Published on Friday, September 28, 2007 by The Boston Globe



[5 short articles on colleges—count as 1 for RDPs]Borrowers Fall Further Behind on $1.3 Trillion in Student Loans Janet Lorin 13, 2015 Borrowers are having more trouble paying their student loans, even as the job market recovers and consumers improve their mortgage payment histories.About 11.5 percent of student debt was delinquent or in default for at least 90 days in the quarter that ended in June, up from 11.1 percent in the previous three months, according to data released today by the Federal Reserve Bank of New York. Credit-card delinquencies held steady, at 8.4 percent.The fresh information signals that the burden of the nation’s $1.3 trillion in education loans, primarily from the federal government, continues to trouble the economy. Student loans are becoming an issue in the presidential campaign, with candidates offering plans to ease the burden. The Congressional Budget Office estimates the amount borrowed will double by 2025.The challenge may be even worse than reported. That’s because half the loans are in programs, such as deferment, that allow borrowers to put off payments, Federal Reserve economists said in the report. For those loans, the delinquency rate could be twice as high, they said. The Fed analyzes a sample of data, including government and private loans, provided by the Equifax Inc. credit bureau.Delinquency rates have improved for other kinds of debt, such as mortgages, because of tough underwriting standards, according to Joelle Scally, administrator of the New York Fed’s Center for Microeconomic Data. By contrast, the government doesn’t consider students’ credit histories, so they the debt flows to “a more diverse group of borrowers,” Scally said in an e-mail.Student debt protests planned after armed marshals arrest man for old loans Rupert Neate in New York February 2016 Seven US marshals armed with automatic weapons turned up at Paul Aker’s home in Houston, Texas, last week to arrest him over a $1,500 student loan debt dating back to 1987.“It was totally mind-boggling,” Aker said. “I was wondering, why are you here? I am home, I haven’t done anything ... Why are the marshals knocking on my door? It’s amazing.”Aker said he was arrested, shackled and taken to federal court. “I was told: ‘You owe $1,500.’ I just couldn’t believe it,” he told Fox 26. “I was taken before a judge surrounded by seven marshals.”Texas representative Gene Green, a Democrat, said it was unacceptable that US marshals are being used to collect decades old student loans. “There’s bound to be a better way to collect on a student loan debt that is so old,” he told the station.Aker is unlikely to be the only person to be surprised by marshals collecting on student loans. A source at the marshal’s office told Fox 26 that it is planning to serve warrants on 1,200 to 1,500 people over student loan debts. Student debts are at a record high, with 2015 graduates saddled with an average debt of $35,000, according to analysis of government data by Edvisors, a student finance advice site. That level of debt is more than twice the amount US graduates had just two decades earlier, even adjusted for inflation. About 40 million Americans have outstanding student loans.The reports come as students and graduates are preparing for a series of meetings on the Capitol demanding action over escalating student debt. Students from Corinthian Colleges, a for-profit college company that went bankrupt last year, will on Wednesday be joined by students from other for-profit colleges including the Art Institutes, ITT Tech, and the University of Phoenix in a “fight back against educational debt” protest.Last year, 15 former Corinthian students launched the nation’s first student debt strike, refusing to pay back loans incurred to attend for-profit Corinthian Colleges... [Dunn cut some for space reasons]Federal student loans often make up the vast majority of for-profit colleges’ revenue. They have been criticised for spending more of that money on marketing and recruitment than they do on education. [Dunn cut rest] A right to debt relief from crushing student loansAlan Collinge 10, 2016Something unusual happened in late February. Commentators on the right and left, liberal Thom Hartmann and conservative Ike Brannon, published essays on the same day, Feb. 22, saying the same thing: Americans should have the right to discharge their student debt in bankruptcy proceedings, just like all other loans. Perhaps this historic convergence means we're finally ready for change.Our bankruptcy system goes back to the 18th century. When the founders — many of whom suffered at the hands of British creditors — wrote the Constitution, they specified that Congress had the authority to create a uniform, federal bankruptcy system, listing that power ahead of the power to declare war, to raise an army and navy, and to coin currency.It wasn't until nearly 200 years later that Congress targeted student debtors, making bankruptcy uniquely unavailable to them. The rationale was that students were fleeing, en masse, to bankruptcy court promptly upon graduation. But we now know that less than 1% of student loans were being discharged in bankruptcy court at that time.Absent bankruptcy protection, the student loan industry functions without checks and balances. Lenders have no reason to seriously evaluate a prospective borrower's ability to repay a loan, because they can make more money on defaults than on loans that remain in good stead. If a debtor lacks the funds to pay interest, lenders have collection powers that would “make a mobster envious” — in Sen. Elizabeth Warren's words. They can extract huge sums from clients, often many multiples of what was originally borrowed.Borrowers who default on student loans are relegated to a lifetime of socioeconomic insecurity. In addition to sustaining damage to their credit scores, they can be fired from public employment, their wages garnished without a court order. They can lose their professional licenses and even their driver's licenses.Those who manage to pay their