Showing posts with label free college education. Show all posts
Showing posts with label free college education. Show all posts

Saturday, February 2, 2019

Kamala Harris, presidential candidate, promises cost-free college for most Americans. What will she do for millions of student debtors who are suffering right now?

Senator Kamala Harris (D. Cal.) is running for President, and she promises a free college education for most Americans if she gets elected.

How will that work? Back in 2017, Senator Harris and Senator Bernie Sanders (D-Vt) introduced legislation for free college, and here are the details:
  • Attendance at a public institution will be free for families making $125,000 or less, which Harris claims will benefit about 80 percent of all Americans.
  • The federal student-loan program will remain in place, but interest rates on loans will be slashed to less than 2 percent.
  • Students from low-income families can attend private colleges and universities that serve "underrepresented minority communities" (she probably means HBCUs) at reduced tuition rates.
  • The Harris-Sanders plan will also help students "afford books, housing, and transportation, and other fees." 
Free college! It's like bourbon flowing out of the office water cooler. Who could oppose that?

But here's the big problem with the Harris-Sanders proposal. Their plan would leave the current student-loan program in place.

The federal student-loan program is a colossal disaster, as Secretary of Education Betsy DeVos admitted last November; and it needs to be radically reformed.

Secretary DeVos said only 1 out of 4 student borrowers are paying down principal and interest on their loans, and 43 percent of outstanding federal loans are "in distress." The Harris-Sanders plan won't do anything to relieve the suffering of millions of Americans who are being crushed by student loans except cut interest rates.

In any event, Senator Harris's free college plan is never going to happen. It simply is not possible for the federal government to finance free college education to millions of Americans while we have $1.56 trillion in accumulated student loan debt--at least half of which will never be repaid.

However, there are specific things that Congress and our President can do to relieve the suffering of distressed student-loan borrowers, and I will support any presidential candidate who promises to "treat the wounded."

Two things need to be done:

1) Congress must eliminate the "undue hardship" language from the Bankruptcy Code so that overburdened college debtors can discharge their student loans in the bankruptcy courts.

2) The for-profit-college industry must be shut down.

Kamala Harris says she is "for the people." And in fact, she aggressively prosecuted Corinthian Colleges, a predatory for-profit college racket, when she was California's attorney general.  Her office obtained a billion dollar judgment against Corinthian, which filed for bankruptcy and shut down.

Very impressive!

Nevertheless, as a presidential candidate, Harris must continue to attack the sleazy for-profit industry. And she should endorse bankruptcy relief for millions of honest Americans who have been victimized by student loans.

Right now, Harris's higher education platform is nothing more than "Free beer tomorrow." Let's see if she proposes substantive reforms for the federal student-loan program and a serious crackdown on the for-profits.






Tuesday, January 3, 2017

Governor Cuomo proposes free college education at New York's public institutions, but the for-profits and private liberal arts schools will likely oppose this plan

Earlier this week, New York Governor Andrew Cuomo announced his plan to offer a free college education at New York's public colleges and universities for all New York families making $125,000 or less. This plan is nearly identical to the proposal put forward by Hillary Clinton last fall during the presidential campaign.

In a press release, U.S. Secretary of Education  John B. King quickly endorsed Cuomo's plan, noting that it is similar to President Obama's proposal for a free community-college education.  "I applaud Governor Andrew Cuomo for his leadership in expanding the doors of opportunity for New Yorkers, particularly those who otherwise may not be able to afford [a college education]," King said.

Governor Cuomo's proposal is a sound idea, Hillary Clinton's proposal is a sound idea, and President Obama's proposal for a free community-college education is a sound idea as well. And, contrary to what critics have said about these plans, they are not financially irresponsible.

The federal government already spends $150 billion a year on student aid programs--Pell grants, student loans, work-study programs, etc. The states also spend billions on higher education every year. New York, for example, spends a $1 billion a year in tuition assistance for the state's students.

If all this money was dedicated toward offering a free college education at public colleges and universities, taxpayers might actually save money.  But none of these plans will work if the federal and state governments continue to subsidize the for-profit college industry and private nonprofit colleges.

