Student Debt Crisis Your One Stop Hub For Student Debt Issues Wed, 18 Feb 2015 21:06:27 +0000 en-US hourly 1 The Case For Student Loan Debt Forgiveness Wed, 18 Feb 2015 21:05:57 +0000 Debt forgiveness exists! It exists in the housing sector in the form of foreclosure. Hospitals routinely agree to reduce or eliminate health care debt. Credit card debt can be forgiven through bankruptcy. It’s time we offered debt forgiveness for student loans.

In 2009, Robert Applebaum jump-started the student debt forgiveness movement when he wrote an essay entitled “Forgive Student Loan Debt to Stimulate the Economy”. Applebaum argued that we could stimulate the economy faster than the hefty bank bailouts by forgiving all of America’s student loan debt. The logic was clear: millions of burdened student loan borrowers are less likely to purchase a home, new car, health care or save for retirement if they instead try to pay off growing debt. With all this student debt hampering the economy, it’s time to answer the question: if we allow the forgiveness of other forms of debt, why not student loan debt?

Even during a period of rapid growth and prosperity, more than 41 million Americans still shoulder the burden of $1.2 trillion in student loan debt. Student debt has grown so quickly that it has surpassed credit card debt, and is now second only to mortgages in the United States. That makes the student debt crisis a major economic problem. It was less than a decade ago that we saw the sub-prime mortgage market spiral unsustainably out of control at a similarly rapid pace. When that bubble inevitably burst, it took the entire economy down with it.

Immediately following the market crash the streets of American neighborhoods were lined with foreclosure signs, a stark reminder of the depressed economy. It’s not a good method of loan forgiveness, but for millions of Americans, foreclosure was their only hope to rid themselves of unpayable debt. Our current economic recovery has been aided because homeowners who were unable to pay their mortgages had an escape.

Today’s student debt crisis may not be visible through signs posted on the street, but it is still severe. Struggling student loan borrowers are defaulting on their debt at an alarming rate of more than 15%. Similarly, by late 2009, 14.4% of all mortgages were delinquent or in foreclosure. Borrowers are finding themselves in the same trap that we saw during the Great Recession — an inability to pay rising debts. Unlike a mortgage, however, a student loan borrower cannot walk away from their debt. Nor can they discharge student loan debt through bankruptcy, as can be done with credit cards…

Read the entire article at Blue Nation Review…

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How Transferring Schools Can Affect Student Loans Wed, 18 Feb 2015 18:57:47 +0000 ​If you’re planning on switching schools, there are likely a number of reasons behind the decision. Some people transfer after realizing a different academic program will better fit their long-term career goals, while others simply want to be closer to their families.

No matter their reason for transferring, all of these students should think about their student loans. Unlike credits, which may or may not follow a student to a new institution, student loans never transfer between schools. As a result, prospective transfer students need to be aware of a number of things to ensure they can fund their education at a new school and take care of what they’ve already borrowed.

Resubmit Your FAFSA

When you transfer, you have to resubmit your Free Application for Federal Student Aid to your new school. Fortunately, resubmit does not necessarily equal redo.

Each academic year has its own FAFSA. If you transfer midyear, the FAFSA you completed for that year is still good. Simply list your intended transfer school or schools in the form and resubmit it at

Because the other information on your FAFSA remains the same, your eligibility for financial aid will be the same as well. That means there shouldn’t be any surprises when it comes to your expected family contribution.

In addition, the government regulates the amount of federal student aid a borrower can receive. That means you can’t get more than the annual maximum in Pell Grants – $5,730 –  or subsidized Stafford loans – $3,500, if it’s your first year in school – no matter the school or schools you attend.

Despite these rules to standardize processes, transfer students still have to resubmit their FAFSAs. That’s because these borrowers won’t necessarily receive the same exact award at different schools. You have to go through a school’s financial aid process, including receiving a new student aid report, so they can calculate that themselves.

