Student loan | Here's how much <b>student</b>-<b>loan</b> debt has exploded over the past <b>...</b> |
| Here's how much <b>student</b>-<b>loan</b> debt has exploded over the past <b>...</b> Posted: 27 Oct 2015 01:58 PM PDT New college graduates have it tougher now than their peers did 10 years ago, a new report indicates. The average student debt at college graduation grew from $18,550 in 2004 to $28,950 in 2014, a 56% jump, according to a report released Tuesday by the Institute for College Access and Success, a nonprofit focused on expanding access to higher education. While the share of graduates with debt only ticked up slightly — from 65% in 2004 to 69% in 2014 — the increase in the average amount of debt far outpaced inflation growth at 25% over that time. While the share of graduates with debt only ticked up slightly — from 65% in 2004 to 69% in 2014 — the increase in the average amount of debt far outpaced inflation and wage growth, which increased 25% and 23% respectively during that time. Though the TICAS report finds a significant increase in the debt levels of college graduates, it likely underestimates the increase because it only includes data from graduates of private nonprofit colleges and public universities. The report doesn't include data on graduates of for-profit colleges, who are both more likely to have debt than their peers at nonprofit schools and carry 43% more debt on average, according to the report. The research also doesn't include loan figures for students who never graduated but may still have debt. State disinvestment in higher education over the past 10 years has played a big role in the growth in student debt, says Lauren Asher, the president of TICAS. "It's quite clear that one major factor is a shifting of more and more of the cost of higher education onto students and families," she said. "Family incomes have not kept up with the costs they're expected to cover for college." Between 2004 and 2014, the share of funding states provide to public colleges dropped from 62% to 51%, and during the same period, the share of tuition colleges have asked families to pay grew from 32% to 43%, the report notes. The fact that Americans haven't received a raise in years hasn't helped, either. Sheila Bair, the former chair of the Federal Deposit Insurance Corporation and current president of Washington College, argued earlier this month that several decades of slow wage growth is one of the main reasons families are increasingly relying on borrowing to afford college. "You have this dynamic of declining real wages and an increased need for a college degree," she said in an interview with MarketWatch. "And so what you end up having is more and more young people applying to college with fewer families able to pay for it." One factor buffering families from the growth in college costs over the past 10 years is an increase in grant aid during that period. Still, grants didn't grow fast enough to fully account for the increase in families' contribution. Between 2004 and 2012, the total grant aid provided to low- and moderate-income students — defined as those students who qualify for Pell grants — who attended a public school grew by $2,900, while their annual cost of attendance increased by $7,400, the report found. Low- and moderate-income students who attended private nonprofit colleges during the same period saw their grant aid grow by $8,700 on average, while their annual cost of attendance increased by $14,400. Compounding the growth in borrowing is the fact that today's young college graduates may struggle more than their older peers to pay back their loans. The jobless rate for young new graduates was below 6% less every year between 2004 and 2008. In 2014, the unemployment rate for young college graduates was 7.2%, the report notes. Still, young college graduates are likely to fare better than their counterparts with just a high school degree. A college degree was a requirement for the vast majority of the better-paying jobs created during the recovery, according to an August analysis from Georgetown's Center on Education and the Workforce. "Study after study continues to confirm that on average getting a college degree is your best shot at a good job and decent pay," Asher said.  |
| Elizabeth Warren on How Clinton Backed <b>Student Loan</b> and <b>...</b> Posted: 27 Oct 2015 03:53 AM PDT A sorry chapter of Hillary Clinton's legislative record was her vote in support of the 2005 bankruptcy "reform" bill. Thw the credit card industry had long been keen to get this measure passed. It had come up repeatedly in Congress and had managed to be beaten back….until 2005, when it became law. One of its biggest proponents was the credit card issuer MBNA, which is now part of Bank of America. MBNA had estimated that getting the bill passed would enable them to get an additional $10 a month from consumers who were eligible for bankruptcy, which would mean an additional $85 million a year to them in profits. The legislation restricted access to Chapter 7 bankruptcies, which enable borrowers to wipe out their debts, and forced more into Chapter 13 bankruptcies, which require borrowers to negotiate a 60 month repayment plan with budgets that require them to live at an extremely meager level (one indicator: the amounts allotted for food are stunningly low, and one wonders how people who are juggling multiple jobs can possibly find the time to shop for food bargains and cook so as to stay within these restrictions). Many people cannot complete their Chapter 13 plans due to 'shit happens" (an unexpected expense, like a medical emergency or car problem, can lead to a borrower missing his repayment schedule). And that's before you get to bad faith conduct by the lender intended to make the borrower fail or appear to fail, which we documented regularly during the mortgage crisis (the objective was to enable the mortgage servicer to proceed with a foreclosure). As most readers know well, the provisions of the 2005 bankruptcy "reform" bill relating to student debt were even more draconian. The overwhelming majority of student loan borrowers are effectively barred from discharging these debts in bankruptcy. Moreover, Social Security payments can be garnished to repay student loans. putting parent/grandparent co-signers and middle aged students presumably seeking to qualify themselves for new careers at risk.* As you can see in a Bill Moyers segment below, Elizabeth Warren recounts how Hillary Clinton sought out Warren's advice on the bankruptcy bill in 1999, and persuaded her husband to veto it, one of the last acts he took as an outgoing President. Warren points out that this bill at the time was a not-very-high priority pro-business measure and by implication was not unduly costly for a departing Chief Executive to oppose. Hillary Clinton was so proud of her role in stopping this bankruptcy legislation that she touted it in her autobiography. Yet in her first act as a newly-elected Senator from New York, she made a 180 degree change and voted in favor of the bill. And Warren makes clear that from her earlier discussions with Clinton that she knew full well what was at stake in terms of the consequences to families. How does Warren explain that change? She attributes it to the power of lobbying dollars in Washington, particularly from the consumer financial services industry, which has long been a top spender. Warren also highlights that financial firms were now Clinton's constituents and she therefore was obligated to represent them. But who precisely were these banking constituents? It was the top executives of the big players headquartered in New York City, such as JP Morgan and Citigroup. Keep in mind that Clinton was not protecting jobs in New York state. Credit card operations, such as back offices and call centers, are located in much lower cost regions (for instance, Citigroup's big credit card processing operation has long been in South Dakota; American Express' is in Phoenix). So Clinton was not protecting jobs; she was at best protecting bank profits and senior level bonuses. And it does not appear that she gave much thought to the costs to the manyborrowers in her jurisdiction. The lesson seems to be that Hillary Clinton is capable of acting on good impulses, as long as she has nothing at stake. Elizabeth Warren on Hillary Clinton from BillMoyers.com on Vimeo. ____
In the first example, Robert Murphy, consider the Administration's stance. From Bloomberg:
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