If Governor Cuomo's plan moves forward, you can expect to see for-profit and nonprofit colleges oppose it. Catharine Hill, president of Vassar College, came out against free college tuition in a New York Times op ed essay last year--back when Bernie Sanders was the only politician endorsing the idea. And New York's association of private colleges has already expressed skepticism about Governor Cuomo's free tuition plan.

The next six months will be a time of great turmoil for higher education. A number of for-profit colleges have closed or gone bankrupt, and many more are hanging on by their fingernails, hoping the Trump administration treats them more kindly than the Obama administration did during its waning days.  Several nonprofit liberal arts colleges have closed as well and more are on the brink of closing.

If the for-profit college industry collapses and the nonprofit college sector shrinks dramatically, then proposals to offer a free college education at public colleges might actually work. But they will not work if federal and state governments continue to prop up the nonpublic college sector with public money.

Bernie & Andrew Cuomo support free college education at public institutions
(photo credit, Sam Hodgson, New York Times)


References

Catharine Hill. Free Tuition Is Not the AnswerNew York Times, November 30, 2015, p. A23.

Jesse McKinley. Cuomo Proposes Free Tuition at New York State Colleges for Eligible Students. New York Times, January 3, 2017.

Rick Seltzer. Free Tuition Idea Revived. Inside Higher Ed, January 4, 2017.

U.S. Department of Education Press Release. U.S. Education Secretary John B. King Jr.'s statement on New York Gove. Andrew Cuomo's free college tuition proposal. U.S. Department of Education, January 3, 2017.

Sunday, October 9, 2016

Hillary Clinton promises free college education and lower interest rates on student loans: These ideas won't solve the student-loan crisis, which is one hot mess

Prompted by Senator Bernie Sanders, presidential candidate Hillary Clinton made two promises to student-loan debtors. First, if she is elected President, all Americans with a family income of $125,000 or less will be able to get a college education for free from a public institution. Second, if elected, Hillary will slash interest rates on student loans.

These are both good ideas, and I endorse them wholeheartedly. But even if Hillary gets elected and keeps these promises, the student-loan crisis will still be one hot mess.

A Free College Education for Families of Modest Means: A good idea

Hillary has promised a free college education at a public institution for everyone whose family income is $125,000 or less. How much would that cost?

Catharine Hill, president of Vassar College, estimated that Bernie Sander's free-college plan would cost about $70 billion a year. The Clinton campaign estimates that her plan will cost less---about $50 billion a year.

Currently, the federal government gives out around $100 billion a year in student loans, and roughly a third of this money goes to for-profit colleges and private institutions. So if the government replaced $50 billion in loans with grants in the same amount, that would go a long way toward giving middle-class families access to a free college education at a public university.

But  Clinton's plan faces major hurdles. First, it will require Congressional approval from a Republican Congress, which seems unlikely. Second, Hillary's plans calls for state governments to contribute one third of the cost, and that assumption may not be realistic.

But let's assume Hillary gets this plan through. We still have a huge problem.  Millions of Americans will still have massive student-loan debt totally $1.3 trillion, and free college for future students will do nothing to relieve them of their suffering. People are having their wages garnished, their Social Security checks dunned, and their income-tax returns seized. Honest people who deserve bankruptcy relief are prohibited by law from getting it.

So if Hillary implements her free college plan she must do something to help the millions of people who are suffering from massive student-loan debt. In my view, she must push for bankruptcy reform that will permit honest but unfortunate student-loan debtors to shed their oppressive student-loan debts. And she should also endorse loan forgiveness for everyone who took out loans to attend an overpriced for-profit college and received no economic benefit from the experience.

Lowering Interest Rates On Student Loans: Another good idea

 Hillary also promises to slash interest rates on student loans if she is elected President, and she has called for a 90-day moratorium on student-loan payments to allow borrowers to refinance their debt. Ag ood idea.

Interest rates on student loans, currently around 4 percent, seem too high when ten-year treasury bonds are going for 1.7 percent. Lowering those rates will give student-loan debtors some relief.