Your Financial Award May Be Less

Odds are, your awards won’t differ greatly from school to school, particularly when it comes to your federal student aid. As mentioned above, your expected family contribution is the same no matter which school you attend. Still, your overall award may differ and your new one could potentially be less than you thought. There could be a few reasons for this.

First, your new school may award you less institutional aid. This could be due to your financial situation or theirs. Some schools simply have less money to give out. Much campus-based aid, including Perkins loans, is limited and disbursed on a first-come, first-served basis.

So, it’s possible that funds that were once available to you are no longer an option. Unfortunately, like federal loans, any campus-based aid you previously received won’t transfer with you either.

In addition, if you transfer midyear, you may qualify for less financial aid than you did as a first-time orreturning student. This will depend on how much aid you earned at your previous school. In general, you don’t fully earn financial aid until you’re 60 percent through a semester.

Leave before then, and your school returns the unearned aid, loans first, to the federal government. This could affect your borrowing maximums at your new school…

Read more at US News…

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In at Least 22 States, Your Student Debt Could Cost You Your Job Tue, 17 Feb 2015 20:32:49 +0000 In at least 22 states, your student loan debt could wind up costing you more than your monthly bill – it could cost you your job.

Across the country, a growing number of jobs don’t just require a college degree, but also a professional license or certificate. These jobs come in all shapes and sizes, ranging from K–12 teachers and nurses to electricians and barbers. It’s now projected that nearly 30 percent of jobs legally require you to have a state-issued professional license in order to perform them.

Not surprisingly, jobs that require licenses or professional certificates often also require a college degree. But as affordable higher education has become less and less accessible, an increasing number of students are forced to take out loans to cover the cost of their education. Take the graduating class of 2014 as an example: more than 70 percent of students took out loans to cover the cost of their education, and on average, they owe $33,000 upon graduation. (Never mind the students who took on debt but didn’t end up graduating).

Meanwhile, instead of helping struggling borrowers, many states are making it even harder to get out of debt. In at least 22 states, the government will revoke your professional license if you are unable to pay off your student loan debt.

These state laws target a wide range of professions, including attorneys, physicians and therapists – even barbers make the list. But two professions show up over and over again: nurses and teachers.

Both professions serve a critical role in our communities and are often wildly underpaid. Are we really in a position to be punishing the people we need the most?

Continue Reading at Jobs with Justice…

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What Would You Do if All Your Student Loans Were Forgiven? Thu, 12 Feb 2015 22:57:42 +0000 Student loan borrowers face the choice every day between paying off their loan and basic necessities. Forgiveness of the loans could be the key to freeing hardworking Americans from a lifetime of debt and re-igniting the flame that is the “American Dream.”

We asked our members one simple question, “What would you do if your student loans were forgiven?”

  1. Forgiving student loan debt would make health care an option for millions of borrowers wholiterally cannot afford a doctor’s visit.

Shelley O “Gee let’s see. I could afford health care, dental work I need done, groceries, fix my vehicle, or even *gasp* buy a new car. Just in case anyone thinks forgiving our loans is a handout, just remember that many of us have given back to our communities.”

  1. Borrowers could buy their first house and move out on their own…in fact, $83 billion in new home sales were lost last year because of student debt (LA Times).

Mario G- “Be able to have the ‘American dream,’ to buy my own house and actually start saving up for retirement. Maybe take my kids to Disney World. Actually afford a wedding.”

Serene W- “More houses can be bought, stimulating the real estate market, which in turn stabilizes communities and helps teachers keep their jobs. All around good idea for everyone.”

Burcin C- “I bet a lot of people could move out of their parents’ basement without student debt!”

  1. They’d buy a new car, because the one they have keeps doing this. Obviously, its not easy to pay off your student debt when you can’t drive anywhere! 

Jeanine A- if i didn’t owe $100,000 I could buy a car, a house, travel, eat, and the list goes on.

