Salon.com > Student Debt

My crushing student debt

Sat, 18 May 2013 23:00:00 +0000

It all began in August 2001, when I decided to participate in one of the great annual migrations known to man: alongside millions of fellow eighteen-year-old Americans, I had graduated from high school and was going to college.

My high school class and I moved like a school of fish: we graduates were capable of going off on our own, in whatever direction we chose, but something demanded we all swim as one, curving, cutting, sashaying together, wiggling our way to college. Except for a few miscreants, we all ended up in college.

In high school, if someone asked me what my “plans” were, I’d click into brainwashed robot mode: my body would become rigid, my pupils would dilate, and in a monotone, I’d recite, “I-will-go-to-the-best-college-I-can-get-into. No-matter-the-cost.” At some point, I’d convinced myself that going to college was what I really wanted to do. So I went to Alfred University, a pricey private college in southern New York. My first year at Alfred would cost me $18,450. Later, I would transfer to a cheaper state school, and my total price tag for higher education: $32,000.

Government profits on student debt

Wed, 10 Apr 2013 16:00:00 +0000

Despite the havoc a generation of heavily indebted young people promises to wreak on the economy, commentators on the student debt crisis have for some time pointed out that the federal government has considerable interest in student borrowers remaining in the red. New figures further back this up. As the Huffington Post reported Tuesday, the Education Department is expected to earn $33.5 billion off student loans made during the 2013 fiscal year, according to budget documents. "The agency’s Direct Loan program delivered a $24 billion profit on loans made in 2012, and nearly $27.5 billion on 2011 loans. All told, over the last five fiscal years, the Education Department has generated $101.8 billion in profit from student borrowers, thanks to low borrowing costs for the government and fixed interest rates for students, budget documents show," reported HuffPo, noting, "Some student advocates have charged that the department is profiting off the backs of students."

Student debt tripled in eight years

Fri, 01 Mar 2013 18:24:00 +0000

A new report from the New York Federal Reserve further confirms what many commentators have been long saying -- student debt is the bubble that just keeps expanding. Total student debt has nearly tripled in the past three years.

Total student debt stands at $966 billion as of the end of 2012, with a 70 percent increase in both the number of borrowers and the average balance per person. The overall number of borrowers past due on their student loan payments has also grown, from under 10 percent in 2004 to 17 percent in 2012.

Noting the N.Y. Fed report, HuffPo pointed out that the proliferation of indebted students and their families has knock on effects on other areas of the economy:

Fewer people with student loans are buying homes, according to data in the report. Of borrowers ages 25 to 30 who are taking out new mortgages, the percentage of those with student debt has fallen by half, from nearly 9 percent in 2005 to just above 4 percent in 2012.

The fed report sees a connection, stating, "The higher burden of student loans and higher delinquencies may affect borrowers' access to other types of credit and the performance of other debt."

More and more families moving in together

Wed, 31 Oct 2012 12:34:00 +0000

Struggling with the burden of debts and underemployment, a growing number of graduates in the U.S. are moving back in with their parents. Meanwhile, unable to afford independent retirement, seniors are moving into their children's family homes. Census bureau statistics show a 4 percent rise from last year in the number of multi-generational households: 4.3 million U.S. households now include a parent, a grandparent and a child.

The video below highlights the strength of this trend; housing developers are designing houses under the premise that a young person or grandparent will be moving back in. Watch below (via NewsFix):

Why student loans are just like mortgages

Sat, 27 Oct 2012 13:01:00 +0000

The parallels between the mortgage market and the student loan industry have been frequently noted. Both involve big borrowing and have a history of lax underwriting by lenders. But the two are also strikingly similar in another way: When it comes to both mortgages and student debt, the servicers, or companies that handle loan payments, sometimes add roadblocks and give struggling borrowers the runaround.

That's the main takeaway from two recent reports by the Consumer Financial Protection Bureau, the independent agency created by the financial reform law passed in 2010.