But again, refinancing student loans won't relieve the massive suffering people are experiencing right now. Millions have seen their loan balances grow larger because they obtained economic-hardship deferments that caused unpaid interest to pile up. Others defaulted on their loans, and the loan guaranty companies slapped an 18.5 percent penalty to their loan balance. As a result, many people now owe two or even three times what they borrowed due to accruing interest, penalties, and collection fees.

A two percent interest rate on a $50,000 debt is certainly better than an 8 percent rate, but Hillary must stop the student-loan guaranty companies from imposing unreasonable costs and penalties to borrowers' loan balances. After all, the loan guarantee companies are supposedly charitable organizations, but four of them have each accumulated $1 billion in assets--most of acquired from their debt collection activities.

Conclusion: Hillary must acknowledge that the student-loan program is a catastrophe

Hillary's two proposals for reforming the federal student-loan program are good ideas, but free college in the future and lower interest rates won't relieve the hardship visited on American young people who borrowed too much money to enroll in educational programs that resulted in little or no economic benefit.

We must face facts. Millions of people were ripped off by shoddy and rapacious colleges. The victims of the student-loan program need to get back into the economy and begin building economic security for themselves and their families. That won't happen until massive amounts of  student-loan debt are forgiven.



References

Catharine Hill. Free Tuition Is Not the Answer. New York Times, November 30, 2015, p. A23. Accessible at: http://www.nytimes.com/2015/11/30/opinion/free-tuition-is-not-the-answer.html?_r=0

http://www.nytimes.com/2016/09/29/us/politics/bernie-sanders-hillary-clinton.html

Laura Meckler. Hillary Clinton's Free College-Tuition Plan Short on Specifics. Wall Street Journal, August 14, 2016. Accesible at http://www.wsj.com/articles/hillary-clintons-free-college-tuition-plan-coming-up-short-on-specifics-1471167001

Letter to the Honorable John King, Secretary of Education, from 23 Democratic Senators, September 15,2016. https://www.insidehighered.com/sites/default/server_files/files/9_15_16%20ITT%20Tech%20ED%20Letter%20(1).pdf

Dawn McCarty and Shahien Nasirpour. ITT Educational Services Files for Bankruptcy After ShutdownBloomberg, September 16, 2016. Accessible at http://www.bloomberg.com/news/articles/2016-09-16/itt-educational-services-files-for-bankruptcy-after-shutdown-it6byu6t

Reuters. ITT Educational Services Files for Bankruptcy After Aid CrackdownInternational New York Times, September 17, 2016. Accessible at http://www.nytimes.com/2016/09/18/business/itt-educational-services-files-for-bankruptcy-after-aid-crackdown.html?_r=0

Robert Shireman and Tariq Habash. Have Student Loan Guaranty Agencies Lost Their Way? The Century Foundation, September 29, 2016. Accessible at https://tcf.org/content/report/student-loan-guaranty-agencies-lost-way/




Thursday, July 7, 2016

Hillary embraces Bernie Sanders' plan for a free college education: God bless Senator Sanders

You did it! You did it! You said that you would do it, And indeed you did. I thought that you would rue it; I doubted you'd do it. But now I must admit it That succeed you did. 

                                                         lyrics from My Fair Lady

Hillary Clinton announced this week that she favors a tuition-free college education at in-state public colleges for all families with annual incomes up to $125,000. As the New York Times correctly noted, by taking that step, Hillary "largely embraced" Bernie Sanders's core position about a free college education at public institutions for all Americans.

God bless Bernie Sanders! As the Democratic primary season ground on, attacks by Hillary's supporters became more and more vicious. Froma Harrup insinuated he was a racist, Barney Frank accused him of McCarthyism, and a New York Times reporter suggested he was a sexist.  I think someone in the Clinton camp would have accused him of antisemitism were it not for the fact that he is Jewish.

All shameful poppycock. But doughty Bernie went the distance, and the Democratic Party has essentially adopted one of his core campaign issues.

What does this mean?

