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Posts Tagged ‘Debts’

More on Major Student Loan Debts and “Victims”

Friday, March 13th, 2009

Yesterday, I wrote about the economic possibilities that could come from canceling all outstanding student loan debt. Over the last week, though, I’ve been reading some articles and new ideas on the entire student loan industry. At one point, I was called the national poster boy for student loan debt (what a claim to fame, huh?) and using that now rustic accolade, I have to make a comment or two about what I’m seeing out there regarding student loans.

While there are too many deceptive and shady practices in the student loan industry, many graduates who are burdened with certain levels of debt need to get over their predicament. I read a story where a guy graduated with some $35,000 in student loan debt and because he began missing payments and couldn’t find a job, over the course of five years that number skyrocketed threefold. Look, in that situation the “problem” likely is the fact that the guy isn’t willing to put himself in a position to be able to afford his payments. Doing some quick math shows that this guy was probably required to pay some $230 per month in order to make his payment.

Come on. Anyone can make $230 per month by working at a gas station or at a retail shop. I don’t want to hear about this guy complaining that he is a victim. I’ll listen to his story about how his life was torn apart and how he’s been stunted from advancing as quickly as previous generations of college graduates (trust me…I know), but don’t act like you’re a victim when – after five years – you couldn’t position yourself to pay $230 per month.

Quite a while ago I wrote an entry called “Personal Clarification on Student Loan Debt” where I stated quite clearly that I am no victim. One of the major problems that I see brewing out of the student loan debt dialogue is this victimized stance that so many people take. Hey – I signed the paperwork to get these loans and while I didn’t fully understand how much the loans would effect me post-graduation, I wasn’t taken advantage of by anyone in the student loan industry. Sure, I think that the “system” which decides who gets free rides and who has to pay is fundamentally flawed. I’m glad that it has been changing (too slowly) over the past six years since I graduated, but don’t paint me as a victim.

On a similar note, I’m not playing the old “fish story” game here either. In other words, I’m not suggesting that the guy whose story I read about only graduated with $35,000 in student loan debt and since I graduated $118,000, then I’m more deserving of pity. First, I don’t want pity (though money would be nice). Second, I’m not interested in promoting a race to the bottom between various student loan borrowers. I have a ton of student loan debt and though I’ve been diligently paying it, I’m still going to be on the hook for a while. That doesn’t mean that I deserve pity, though!

I sincerely hope that an honest national dialogue opens up about how to address the gigantic student loan debt burden that will continue to stunt our economy for the foreseeable future. Once policymakers realize that personal social advancement and personal wealth accumulation are not possible when America’s 20 and 30-somethings are saddled with unmanageable debt, then we might see some positive action. My fear, though, is that no one will realize this until it’s too late (imagine an economy that is poised to succeed but can’t figure out why drastically reduced home prices aren’t selling units and consumer spending is continuing to constrict). Here’s hoping that some forward-looking policymaker or legislator sees this problem early-on and begins addressing it as soon as possible!

Posted in Money, Jobs, & Finances, Student Loans | No Comments »

The FAFSA May Be On The Way Out

Monday, February 23rd, 2009

The New York Times printed an article this morning talking about how the Free Application for Federal Student Aid (FAFSA) is too cumbersome for most families to fill out. They cited how some families are even turning to paid consultants to complete the form, paying somewhere between $80 and $100 per application (which defeats the whole purpose of a free application).

Clearly, if you’ve read this blog over the years, you know that I have a long and storied history with student loans. Over the course of my 7 years as an undergraduate and graduate student I filled out a bunch of these things; my Mother and I filled out my first few FAFSA forms and I filled out the last few. What I remember about filling out the forms was not that it was tedious (filling out any government form is tedious), but rather that the results reports were not good enough.

In other words, you’d put together this FAFSA and then get a report back (mine was from my undergraduate institute) telling you which aid you qualified for based on your responses. The report didn’t speak to potential repayment scenarios or to existing debts under each program; both pieces of information could really help students and their families make better decisions. I’m not sure why this information isn’t included in the report as both the federal government and the college have the information at their fingertips.

The FAFSA should be changed, but this change should be a part of changing the entire student loan process.

Posted in Money, Jobs, & Finances, Student Loans | 5 Comments »

Money Now Or Tax Cuts?

Monday, February 16th, 2009

Bloomberg.com published an opinion editorial by Michael R. Sesit on January 30th that suggested the economy needed cash injected into it immediately, not tax breaks later. This article was focused on what the typical consumer would have needed from the stimulus plan that was bouncing around Congress at the time, but with the bill being passed the other day, much of this is moot at this point. However, the concepts in Sesit’s piece were interesting enough to maintain this post.

Sesit suggests the following:

Early last year, Congress passed, and President George W. Bush signed, a $168 billion stimulus bill whose centerpiece was about $100 billion in personal-tax rebates. Only about a third of the rebate checks, which ranged from $300 to more than $1,200 for some families, were spent, Mishel says. Others put the unspent portion as high as 80 percent.

“It was not an effective way to get the economy back on track,” Mishel says,

A survey of people eligible to receive tax rebates of $300 or $600 in 2001 found that only 22 percent of households receiving the money spent it, according to a study by Matthew Shapiro and Joel Slemrod at the University of Michigan.

You can learn a few things from this, some of which we might have already assumed. First, is it a surprise to anyone that nearly 80% of the people who received a check last year put it in the bank and didn’t spend it? Americans are hurting for money. Any middle or lower income family will tell you that they probably used the money they received last spring to either buoy their savings accounts or pay down some of their debts.

By the way, I have to bring up an odd coincidence here. How interesting is it that Americans used the checks to strengthen their savings accounts much like banks used their bailout money to strengthen their balance sheets? The purpose of the checks last spring were to get Americans spending money – it didn’t happen. The purpose of the bailout dollars to the banks was to get them making loans again – it didn’t happen. Just thought I’d point that out.

If you get a chance, I suggest reading Sesit’s op-ed – it’s interesting and presents a more “what do we need now” point of view. For what it’s worth, I think the economy needs many things, but most of all we need a readjustment of costs. Take housing, for example. There are homes on the market that are selling for 20% – 40% below their listing price and they are still too expensive.

Posted in Money, Jobs, & Finances | 2 Comments »

Unexpected Good News For Those In Need

Wednesday, June 25th, 2008

Earlier today, USAToday.com ran a story about some of those government stimulus checks that have not reached their intended recipients yet. Turns out that the government is diverting checks away from those who owe back taxes, child support payments, student loan debts, and other government-related debts. From the article:

So far, 1.8 million rebate checks have been intercepted by Treasury Department computers showing that individuals owe money to federal or state governments.

The biggest beneficiaries: parents who are owed child support.

I think this is great news. A population which can certainly use some extra help during these economic times is getting it from their own rebate checks plus they’re getting some money that they should have already received in the first place! Of course there is the larger population of deadbeats who not only are not receiving their checks, but haven’t made their various payments to the government. This is another population that could use some help. But that’s for another rebate program at another time.

Posted in Money, Jobs, & Finances, United States Politics | No Comments »