way out of default through a hugely expensive loan “rehabilitation” process wind up in default again more than 60% of the time. Ultimately, borrowers in default can look forward to giving up a portion of their Social Security or disability income.In this lending and collection environment, the price of college has (predictably) skyrocketed. The nation now owes nearly $1.5 trillion in student loan debt, up from $500 billion eight years ago. The average undergraduate leaves school with $35,000 in loans, and the lifetime default rate on these loans is somewhere between 25% and 50%.But defaults are only a part of a much larger problem. Research by the Institute of Higher Education Policy found that an astonishing 63% of people who left school in 2005 were either in default, deferment, hardship forbearance or otherwise delinquent by 2010. Given the continued rise in college prices and flatlining wages, this trend has probably worsened since then.Behind the scenes, the Department of Education (which booked about $50 billion in profits on the lending system in 2011 alone) stands with the banks and their lobbyists in fighting to perpetuate the status quo. It is clear that the department has jettisoned the public's interest and represents instead the entities it is supposed to be overseeing: the lenders and the schools…[Dunn cut rest]College, the Great UnlevelerBy SUZANNE METTLER New York Times 1, 2014 When the G.I. Bill of Rights of 1944 made colleges accessible to veterans regardless of socioeconomic background, Robert Maynard Hutchins, the president of the University of Chicago, worried that it would transform elite institutions into “educational hobo jungles.” But the G.I. Bill was only the first of several federal student aid laws that, along with increasing state investment in public universities and colleges, transformed American higher education over the course of three decades from a bastion of privilege into a path toward the American dream.Something else began to happen around 1980. College graduation rates kept soaring for the affluent, but for those in the bottom half, a four-year degree is scarcely more attainable today than it was in the 1970s. And because some colleges actually hinder social mobility, what increasingly matters is not just whether you go to college but where.The demise of opportunity through higher education is, fundamentally, a political failure. Our landmark higher education policies have ceased to function effectively, and lawmakers — consumed by partisan polarization and plutocracy — have neglected to maintain and update them.More Americans than ever enroll in college, but the graduates who emerge a few years later indicate that instead of reducing inequality, our system of higher education reinforces it. Three out of four adults who grow up in the top quarter of the income spectrum earn baccalaureate degrees by age 24, but it’s only one out of three in the next quarter down. In the bottom half of the economic distribution, it’s less than one out of five for those in the third bracket and fewer than one out of 10 in the poorest.That’s before we even begin differentiating by type of college. Higher education is becoming a caste system, separate and unequal for students with different family incomes. Where students attend college affects their chances of graduating and how indebted they will become in the process.Private nonprofits, schools like Stanford or Vassar, list the highest “sticker prices,” but the average student pays less than half of full fare. Some nonprofits provide generous need-based aid to low- and middle-income students, supplementing their federal aid. Others devote their resources instead to merit-based aid, courting students with high SAT scores, typically from higher-income backgrounds. These colleges rise in the rankings, but they also provide a disadvantage to poorer students who would benefit from more need-based aid, who struggle financially to stay enrolled and who take out more student loans to do so.Nearly three-quarters of American college students attend public universities and colleges, historically the nation’s primary channels to educational opportunity. These institutions still offer the best bargain around, yet even there, tuition increases have bred inequality. For those from the richest fifth, the annual cost of attending a public four-year college has inched up from 6 percent of family income in 1971 to 9 percent in 2011. For everyone else, the change is formidable. For those in the poorest fifth, costs at State U have skyrocketed from 42 percent of family income to 114 percent.The worst problems, though, occur at for-profit schools like those run by the Apollo Group (which owns the University of Phoenix), the Education Management Corporation or Corinthian Colleges. These schools cater to low-income students and veterans, but too often they turn hopes for a better life into the despair of financial ruin.Nearly all of their students take out loans to attend, and the amounts are staggering. Among holders of bachelor’s degrees, 94 percent borrow. They take on median debt of $33,000 per student, compared with just $18,000 at the nonprofits and $22,000 at the publics. The for-profit graduates have trouble finding jobs that pay enough to afford their debts, and 23 percent of borrowers default within three years, compared with just 7 percent from nonprofits and 8 percent from publics.Just when having a highly educated citizenry is more important than ever, how could we be failing so miserably at achieving it? It’s not as simple as politicians’ terminating laws or gutting funding. Federal student aid has actually increased considerably since 2007. But government has abdicated its leadership role.First, federal student aid has become less effective in promoting opportunity. In the 1970s, the maximum Pell grants for low-income students covered nearly 80 percent of costs at the average four-year public university, but by 2013-14 they covered just 31 percent. Presidents beginning with Bill Clinton introduced costly new tax policies to help with tuition, but these have