If Clinton is elected President, which seems likely, Congress will be forced to grapple with real reform for the federal student-loan program.  Clinton crossed the Rubicon when she endorsed Bernie's free-college tuition proposal. There is no going back. And by calling for a 3-month moratorium on student-loan payments to allow college borrowers to refinance their college loans, Clinton has forced the Democratic Party and the American public to face the fact that the student loan program is a train wreck.

As Winston Churchill said after the battle for Egypt, "Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning."

A calamity has descended on American higher education. In the coming years, the for-profit sector will collapse,dozens of  small liberal arts colleges will close, and millions of Americans will be forced into 20-and 25-year repayment plans. The student-loan program as we now know it will unravel.

It's going to be ugly, but at least Hillary's two recent pronouncements about higher education finance are an acknowledgement that we have to embrace radical change. And we can thank Senator Bernie Sanders of Vermont for pushing America's most important domestic policy issue to the front and center of American politics.

And let us not forget what I have been arguing for 20 years: There is no way out of this morass without allowing millions of student borrowers to shed their student loans in bankruptcy.

Image result for "bernie sanders"

References

Stephanie Saul and Matt Flegenheimer. Hillary Clinton Embraces Ideas From Bernie Sanders's College Tuition Plan. New York Times, July 6, 2016. Accessible at http://www.nytimes.com/2016/07/07/us/politics/hillary-clinton-bernie-sanders-education.html?_r=0

Anne Gearan and Abby Phillip. Clinton to propose 3-month hiatus for repayment of  student loansWashington Post, July 5, 2016. Accessible at https://www.washingtonpost.com/news/post-politics/wp/2016/07/05/clinton-to-propose-3-month-hiatus-for-repayment-of-student-loans/?hpid=hp_special-topic-chain_clinton-loans-11pm%3Ahomepage%2Fstory

Thursday, June 9, 2016

The Student Loan Crisis and the Democratic Party Platform: Key Reform Proposals Would Entice Young Voters to vote for Hillary

Hillary Clinton has a problem with young  voters. They went 3 or 4 to 1 for Bernie Sanders in the various Democratic primaries this spring. Why did young voters go to Bernie, and how can Hillary win them over?

The Democratic Party insiders--dinosaurs like Nancy Pelosi, Harry Reid, Debbie Wasserman Schultz, Charles Schumer, etc--don't realize it but the number one domestic policy issue in the United States today is the student loan crisis.  Approximately 43 million Americans are carrying $1.3 trillion in student-loan debt, and at least half of them can't pay it back.

As the Wall Street Journal reported in April, about 40 percent of college-loan borrowers in the repayment phase aren't making their monthly loan payments.  And five million people are enrolled in various income-based repayment programs. Most debtors in these programs are making payments so low that the payments don't cover accruing interest. In reality then, most people in income-based repayment plans will never pay off their loan balances.

Bernie Sanders signaled that he understands the scope of the problem when he proposed a free college education at a public college for every American.  By making that pledge, he turned millions of young Americans into single-issue voters.

Hillary could attract millions of Bernie supporters by adding these  planks to the Democratic Party platform:
  • Free college education at a public college or university (as Bernie proposed).
  • Eliminating the tax penalty for people who successfully complete long-term repayment plans but who have a loan balance when they've  completed their repayment terms.
  • Stopping the garnishment of Social Security checks for elderly student-loan defaulters.
  • Forcing the for-profits to stop putting mandatory arbitration clauses in student enrollment documents.
  • Repealing the provision of the 2005 Bankruptcy Reform Act that virtually eliminated bankruptcy relief for people who took out student loans from private lenders.
If Hillary and her handlers are smart, they will adopt these ideas. I hope Bernie refuses to endorse Hillary until she endorses at least some of them. If Bernie can pressure Hillary to make a commitment to solve the student-loan crisis, his campaign for the presidency will not have been in vain. But if the presidential race between Trump and Hillary rolls toward election day without any serious discussion of the student-loan crisis, then this country is in huuuge trouble.



Image result for bernie sanders

References

Josh Mitchell. More Than 40% of Student Borrowers Aren’t Making Payments. Wall Street Journal, April 7 2015. Accessible at http://www.wsj.com/articles/more-than-40-of-student-borrowers-arent-making-payments-1459971348 

Wednesday, June 8, 2016

How many college graduates have jobs that don't require a college degree? You might be surprised.

