The battle to make college more affordable has come down to a critical few weeks in the Senate. The banks and student loan companies already have spent millions of dollars on lobbying, PR firms, and advertisements in their attempt to stop reform and hang on to $87 billion in subsidies that could be going to help students.
Now Campus Progress is taking action. We’ve raised money to put this :30 second spot on cable TV and on Hulu in key states across the country:
We don’t have the kind of money student loan companies have, so we’re going to need your help spreading the ad on Facebook, Twitter, and email if we’re going to get the word out. Click here to help us spread the word.
Media outlets are reporting that 14 individuals at the University of California-Los Angeles (UCLA) were arrested today at a regents committee meeting debating student fee increases.
The meeting was closed to visitors after repeated outbursts by students and union members.
Protesters chanted outside the building as the university Board of Regents committee voted to boost fees over two years. The full board is scheduled to vote Thursday.
Despite the public outcry, the regents OK’d a 32 percent increase to fees at all university campuses.
The vote comes amid an escalating budget shortfall in the state, totaling $21 billion.
Earlier this month, I wrote about the lack of any student opposition to the Student Aid and Fiscal Responsibility Act (SAFRA), which would cut wasteful government subsidies to student loan companies, and use the $87 billion in savings to raise Pell grants, invest in community colleges and minority serving institutions, expand the Perkins loan program, and more.
As it turns out, I may have spoken too soon. There is now one student who, through a lender run campaign, has spoken out against SAFRA. A freshman at Vanderbilt University has signed up with “Protect Student Choice/Protect Local Jobs,” which is apparently being run by Qorvis Communications. The student would not say whether he has any student loans.
While industry has found one student in its campaign to protect “student choice,” Campus Progress and its coalition partners have been more successful. More than 10,000 students signed a petition either online or on their campus to support student loan reform on the National Wall of Debt Day of Action on September 16th, and more than 40,000 people have signed petitions on Facebook supporting reform.
Even if students go bankrupt, private lenders still make them pay up
“What is so different about discharging student loans that is different from everything else that is dischargeable?” asked Rep. John Conyers, Jr. (D-MI) at Wednesday’s hearing about private (“alternative”) student loans and bankruptcy. “This isn’t a gambling debt, this isn’t something against the common good.” The hearing was held to reconsider a law that allows private lenders to prevent loans from being discharged if a student declares bankruptcy.
Unfortunately, only 4 out of 14 other committee members attended, but the majority of senators and witnesses echoed Conyers’ sentiments. The harsh and unforgiving treatment of private student loan debt is the exception to the rule for most noncriminal consumer debt. The current policy protects private lenders and puts borrowers in dire financial straits. Although federal student loans are also not dischargeable, they have numerous consumer protections, repayment options, and loan forgivness programs in place– private lenders do not.
There is a grave need to change this strange and dangerous policy. Witness Lauren Asher, President of the Institute for College Access and Success, spoke about the desperate situations of student borrowers today. College costs have outpaced family incomes, and financially trapped students must have honest lenders who will not prey on their need or ignorance. But Asher cited some highly disturbing examples of the predatory lending epidemic raging across our nation’s campuses.
“If we don’t have climbing walls and sushi bars in our universities, does that make us un-American?”
So asked a panelist in a half-joking comment Thursday about the gravely misplaced priorities of higher education institutions. Five speakers, including Robert Shireman, the deputy undersecretary of Education for the federal administration, met at a discussion hosted by the Education Sector and Washington Monthly at George Washington University. In light of the Student Aid and Fiscal Responsibility Act (SAFRA) that is currently before congress, the panelists offered up specific strategies to improve the system with the goal of increasing affordability, graduation rates, and overall quality of education. (more…)
The Wall Street Journal has a great article out today about the explosive increase in the total amount of federal loans borrowed by all students. The total for 2008-09 is 25% higher than 2007-08, and this represents the largest in recent memory. The largest increases in the past couple decades was in 1994-95, when total increased by 17%.
The silver lining in these numbers is that they represent an increase in college enrollment. Unfortunately, these numbers are also just the latest evidence that the recession has been hitting young people hard.
It has been particularly difficult for young workers without postsecondary education to find work, and many have decided that their best bet is to go to college in order to improve their long term prospects. And with so many families facing lay-offs, foreclosures, and other financial disasters, many students that would have received help from their parents must borrow more, even as they often qualify for additional federal student aid.
A new report by the Project on Student Debt shows that an alarming number of students are taking out private student loans, which often come with high and variable interest rates and few borrower protections, before exhausting federal sources of funding.
Among their findings:
The portion of private loan borrowers who did not exhaust federal sources of student loans increased from 48% in 2003-04 to 64% in 2007-08.
The portion of all undergrads who borrow private loans has increased dramatically from 5% in 2003-04 to 14% in 2007-08. Students at certain kinds of institutions are much more likely to take out private student loans, however. 14% of students at public four year universities have private loans, compared to 42% of students at for-profit schools.
African Americans are the most likely to borrow private loans. Between 2003-04 and 2007-08, the number of percentage of African American undergrads who took out private loans rose from 4% to an alarming 17%.
Though these loans often come with interest rates comparable to a credit card and few borrower protections, borrowers are unable to discharge them in bankruptcy.
The Project on Student Debt is also calling on folks to support a Consumer Financial Protection Agency that, among other things, could regulate private student loans. Despite some new disclosure regulations passed last year, not enough has been done to reign in the growth of these dangerous loans. Take action by clicking here.
One of the arguments often made by student loan industry lobbyists and their friends is that, by providing loan companies with huge, wasteful subsidies, students get something very valuable: a choice of lender.
Check out this table of the “choice” students have when selecting a lender for the Federal Stafford Loans, which was compiled by the Student Lending Analytics Blog:
In an op-ed in Forbes.com yesterday tactfully entitled SAFRA Stinks, the CATO Institute’s Neal McCluskey argues against legislation that would end wasteful government subsidies to student loan companies, and use the $87 billion we will save to make college more affordable and accessible. Unfortunately, his argument is based almost entirely on his free market ideology, rather than an assessment of the current state of education and a desire to solve concrete problems.
Here are his major arguments and our response, one by one:
Funding our Future is a campaign to pass a progressive federal budget for 2010 and ensure that our nation.s key economic choices invest in our education, spark reform of our health care system, and address climate change through cap and trade and clean energy investments. Click here for more info.
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In an op-ed in Forbes.com yesterday tactfully entitled