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

How does Hillary's emoji on student loans make you feel?

References

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

President Obama's "Student Bill of Rights" would be laughable if the student-loan crisis weren't so tragic

President Obama recently released what he laughably called his "Student Bill of Rights." The Bill of Rights has just four parts:

I. Every student deserves access to a quality, affordable education at a college that is cutting costs and increasing learning.

II. Every student should be able to access the resources needed to pay for college.

III.Every borrower has the right to an affordable repayment plan.

IV. And every borrower has the right to quality customer service, reliable information, and fair treatment, even if they struggle to repay their loans.

You want this ludicrous, so-called "Bill of Rights" boiled down into a single sentence?President Obama is basically saying everyone has the right to borrow money at a reasonable interest rate to attend college and to be treated courteously by the debt collectors.

This ridiculous document does nothing to rein in college costs or to effectively regulate the for-profit college industry. It does nothing to ease the suffering and hardship of millions of people who have defaulted on their student loans.

What would a real Student Bill of Rights look like?  Something like this:

I. Insolvent people who took out student loans in good faith have the right to have their student loans discharged in bankruptcy.

II. Elderly people who are living entirely off their Social Security income should not have their Social Security checks garnished because they defaulted on a student loan.

III. People should not be required to sign covenants not to sue as a condition for enrolling at a for-profit college.

IV. All colleges and universities that benefit from the federal student-loan program should be subject to an open-records law that would require them to disclose their financial affairs and their decision-making process for admitting students.

V. Student-loan defaulters should not have excessive fees and penalties added to their student-loan debt.

VI. A statute of limitations should apply to all efforts to collect on unpaid student loans. The statute of limitations should be six years, just as it is in most jurisdictions for lawsuits for breach of contract or nonpayment on a debt.

VII. The government and its collection agents should stop trying to force bankrupt debtors into 25-year repayment plans as they did in the Roth case, the Myhre case, and the Lamento case.

VIII. Students who take out loans from private banks and private financial institutions should be able to discharge their student loans in bankruptcy under the same terms that apply for discharging other debts.

But the Obama administration, Congress,  and the higher-education industry don't really want to effectively curb the excesses of the student-loan industry.  They want to tinker around the edges of this huge problem, while the colleges and the debt collectors gorge themselves on student-loan money.

There's good money in student loans.