Last April, the Federal Reserve Bank of New York released an analysis of labor-market conditions for college graduates. Here is what it found:

  • In 2015, almost 45 percent of recent college graduates (graduates aged 22 through 27) were working in jobs that do not require a college degree.
  • Around 35 percent of all graduates (graduates aged 22 through 65) were holding down jobs that don't require a college education.
  • Wages for recent college graduates have remained relatively flat from 1990 to 2015.
So what do these numbers mean for young Americans?

College is not a good bet for everyone. First, although the college industry and their advocates (Brookings Institution, etc.) like to remind us that people who graduate from college make more money over their lifetimes than people who only have high school diplomas, going to college is not a good bet for everyone.

As the New York Fed has shown us, darn near half of recent college graduates are working in jobs they could have gotten without going to college. Of course many recent graduates will eventually find jobs that require a college degree. But even among the college-educated population as a whole, about one third of college graduates are working in jobs that do not require a college education.

 The payoff for getting a college degree is not as good as it once was. Second, wages for college graduates have remained about the same for the past 25 years--about $45,000 in constant 2015 dollars. But the cost of going to college has tripled over the last quarter of a century. That's why about two thirds of college graduates leave school with college-loan debt.

Thus, you may still need to go to college to earn a decent income, but a larger share of that income is going to go to servicing student loans.  In other words, recent college graduates are not as well off financially as their counterparts were 1990 because a majority of them are graduating with a significant amount of debt.

The case for a free college education gets stronger and stronger. People laughed at Bernie Sanders when he argued for a free college education from a public college for anyone who wants one. But, as I have repeatedly pointed out, Bernie's plan would actually cost less than the current federal loan program, because millions of people aren't paying off their loans.

Now Bernie is gone--swept away in the California primary election, and the higher education community can look at this idea afresh without fear of undermining their favorite presidential candidate--Hillary Clinton.

And lo and behold, the Brookings Institution published a paper today by a couple of croakers named Morley Winograd and Michael Hais that suggests free college might be a good thing.

And it would be a good thing. Certainly offering a free college education would be better than Hilary's scheme to pump billions of dollars more into a higher education system that is corrupt, obsolete, inefficient, and horribly overpriced.

References

The Labor Market for Recent College Graduates. Federal Reserve Bank f New York, 2016. Accessible at https://www.newyorkfed.org/research/college-labor-market/index.html

Mathew Boesler. More College Grads Finding Work, But Not in the Best Jobs. Bloomberg.com, April 7, 2016. Accessible at http://www.bloomberg.com/news/articles/2016-04-07/more-college-grads-finding-work-but-not-in-the-best-jobs

Morley Winograd and Michael Hais. The Democrats' Generation Gap. Brookings Institution, Jun 3, 2016. Accessible at http://www.brookings.edu/blogs/fixgov/posts/2016/06/03-millennials-democrats-election-2016-winograd-hais?utm_campaign=Brookings+Brief&utm_source=hs_email&utm_medium=email&utm_content=30380706&_hsenc=p2ANqtz-8kyQSbZyUfxh-t2hnsxhvRRXvUp2j0eORShy09EK-7-HQpeIdEwoZaQ1CXQ3fR5CAxWRHk2cBWPTT6cCkIOO74q4BLUw&_hsmi=30380706

 Morley Winograd and Michael Hais. The Democrats' Generation Gap, Mike and Morley web site, June 6, 2016. http://www.mikeandmorley.com/the_democrats_generation_gap


Morley Winograd and Michael Hais recommend free college in a Brookings paper less than 24 hours after Bernie Sanders lost the California primary


The Brookings Institution is a cowardly, sniffling organization committed to preserving the status quo in higher education. And here is another indication of that.

On June 8, the morning after Hillary beat Bernie in California, Brookings posted an essay by Morley Winograd and Michael Hais about how the Democrats can win back  the young voters who went for Bernie Sanders over Hillary by 3 or 4 to 1. 