failed to improve access for the less well off.Second, state governments, burdened by the growing cost of Medicaid, K-12 education and prisons, let higher education funding dwindle. Spending per full-time public student fell by an average of 26 percent in real terms between 1990-91 and 2009-10. Besides raising tuition, public colleges have had to squeeze resources at the schools themselves. For poorer students, graduating becomes all the harder as class sizes grow, online courses proliferate and support services are cut.Third, Congress, by loosening regulations, permitted for-profit colleges to thrive on the government’s dime. These schools, which enroll nearly a tenth of college students, use nearly a quarter of federal student aid dollars allocated through Title IV of the Higher Education Act of 1965, and they account for nearly half of all student loan defaults. A 1998 rule allows them to gain up to 90 percent of their revenues from Title IV alone — a figure that does not include their substantial use of military education money. Even during the 2008 financial downturn, the top publicly traded for-profits enjoyed growth. Their upper management and shareholders benefit at the expense of American taxpayers and students... [Dunn cut some for space reasons]That’s not the whole story, either. Plutocratic governance intensifies the dysfunction, as powerful industries still have the strength to bring politicians together across the aisle in a parody of true bipartisanship.The effect of polarized plutocracy is epitomized by Congress’s support for the for-profit colleges. Already in the late 1940s, one senator was criticizing them for “milking the system,” providing inferior training to veterans as a means to siphon off G.I. Bill funds. At that time and as recently as the early 1990s, lawmakers from both parties came together to investigate and regulate them. Fiscal conservatives in the Reagan administration, the Republican senators Bob Dole and Phil Gramm, and some Democrats of all stripes sought to rein in the industry’s use of federal funds.But by the late 1990s, Republican leaders championed the for-profits as the “private sector,” never mind that 15 of the large publicly traded for-profits receive on average 86 percent of their revenues from federal student aid. Plutocracy helped bring House Democrats onboard, as the industry wooed them through strategic lobbying and campaign contributions. The result? In the House of Representatives, where Democrats and Republicans agree on almost nothing, they have united to protect $32 billion taxpayer dollars for the for-profit college industry.Is this who we are as a nation? Is this what we aspire to? The federal government must step up and lead. Tougher regulations of the for-profits, long overdue, are the quickest way to help the poorest Americans who seek college degrees. States, too, should be held accountable; a perverse incentive permits them to gain more in federal student aid if they commit less of their own resources to helping poorer students. Nonprofit schools must also be responsible partners with government in furthering opportunity. Lawmakers should curtail the money we spend on tuition tax policies and for-profits, and invest more in Pell grants and community colleges.Most of us were raised to believe that going to college was the surest path to a better life, but for many today that belief can be perilous. Unless we can claw back polarization and plutocracy enough to restore opportunity in higher education, the United States will become a society in which rank is fixed and our ideal of upward mobility but a memory.Suzanne Mettler, a professor of government at Cornell University, is the author of “Degrees of Inequality: How the Politics of Higher Education Sabotaged the American Dream.”A version of this article appears in print on 03/02/2014, on page SR5 of the NewYork edition with the headline: College, the Great Unleveler.College May Become Unaffordable for Most in U.S. By TAMAR LEWINNew York TimesDecember 3, 2008 rising cost of college — even before the recession — threatens to put higher education out of reach for most Americans, according to the biennial report from the National Center for Public Policy and Higher Education. Over all, the report found, published college tuition and fees increased 439 percent from 1982 to 2007, adjusted for inflation, while median family income rose 147 percent. Student borrowing has more than doubled in the last decade, and students from lower-income families, on average, get smaller grants from the colleges they attend than students from more affluent families. “If we go on this way for another 25 years, we won’t have an affordable system of higher education,” said Patrick M. Callan, president of the center, a nonpartisan organization that promotes access to higher education.“When we come out of the recession,” Mr. Callan added, “we’re really going to be in jeopardy, because the educational gap between our work force and the rest of the world will make it very hard to be competitive. Already, we’re one of the few countries where 25- to 34-year-olds are less educated than older workers.” Although college enrollment has continued to rise in recent years, Mr. Callan said, it is not clear how long that can continue.“The middle class has been financing it through debt,” he said. “The scenario has been that families that have a history of sending kids to college will do whatever if takes, even if that means a huge amount of debt.” But low-income students, he said, will be less able to afford college. Already, he said, the strains are clear. The report, “Measuring Up 2008,” is one of the few to compare net college costs — that is, a year’s tuition, fees, room and board, minus financial aid — against median family income. Those findings are stark. Last year, the net cost at a four-year public university amounted to 28 percent of the median family income, while a four-year private university cost 76 percent of the median family income. … [cut rest for space reasons] ................
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