five times in the last six years. A fact that most people have forgotten and the government chose not to acknowledge. So on behalf of my daughter and myself thanks America for taking care of us and the future of the United States, quite possibly the next third world country.
One particular thing disgusts me about the current system of funding college or university with the use of easily obtained, sign on the X loans for people who are basically kids straight out of their parents' homes -- it has supported a half-bogus education system where there is no accountability as to whether or not you are actually getting your money's worth at college.
I have two degrees, the last one I received from state university in New Jersey using loans to fund my education. Most of the students were much younger than I. I have been a homeowner, paid a mortgage, paid off a car bought new. None of these young people has any experience with any of this. So I enter college as an adult, and I quickly find something completely appalling. About 50 percent of my teachers regularly do not show up to teach my classes. For a 3-credit class I pay about $1000. In one class, my tenured professor cancels five classes, mostly with no prior notice. In addition to this, she sends stand-ins to do presentations on subjects unrelated to the class. On one occasion she comes to class and tells us one of her favorite professors has passed away and she is not in the mood to teach because she is sad. She proceeds to use the entire hour and forty-five minute class to listen to a piece of music that has nothing to do with our classwork or upcoming exams. Another class, 3-credit, $1000 bucks, and listed as taught by a famous jazz pianist. Day one: no professor. The professor showed up to less than half the classes, and my favorite part -- on the day she showed up to class, she informed us she would be "sending" a man to replace her when absent who had none of her credentials. This man taught half of the classes that semester, maybe more, but was never listed in any of the course literature. I paid $1000 for this class. No mid-term, no-final exam, not a single quiz and the course did not follow any syllabus. On another occasion: I pay over $300 for an independent study but a professor simply does not show up to half of the scheduled meetings. he conveniently fails to inform me he will not be there in advance. So I drive to college and wait for him although he never arrives and my debt grows and I learn nothing except that I am being SCAMMED. My teacher didn't come to a major recital I worked on for two years. I know several other students to whom this has happened also at the same school. Of course there are always a few excellent teachers. But I would say less than 50 percent of them are responsible. It's pathetic. I could go on and on about what a misleading, lying, money-making racket my college was. Sallie Mae is happy, what do they care? As it seems my university doesn't care to hold its teachers up to any educational standards. It is simply not worth the money.
By forgiving even half of anyones student load debt, all that would be put right back into the economy.
Europe has a much better way of handling this and if the US would ever get it's head out of its ass we could perhaps enjot the same benefits they do. Yeah yeah yeah, I know the EU has its issues, but it is far better then the mess of a system the US has.
Growing up with my parents who had never had any education, I had to learn everything by myself. I find people are just plain arrogant and always assume you ought to know this or that, but sadly no. The heart of the matter is, the children simply don't know they are living in a marketing system. They need to be taught what they see from media and what they observe in their social lives. I support student loan debt should be forgiven but one may suggest how are we going to paid the teachers? I don't mind working for free as a teacher, as long my basic necessities are meet, that is how madly I am. Disregarding what I have just state, lets considered about income taxes, ought it to be abolished or drastically reduce; or a second solution is to give free wireless electricity to everyone, and to promote this new technology development. The effects one can assume is that if there is no income taxes, one don't mind being employed instead of being unemployed and collect unemployment, and the other is if we can a new energy plan, harnessed in a way that is wireless and given for free to everyone, a great change will be.
Peace and love,
Daniel
Contact me at applebaum@forgivestudentloandebt.com if you'd like me to refer you to a specialist in Student Loan Law. There are statutory provisions for forgiveness of loans taken out to attend schools that are subsequently unaccredited or shut-down.