Servicers have misapplied payments, given borrowers bad advice, and reported incorrect information to credit bureaus, according to one of the reports. The findings were based on the agency's recent tracking of student loan complaints, focusing on the companies who handle private student loans.

Gender pay gap begins one year out of college

Wed, 24 Oct 2012 20:48:00 +0000

A report from the American Association of University Women (AAUW) flagged by Raw Story found that a gender earning gap usually occurs just one year after graduates leave college, with men making an average of $42,918 one year after graduation while women make an average of $35,296. The report, "Graduating to a pay gap" notes:

"Graduating to a pay gap" finds that women working full time already earn less than their male counterparts do just one year after college graduation. Taking a closer look at the data, we find that women’s choices—college major, occupation, hours at work—do account for part of the pay gap. But about one-third of the gap remains unexplained, suggesting that bias and discrimination are still problems in the workplace.

Student group organizes global rally

Thu, 18 Oct 2012 21:17:00 +0000

The past few years have seen mass student uprisings against austerity in the U.K., Chile and Quebec. The International Student Movement (ISM) — a web platform created in 2008 — is helping these disparate scholars coordinate their local movements with global protest days. The idea is to fight the worldwide squeeze on education, as articulated in ISM's call to action:

No matter where we live, we face the same struggle against national state and profit driven interests, and their hold on education. Increasing tuition fees, budget cuts, outsourcing, school closures, as well as other phenomena are linked to an increasing commercialization and privatization of education.

This month, ISM hosted Web-based chats with students from Morocco, Bangkok, Vienna, New York and many other locales leading up to today's “Global Day of Action to Reclaim Education.” The blend of high tech and grass-roots activism is still being tested, but it has already emboldened students to coordinate a Global Education Strike for Nov. 14-22.

Are student loans the new subprime mortgages?

Sun, 07 Oct 2012 14:00:00 +0000

More than a decade after Aurora Almendral first set foot on her dream college campus, she and her mother still shoulder the cost of that choice.

Almendral had been accepted to New York University in 1998, but even after adding up scholarships, grants, and the max she could take out in federal student loans, the private university — among nation's costliest — still seemed out of reach. One program filled the gap: Aurora's mother, Gemma Nemenzo, was eligible for a different federal loan meant to help parents finance their children's college costs. Despite her mother's modest income at the time — about $25,000 a year as a freelance writer, she estimates — the government quickly approved her for the loan. There was a simple credit check, but no check of income or whether Nemenzo, a single mom, could afford to repay the loans.

Nemenzo took out $17,000 in federal parent loans for the first two years her daughter attended NYU. But the burden soon became too much. With financial strains mounting, Almendral — who had promised to repay the loans herself —withdrew after her sophomore year. She later finished her degree at the far less expensive Hunter College, part of the public City University of New York, and went on to earn a Fulbright scholarship.

California education’s painful decline

Tue, 02 Oct 2012 18:43:00 +0000

It was the greatest education system the world had ever seen. They built it into the eucalyptus-dotted Berkeley hills and under the bright lights of Los Angeles, down in the valley in Fresno and in the shadows of the San Bernardino Mountains. Hundreds of college campuses, large and small, two-year and four-year, stretching from California's emerald forests in the north to the heat-scorched Inland Empire in the south. Each had its own DNA, but common to all was this: they promised a “public” education, accessible and affordable, to those with means and those without, a door with a welcome mat into the ivory tower, an invitation to a better life.

Then California bled that system dry. Over three decades, voters starved their state -- and so their colleges and universities -- of cash. Politicians siphoned away what money remained and spent it more on imprisoning people, not educating them. College administrators grappled with shriveling state support by jacking up tuitions, tacking on new fees, and so asking more each year from increasingly pinched students and families. Today, many of those students stagger under a heap of debt as they linger on waiting lists to get into the over-subscribed classes they need to graduate.