Class Struggle

On November 28, hundreds of students from Brauch College linked arms and protested outside a City College of New York board meeting in which members authorized, by a 15-to-1 vote, a $300 annual tuition increase until at least 2015. The protest was so disruptive that, according to The New York Times, Brauch canceled classes after 3 p.m. and stopped regular foot traffic going in and out of the building where the meeting was taking place. Three people were arrested.

Occupy CUNY, the group of students that staged the protest, announced on its Facebook page that it aimed to make public education “accessible” and “fair.” The City University of New York’s (CUNY) tuition is already more than $5,000 per year and with the new rates, will be more than $6,000 for the 2015—2016 school year. The students’ demonstration lined up with the Occupy Wall Street movement, which has focused on one of the facets of economic injustice increasingly affecting the “99 percent”—student debt.

It’s no wonder. The average four-year student graduating in 2008 carried $24,651 in debt, a number that has increased by 5.6 percent since the 2003-2004 school year, according to federal student-loan data. Tuition has been rising at twice the rate of inflation for more than a decade, and America’s student-loan debt has recently surpassed its credit-card debt.

An advocacy organization founded by former Education Department Undersecretary Bob Shireman, The Institute for College Access and Success (TICAS), has been looking for solutions and for ways to help students feel less discouraged. Though some have compared the student-debt crisis in America to the subprime housing market, TICAS President Lauren Asher says student-loan debt may feel more similar to the emotional nature of the health-care crisis. Even though the economic structures are much different on the health-care front, Asher says of students struggling with debt, “People can feel hopeless.”

The debt crunch comes at a time when students are increasingly turning to higher education to remain competitive in the economy. A TICAS survey found that, though young people believe getting a college education is more important than ever, three-quarters of them say it’s harder to find an affordable education than it was five years ago. Only 21 percent said students graduate with a manageable amount of debt.

Still, Asher acknowledges that the situation may not be as bad as it seems. “Despite rising debt levels, there have been steps in the right direction, including income-based repayment and increases in the Pell grant,” she says.

So how can we reduce student-debt burdens in America? It’s a complicated question, but one that has some concrete policy solutions.

Get states to adequately fund higher education.

State funding for higher education decreased by 1.5 percent in the 2009 fiscal year; without stimulus funding, that figure would have been 3.4 percent, a report from the National Council of State Legislatures (NCSL) estimates. The Center on Budget and Policy Priorities finds that since the beginning of the recession in 2008, 43 states have cut higher-education funding. Because most states allocate higher-education funding from general funds, when state budgets shrink, funding to state colleges and universities gets cut.

 

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End predatory student loans.

There are two kinds of student debt. The first kind, federal student loans, comes with borrowing limits, customized repayment and forbearance, fixed interest rates, and options for forgiveness. Private student loans from student-lending giants like Sallie Mae come with variable interest rates and fewer protections. It’s often these private loans that push students from a manageable to an unmanageable debt load.

Increasingly, with the recession creating a tight credit market, for-profit colleges are getting into the lending game. Corinthian Colleges, a publicly traded company that got its start by buying up failing institutions for the accreditation, has committed to doubling its institutional student-lending program to investors even though about 55 percent of such loans end in default.

The new Consumer Financial Protection Bureau, the brainchild of Massachusetts Senate candidate Elizabeth Warren, has created a student-loan ombudsman office that plans to target dangerous loans. It has taken the first steps to reining in these dangerous loans by starting the federal regulatory process.

Change student-loan bankruptcy law.

Unlike subprime loans that came out of the housing-market crisis, student loans cannot be discharged in bankruptcy, and defaulted student loans are classified as criminal debt to the government. While federal student loans can be discharged in the case of death or disability, private student loans aren’t required to carry protections for these extreme circumstances.

A bill in Congress, the Private Student Loan Bankruptcy Fairness Act of 2011, seeks to better regulate private lenders. If passed, this law will force private lenders to adhere to the same rules as public lenders—and relieve students of some of the debt they cannot afford to pay back.

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Crack down on schools offering shoddy degrees.

The Department of Education tried to crack down on career colleges that fall short on their promises of leading students to financial success with practical degrees. The department created the “gainful employment” rule, which would have stopped giving federal student aid—up to 90 percent of for-profit colleges’ profits—to schools with high default rates or students with out-of-control debt-to-income ratios. But, as The New York Times reported, a significant lobbying effort on the part of many of these schools ultimately caused the department to implement a weakened version of the rule.

For-profit schools have seemingly started to wise up to the attempts to regulate the industry, with coalitions of schools issuing their own professional guidelines in an attempt to thwart stricter regulation.

Still, even though for-profit colleges managed to sidestep the moderate regulations initially proposed by the Education Department, many for-profit schools are starting to see declining enrollment figures. DeVry University, one of the largest for-profit education companies, reported that its fall 2011 enrollment had dropped 5.9 percent from 2010.

In Kentucky, Attorney General Jack Conway created a coalition of 22 attorneys general from across the country who are investigating for-profit colleges. Conway is specifically investigating seven colleges in Kentucky that he says have targeted students with fraudulent and deceptive practices like misrepresenting job-placement numbers. To curb dropout rates, make students go to tougher schools.

Data introduced in a book called Crossing the Finish Line , by William G. Bowen, Matthew M. Chingos and Michael S. McPherson, which looked at students at flagship universities, found that those who “overmatched”—that is attending schools more selective than other students of their background might typically choose—tended to graduate at much higher rates than those who attended less selective institutions.

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It may be difficult to convince students to go for more selective institutions since, as the TICAS survey found, students find college less affordable and highly competitive institutions often cost more. Lower-income students who gain admission into selective schools, where they would be more likely to graduate, can find the cost prohibitive. But even if the sticker price seems high, these more selective institutions often offer financial aid packages that can make them more affordable. In an effort to make the costs of attending university more transparent, all colleges are now required to post a net-cost calculator on their website. Students can input basic information about their family contributions and get a reasonably accurate estimate of how much that school will end up costing them . This tool could help students manage the cost of attending high-tier schools that match their talents.

So while young people taking part in Occupy protests may feel hopeless about their student debt, solutions to reduce debt loads do exist—not only for them, but for future generations. Some of the solutions are as simple as reversing the 2005 change to bankruptcy laws. Others, like working to reduce college cost through state budget investment, are going to be far more complicated to tackle. The important thing, though, is that as frustrated as Occupiers (and typical college attendees) are with high debt loads and a poor economy, they don’t have to feel entirely hopeless. There are concrete steps we can and should take to ensure that higher education doesn’t become something only the one percent can afford.

Comments

Oh, c'mon $25,000 of student debt on the average. That's the price of a car--and not a particularly posh one. Students think nothing of going into debt to buy cars--and no one imagines that they're going to buy a house for cash. But the idea of going into debt to pay for an education--about the most reasonable debt one can incur--sends students into a tailspin. Get the education, kids, and forget about the car.

What's the alternative anyway. Working your way through school? Not in the least rational because the time at work is time students can't spend studying, cranking up GPA and getting the credentials that will make them employable.

Of course the state should provide education through college. But given that it currently doesn't loans are the best we have and students should do all they can to take advantage of them--and avoid working while in school insofar as possible.

Unfortunately several years have passed and we have the same problems: student loan interest rate increase and attempts to make these loans liable to bankruptcy. Young people have now less chances and opportunities to study and many families are ruined. They seek for the ways to educate their children, apply for loans of various kinds, save wherever they can, but still often fail to manage their debt.
Jull from http://personalmoneyservice.com/

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