Chris W- If our student loan debt was forgiven we could afford to replace our 10 and 12 year old cars and purchase a house. Along with furniture and other goods.

Ryan S- I’d go buy a car to replace my beater, buy a home, and finally start a family.

Kristi B- I would be able to afford a decent vehicle. I would also be able to pay for my own groceries.


Check out the rest of the list at Blue Nation Review…

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Forgive Student Loan Debt to Stimulate the Economy Wed, 11 Feb 2015 15:31:52 +0000 Originally Written – January 29, 2009
By – Robert Applebaum

President Obama recently signed into law a $787 billion stimulus package on top of Bush’s grossly mismanaged $700 billion TARP bailout from last September. Several weeks ago, the Federal Reserve basically printed an additional $1,000,000,000,000 to inject more funds into the monetary system which will undoubtedly have the effect of diminishing the purchasing power of the dollar. Since last fall, the government has paid out trillions of dollars in bailouts, handouts, loans and giveaways, with no end in sight as our leaders try anything and everything to try and get our spiraling economy under control. While some of what Washington has already done may act to stimulate the economy, much of the trillions of dollars already spent will, no doubt, turn out to be just money wasted.

Tax rebate checks do not stimulate the economy – history shows that people either spend such rebates on paying off credit card debt, or they simply save them, doing little to nothing to stimulate the economy. Presumably, that is why they were removed from the final version of the stimulus bill. The tax cuts that were included, however, amount to a whopping $44 per month for the rest of 2009, decreasing to an even more staggering $33 per month in 2010. This is hardly “relief” as it is likely to help nobody.

The Wall Street financial institutions, auto manufacturers, insurance companies and countless other irresponsible actors have now received TRILLIONS of taxpayer dollars(as demonstrated above, that’s a number with *12* zeros at the end of it) to bail them out of their self-created mess. This, too, does nothing to stimulate the economy. It merely rewards bad behavior and does nothing to encourage institutional change. There is a better way.

How many times have we heard from our leaders in Washington that education is the key to solving all of our underlying societal problems? The so-called “Silver Bullet.” For decades, presidents, senators and members of Congress have touted themselves as champions of education, yet they’ve done nothing to actually encourage the pursuit of one on an individual level.

Some of us have taken advantage of Federal Stafford Loans and other programs, including private loans, to finance higher education, presumably with the understanding that an advanced degree equates with higher earning power in the future. Many of us go into public service after attaining such degrees, something that’s also repeatedly proclaimed as something society should encourage. Yet, the debt we’ve accrued to obtain such degrees have crippled our ability to reap the benefits of our educations, causing many to make the unfortunate choice of leaving public service so as to earn enough money to pay off that debt.

Our economy is in the tank. There isn’t a reasonable economist alive who doesn’t believe that the economy needs stimulating immediately. The only debate now centers on how to go about doing it. While the new stimulus plan contains some worthy provisions, very little of it will have a significant and immediate stimulating effect on the economy. The Obama Administration itself doesn’t expect to see an upsurge in the economy until mid-to-late 2010.

Instead of funneling billions, if not trillions of additional dollars to banks, financial institutions, insurance companies and other institutions of greed that are responsible for the current economic crisis, why not allow educated, hardworking, middle-class Americans to get something in return? After all, they’re our tax dollars too!

Forgiving student loan debt would have an immediate stimulating effect on the economy. Responsible people who did nothing other than pursue a higher education would have hundreds, if not thousands of extra dollars per month to spend, fueling the economy now. Those extra dollars being pumped into the economy would have a multiplying effect, unlike many of the provisions of the new stimulus package. As a result, tax revenues would go up, the credit markets will unfreeze and jobs will be created. Consumer spending accounts for over two thirds of the entire U.S. economy and in recent months, consumer spending has declined at alarming, unprecedented rates. Therefore, it stands to reason that the fastest way to revive our ailing economy is to do something drastic to get consumers to spend.