In case you haven't heard of them, Morley Winograd and Michael Hais are two old coots who profess to be experts on the millennial generation. Judging by their photos, Winograd and Hais are not millennials themselves, but they have written some books about millennials and that makes them experts.

In their essay for Brookings, Winograd and Hais cooed approvingly about Hillary's stand on the student-loan crisis:  "[Hillary] has already spoken out forcefully on the need to lift the burden of student debt from this generation," the authors wrote. They note that sheendorses the idea of allowing college-loan borrowers to refinance their loans and she favors loan forgiveness for people who were defrauded by "unscrupulous lenders or schools." 

Big friggin' deal. Allowing distressed debtors to refinance their loans will not solve the student loan crisis. There are 43 million people with outstanding college-loan debt, and most have signed multiple promissory notes. There must be at least 200 million individual debt instruments floating around--maybe twice that many.  Is the federal government really going to refinance all those loans at lower interest rates? In your dreams, Mike and Morley.

And as for the notion that defrauded students should have their loans forgiven, I've got news for you, Mike and Morley. The Department of Education already has a debt forgiveness program in place. The problem is that the process is so cumbersome that very few loans have actually been forgiven.

But here's the money quote.  Mike and Morley recommend a free college education for everybody.
 "[M]illennials and the generations that come after them should be able to get their higher education debt free," Winograd and Hais wrote, "because that’s the level of education they—and America—will need to be successful both in today’s economy and in the years ahead."

Hey, that's exactly what Bernie Sanders said at his first debate with Hillary last fall. If this is such a good idea, why didn't Mike and Morley, the so-called millennial experts, suggest it sooner? Why didn't Hillary endorse this idea? And, more to the point of this commentary, why didn't the Brookings Institution publicize this idea before the California primary rather than after the votes were counted and Bernie was defeated?

I'll tell you why--because Hillary, the Brookings Institution, and the Democratic Party are committed to the status quo in higher education. If Americans could get a free college education from a public college in the same way they get a free high school education, the for-profit colleges would shut down almost overnight and the elite private colleges would be forced to slash their tuition rates.

Hillary is not going to let that happen. She and Bill have made too much money off the higher education industry, and so have Democratic Party insiders like Debbie Wasserman Schultz.  That's why Mike and Morley's whispered suggestion about a free college education didn't surface until after Hillary had defeated Bernie. And my prediction is this: the Brookings Institute will never allow this very good idea to be floated again in any of its publications.

Image result for morley winograd and michael hais
Morley Winograd & Mihael Hais: Experts on millennials

 Note: The Winograd and Hais essay is dated June 3, 2016, but it first appeared for public viewing on the Brookings web site on June 8, 2016. The same essay appeared on the Mike and Morley web site on June 6. 

References

Morley Winograd and Michael Hais. The Democrats' Generation Gap. Brookings Institution, Jun 3, 2016. Accessible at http://www.brookings.edu/blogs/fixgov/posts/2016/06/03-millennials-democrats-election-2016-winograd-hais?utm_campaign=Brookings+Brief&utm_source=hs_email&utm_medium=email&utm_content=30380706&_hsenc=p2ANqtz-8kyQSbZyUfxh-t2hnsxhvRRXvUp2j0eORShy09EK-7-HQpeIdEwoZaQ1CXQ3fR5CAxWRHk2cBWPTT6cCkIOO74q4BLUw&_hsmi=30380706

 Morley Winograd and Michael Hais. The Democrats' Generation Gap, Mike and Morley web site, June 6, 2016. http://www.mikeandmorley.com/the_democrats_generation_gap


Monday, April 25, 2016

The student-loan crisis and Presidential politics: Bernie needs to up his game on student loans to attract young votes

Bernie is very popular with young voters. He out polled Hillary by almost 4 to 1 among the twenty-somethings in the New York Democratic primary, and he's done even better with young voters in other primaries. Young people sense almost instinctively that Hillary is just a political hack, and that Bernie has ideas that might really make their lives better.

In fact, Bernie is the only presidential candidate to offer a realistic plan to address the student-loan crisis, which is crushing millions of Americans. Bernie's plan for a free college education at a public college is eminently sensible, and cheaper than what we are doing now, which is to loan $165 billion a year to college students and only get about half of it back.

In contrast, Hillary's student-loan reform plan is to pump an additional $30 billion a year into the nation's bloated and corrupt higher education industry.  That's Hillary's solution to every problem--let's shovel some money at it and make sure the insiders get most of the loot.

And let's not forget that Hillary tweeted young voters last summer, asking them; "How does your student loan debt make you feel? Tell us in 3 emojis or less." Let's see if I can find three profane emojis to send her.

And Cruz is no friend to student-loan debtors. He represented the lender in the famous Espinoza case, in which a bankrupt baggage handler argued that he should only be required to pay back the principal on his debt and should be relieved of the accrued interest.

Espinoza's argument was very reasonable; after all it is the accrued interest and penalties that are crushing most distressed student-loan borrowers--not the amount they actually borrowed. But Cruz's client prevailed before the Supreme Court--a 9 to 0 decision against poor Mr. Espinoza.

So if you are one of 20 million overwhelmed student-loan debtors, Bernie is the only game in town.  Unfortunately, you and I know that Bernie's free-college plan will never be enacted, because too many political interests benefit from the status quo.

But there are other student-loan reforms Bernie could propose that are less ambitious than his free-college plan but which would resonate with young voters.  Here are a few ideas for him:

1) Let's force the for-profit colleges to stop making their students sign arbitration agreements that cut off students' right to sue for fraud.  DOE Secretary John B. King favors regulations to stop colleges from putting arbitration clauses in their student contracts. Bernie could reasonably support King's efforts.

2) The government could require all loan servicers--including Educational Credit Management Corporation and Navient--to disclose the compensation packets for their senior executives and their debt collectors and to disclose on a public web site the amount they pay their lobbyists, the attorneys who hound student-loan debtors, and the recipients of all their campaign contributions.

3) The government could stop garnish Social Security checks of elderly college-loan borrowers who defaulted on their loans. This is a logical extension of the Obama administration's decision to forgive loans of disabled borrowers.

I think if Bernie would add a just couple of additional features to his plan to solve the student-loan crisis, he would see an even bigger surge of support among young voters--maybe enough of a surge to assure a victory in California.

And of course my ideas for appealing to young voters are open to any of the Presidential candidates: Hillary, Cruz, Kasich and Trump could take these ideas and run with them. But Bernie is the only presidential candidate who shows any interest in solving the student -loan crisis.

Ted Cruz: No friend of student-loan debtors

Image result for hillary clinton emoji
How does Hillary's emoji on student loans make you feel?

References

United Student Aid Funds, Inc. v. Espinosa, 130 S.Ct. 1367 (2010).


Thursday, March 10, 2016

Bernie Sanders and Student Loan Debtors: If you are ovewhelmed by college-loan debt, Bernie is your only hope

Help me, Obi Wan Kenobi. You're my only hope.

Princess Leia
Star Wars

Bernie Sanders beat Hillary Clinton in Michigan--stunning everybody, including Bernie.

Bill O'Reilly scoffed, and pundits dismissed Bernie's victory as a blip; but change is in the wind. Bernie has the support of young people, and Hillary will never win them away. They are attracted to Bernie's clarity and straightforward message.

In particular, Bernie's call for a free college education at a state college is very appealing. And--as I've written before--his free college plan is not wacky. It would actually be cheaper than the cumbersome student aid program we now have in place..

Now I encourage Bernie to reach out specifically to overburdened student-loan debtors--and there are 20 million of them.  If he will make four simple promises to this weary and oppressed multitude, I think he will win over millions of voters to the Bernie Crusade.

And these are the promises:

1) If I am elected President, the federal government will stop garnishing Social Security checks of elderly student-loan defaulters.

2) If I am elected President, I will forbid the government and its debt collectors from slapping unreasonable fees and penalties on student-loan balances.

3) If I become president, student borrowers who complete long-term income-based repayment programs will not be taxed on any forgiven student-loan debt (a policy recommended by President Obama).