This proposal would quickly revitalize the housing market, the ailing automobile industry, travel and tourism, durable goods and countless other sectors of the economy because the very people who sustain those sectors will automatically have hundreds or, in some cases, thousands of extra dollars per month to spend. The driving factor in today’s economy is fear. Unless and until the middle class feels comfortable enough that they’ll have their jobs, health insurance and extra money to spend not only next month, but the month after that, etc., the economy will not, indeed, cannot grow fast enough to stop the hemorrhaging.

Let me be clear. This is not about a free ride. This is about a new approach to economic stimulus, nothing more. To those who would argue that this proposal would cause the banking system to collapse or make student loans unavailable to future borrowers, please allow me to respond. I am in no way suggesting that the lending institutions who carry such debts on their balance sheets get legislatively shafted by having them wiped from their books. The banks and other financial institutions are going to get their money regardless because, in addition to the $700 TARP bailout, more bailout money is coming their way. This proposal merely suggests that in return for the trillions of dollars that has been and will continue to be handed over to the banks, educated, hardworking Americans who are saddled with student loan debt should get some relief as well, rather than sending those institutions another enormous blank check. Because the banks are being handed Trillions of dollars anyway, there would be no danger of making funds unavailable to future borrowers.

To avoid the moral hazard that this plan could potentially create, going forward, the way higher education in this country is financed MUST be reformed. Requiring students to amass enormous debt just to receive an education is an untenable approach, as demonstrated by the ever-growing student loan default rates. Having a loan-based system rather than one based on grants and scholarships or, ideally, public funding, has, over time, begun to have the unintended consequence of discouraging people from seeking higher education at all. That is no way for America to reclaim the mantle of the land of opportunity.

A well-educated workforce benefits society as a whole, not just the students who receive a higher education. It is often said that an undergraduate degree today is the equivalent of a high school diploma 30 or 40 years ago. Accepting the premise as true that society does, in fact, place the same value on an undergraduate degree today as it did on a HS diploma 30 or 40 years ago, then what is the rationale for cutting off public funding of education after the 12th grade? It seems to me that there is some dissonance in our values that needs to be reconciled. That, however, cannot come to pass until the millions of us already shackled with student loan debt are freed from the enormous economic burdens we’re presently carrying.

Many of the vocal nay-sayers to this proposal seem intent on ignoring the fact that Washington IS going to spend trillions of dollars, likely in the form of handing blank checks over to more and more banks, as a way of getting the economy under control. Normative assessments of how things should be are fine, but they don’t reflect reality. Accepting the premise that Washington will spend Trillions of dollars in unprecedented ways (a good portion of which will just be trial and error, since we’re in uncharted waters), what is the argument against directly helping middle class people who are struggling, rather than focusing solely on the banks and other financial institutions responsible for crisis to begin with?

Further accepting that there is an aggregate amount of outstanding student loan debt totaling approximately $550 Billion, (that’s Billion with a B, not a T), one is forced to ask again, what is the objection to helping real people with real hardships when all we’re talking about is a relative drop in the bucket as compared with what will be spent to dig us out of this hole?

In a perfect world, I share these biases towards personal responsibility and having people pay back what they owe and making good on the commitments they’ve made. But we don’t live in a perfect world and the global economy, not just the U.S. economy, is in a downward spiral, the likes of which nobody truly knows how to fix.

This proposal will immediately free up money for hardworking, educated Americans, giving them more money in their pockets every month, addressing the very real psychological aspects of the recession as much as the financial ones. Is it the only answer? No, of course not. But could it help millions of hardworking people who struggle every month to get by? Absolutely. Given the current economic climate, as well as the plans to spend trillions of additional dollars that are in the works, one must wonder what is so objectionable about giving a real helping hand to real people with real struggles.

2009 and the new Obama Administration is supposed to be about change. Nothing in the new economic stimulus package represents a significant departure from the way Washington has always operated – it’s merely a different set of priorities on a higher scale, but it’s certainly not materially different from any other economic stimulus package passed during the past few decades. Washington cannot simply print and borrow money to get us out of this crisis. We The People, however, can get this economy moving NOW. All we need is relief from debt that was accrued under the now-false promise that higher education equates with higher earnings.

Free us of our obligations to repay our out-of-control student loan debt and we, the hardworking, middle-class Americans who drive this economy will spend those extra dollars now.

If you believe that there’s a better way of climbing out of this economic crisis, one that empowers us to directly spend money, start businesses, free up credit and create jobs, then please join this group and encourage others to do so as well. There’s strength in numbers – the more people to join this group, the louder our voices and the greater the chances of being heard by President Obama and Congress.

Support real change we can believe in!

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For Millions Of Millennials: Some College, No Degree, Lots Of Debt Mon, 09 Feb 2015 18:34:41 +0000 If Noelle Johnson had a bachelor’s degree, she’d be able to live closer to work, she says. She wouldn’t have to spend so much of her free time hustling for baby-sitting gigs. She’d shop at the farmers market. She’d be able to treat her sister to dinner for once. She and her husband could go on trips together — they’d be able to afford two tickets instead of one.

There are dozens of ways that not having a college degree and dealing with student loans affects Johnson’s life.

Johnson, 27, lives in Manassas, Va., and commutes 90 minutes each way by bus and train to Arlington, Va. She likes her job as an office manager at a nonprofit and makes around $40,000 a year. That compares with a national median income of about $34,000 for households led by young adults with some college. The capital region has a higher cost of living as well.

But households led by young college graduates have a median income of about $58,000. And after nine years of changing schools, trying to choose a major, dealing with an illness and managing tuition costs, Johnson has about $20,000 in student loan debt and no degree to show for it.

Millions of millennials are in the same boat. More than 40 percent of households headed by young adults with some college are dealing with student loans. And without the increased earnings that usually come with a college degree, managing even just a few thousand dollars in loans can be a huge challenge.

Richard Fry, a senior researcher at the Pew Research Center, says the real impact of student loans for those with no degree isn’t even on how much money they make — it’s on their overall wealth.

“The ‘some college educated’ household that doesn’t have the student debt? Their net worth is about $10,000, $11,000,” he says. “As opposed to that, for the ones that are still sort of servicing their student debt? They have a net worth of about a grand. So you’re looking at about a tenfold difference.”…

Read the entire article at NPR…


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Rep. Charles Rangel Has a Plan to Help Borrowers, but We Need Much More Thu, 05 Feb 2015 21:10:35 +0000 Student loan debt is one of the largest crises facing our nation today. Last year, 71 percent of our college graduates had student loans to pay off, with the average falling a whopping $33,000 in debt for their education. Americans now have more collective student loan debt ($1.2 trillion) than either credit card debt or auto loan debt.

Because of this, millennials are increasingly delaying investments in houses, not buying cars, and putting off starting a family, which cripples our consumer-driven economy. And perhaps most troubling, they are avoiding graduate and professional school programs, such as law and medical school, due to the hundreds of thousands of dollars in debt they are burdened with at the end. If we do not act to make higher education more affordable, the demand for highly skilled jobs will be unmet, and America will lose ground in the competitive global market.

To help address these trends, I, along with 29 original co-sponsors, introduced H.R. 509, “The Student Loan Interest Deduction (SLID) Act.” The legislation helps make college and graduate school more affordable by easing the burden of student debt through simple tax breaks for borrowers.

Here are the key provisions of the SLID Act:

1. Doubles the tax deduction for interest paid on student loan debt.Currently, single individuals and married couples paying off student loans are allowed to deduct $2,500 from their taxes. The SLID Act would double the deduction up to $5,000 for singles and $10,000 for married couples. This puts more money in borrowers’ pockets and makes student debt more manageable.