4) If I become your President, I will draft regulations forbidding for-profit colleges from requiring students to sign arbitration agreements that cut of their right to sue their college for fraud.

None of these promises are radical, and none are expensive. And in fact, if all four of these promises were fulfilled by the next President, the impact on student-loan debtors would be minimal.

But these promises would be a signal to oppressed student-loan borrowers that Bernie understands their suffering and will do what he can to give them some relief.

But whether or not Bernie makes these particular promises, he has my unwavering support right through the election process. Of all the candidates vying for the Presidency, Bernie is the only one who will do something substantive to address the student-loan crisis.  Indeed, as Princess Leia might have put it, Bernie is our only hope.



Image result for princess leia help me obi wan
Help me, Obi Wan Ka-Bernie. You're my only hope.

Monday, February 22, 2016

Daniel Arbess, Writing In The Wall Street Journal, Says Bernie Sanders Supporters Are Clueless: But It Is the Wall Street Journal That Is Clueless

Daniel J. Arbess, writing in the Wall Street Journal, maintains that American young people who support Bernie Sanders are economically clueless. They blame Wall Street for the nation's financial malaise, Arbess argues, which is misguided. "Don't they realize," he asks plaintively, "that the financial markets are the lubricant of the entire economy--that Wall Street's capacity to provide liquidity and to broker capital is the lifeblood of American companies?"

Actually, Mr. Arbess, America's young people do understand that Wall Street is a lubricant. They've figured out that the global financial industry is a lubricant for raping the middle class.


Arbess seems to believe that young Americans should put their faith in unrestrained capitalism, which will eventually bring us all economic prosperity. But Arbess's own words belie his argument. As he himself says, the underemployment rate for young adults--that is, the percentage of people who are underpaid or working in jobs for which they are overqualified--is 60 percent! And 20 million Americans are burdened by student loans they can't pay back
The political elites, the financial industry, and the mainstream media seem to think Sanders' economic platform is nothing but a pipe dream; but two planks of that platform--universal health care and a free college education--resonate deeply with the young.


Young people know they must obtain useful postsecondary training to get middle-class jobs; and they also know they are being forced to pay far too much to attend a college or a graduate school. And they are coming to grips with the fact that borrowing money to pay for college can sometimes be an economic death sentence since it so difficult to discharge student-loan debt in bankruptcy.  Free college tuition to attend a state institution makes perfect sense to them, and Bernie's plan would actually be cheaper than the Byzantine student-loan program the government is now running.


And young people know that health care costs are eroding their take-home pay. Everyone I know who was forced into Obamacare is unhappy about it. Virtually all of them saw their health insurance costs went up and the quality of their coverage deteriorated. They understand that the United States could offer universal health care on a European model that would be more efficient and far cheaper than the cobbled-together scheme we now have in place that benefits no one but the medical industry and the insurance companies.

The fact that the Wall Street Journal thinks it is appropriate for a hedge fund manager to lecture Americans about the presidential campaign shows us just how clueless that newspaper is.
As for Mr. Arbess himself, I found a recent news story about his financial acumen. According to a 2014 online story in Bloomberg Business, "Perella Weinberg Partners LP is shutting its Xerion hedge fund, after its manager, Daniel Arbess, failed to recoup a 21 percent loss dating from 2011."


So maybe American young people are smarter than Mr. Arbess when it comes to making political decisions that affect their own economic well being.





Perella Weinberg’s Xerion Closing After 2011 Loss Proves Fatal
Mr. Arbess thinks young Bernie supporters are clueless.
References


Daniel J. Arbess. The Young and the Economically Clueless. Wall Street Journal, February 19, 2016. Available at http://www.wsj.com/articles/the-young-and-the-economically-clueless-1455924699


Kelly Bit and Katherine Burton. Peralla Weinberg's Xerion Fund To Close, Return Money. Bloomberg Business News, November 24, 2014. Available at http://www.bloomberg.com/news/articles/2014-11-14/perella-weinberg-s-xerion-fund-to-close-return-money-to-clientshttp://www.bloomberg.com/news/articles/2014-11-14/perella-weinberg-s-xerion-fund-to-close-return-money-to-clients