2. Eliminates upper income limits on deductions. Currently the tax deduction is phased out for individuals making over $65,000 and married couples making over $130,000, meaning that people with student loans are penalized

Read Rep. Rangel’s Entire Piece at Huffington Post…

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Affording College in a Time of Income Inequality Thu, 05 Feb 2015 20:18:42 +0000 A new report from The College Board, “Trends in College Pricing 2014,” has good and bad news for students and their families. The good news is that the rate of net tuition growth is slowing. The bad news is that non-tuition costs (room and board, transportation, books and supplies, etc.) remain a financial challenge for many prospective students especially given that non-tuition expenses still do not vary based on family income. This is unfortunate because, as the report notes, these cost of living expenses remain a significant impediment for far too many students.

The data shows that at private and public four-year colleges, the rate of growth of published tuition and fees (adjusted for inflation) has declined for the last three decades. While this is a positive sign, prospective students should look not at the average rate of growth for all colleges and universities, but at the rate of tuition growth for the particular institutions they are considering attending. The report notes that the variation between institutions can be considerable. For example, 5 percent of students at public four-year colleges saw published tuition and fee increases of 9 percent or more in 2014-15.

Of course, what matters most for students is what they will actually pay to attend their college or university — the net price — not the published rate. The difference can be considerable. For example, the College Board estimates that in 2014-15, the average published in-state tuition and fees at public, four-year colleges was $9,139 but the average net price was only $3,030…

Read the entire article at Huffington Post…

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Congressman Kind to Reintroduce Student Debt Legislation Fri, 23 Jan 2015 19:33:22 +0000 WASHINGTON, D.C. (WSAU) — A Wisconsin Congressman is pushing for federal legislation that he says would help reduce student debt. 3rd District Representative Ron Kind tried before, but says he will be reintroducing his student debt bill, to help consolidate loans and refinance debt at lower rates, just like homeowners are allowed to do.  “It would prohibit the federal government from raising money off the interest that is collected from the students, and we would peg the repayment rate on the student loans to the student’s income level, so as their income goes up, they could pay more. If it happens to decline for some reason, they could pay less.”

Kind says his proposal would help keep student loan payments affordable and keep more students out of default and personal bankruptcy.  “Let’s charge our students the same interest rates that the big bank on Wall Street are allowed to borrow money on, which is at rock-bottom rates. I think if it’s good enough for the Wall Street banks, it should be good enough for our students throughout the country to ease the financial burden to afford school.”…

Continue Reading at…

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Student Debt Crisis’ statement on the State of the Union Wed, 21 Jan 2015 03:14:54 +0000 FOR IMMEDIATE RELEASE
January 20th, 2015
CONTACT: Natalia Abrams
Phone: 310-365-1069

Student Debt Crisis’ statement on the State of the Union

This evening we heard from President Barack Obama on the state of our union.  Student Debt Crisis applauds the President’s commitment to higher education. Tonight, President Obama proposed free community college. The new proposal offers two years of free community college to over 9 million new students, and saves them on average $3,800 per year, per student. By highlighting the need for free community college, President Obama is starting the conversation that higher education is a public good, which must be affordable and accessible to all.

However, free community college is not enough.  We will continue to echo our supporters’ call to help all Americans who are negatively affected by current large debt burdens. We need immediate action for private student debt borrowers, defaulted student loan borrowers and those struggling to make ends meet with exorbitant monthly loan payments. SDC advocates direct measures such as student loan refinancing, lower interest rates, and more repayment programs for private and federal student loans that would immediately benefit millions.

Student Debt Crisis urges the administration, and Congress, to seek out methods to assist the over 40 million existing student loan borrowers. Thankfully the President acknowledged their hardship by stating “I want to work with this Congress, to make sure Americans already burdened with student loans can reduce their monthly payments, so that student debt doesn’t derail anyone’s dreams.” We are encouraged by the big ideas proposed in tonight’s speech and will continue to push for stronger reforms for all borrowers.

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