Student Loans, Bankruptcy, and Creditors' Lawyers: If Auschwitz Comes to the United States, Will Attorneys Handle the Paperwork?

I was a child when I learned about the Nazi concentration camps. I was a voracious reader when I was young, and I often wandered around our town library, browsing through the books. One day, I pulled a book off a shelf because I was intrigued by the title, and the pages fell open to a photo of one of the German concentration camps. It might have been Auschwitz, but I don't remember.

The photo showed dozens of naked and emaciated corpses piled in a heap, and that was all. I remember being viscerally shocked and frightened by what I saw, and I immediately realized that the dead people who appeared in the photo were the victims of human monsters.

I thought about that photo for weeks, and I finally comforted myself with the childish conviction that the death camps would never come to America--that Americans could never commit such savage acts.

I hope I get off work in time to see my kid's soccer game

I was naive of course.  As I grew older, I realized there are plenty of Americans who will do anything they are directed to do--no matter how much pain they inflict on other human beings.

The people who operated the Nazi death camps were, after all, ordinary people.  They probably read their morning newspapers over breakfast and played with their children after work in the evenings. They labored for the Nazi death machine for a variety of mundane reasons--maybe they just needed a paycheck.

And this brings me to the lawyers who work for Educational Credit Management Corporation, perhaps the federal government's most aggressive debt collector against student-loan borrowers. ECMC's attorneys have gone into bankruptcy court time after time to oppose debt relief for distressed student-loan debtors.  In the Roth case, for example, ECMC's legal counsel opposed bankruptcy relief for Janet Roth, an elderly debtor with chronic health problems who was living on less than $800 a month. ECMC harried Ms. Roth all the way to the Ninth Circuit's Bankruptcy Appellate Panel.

In a letter dated July 7, 2015, Lynn Mahaffie, a Department of Education bureaucrat, issued a letter advising creditors like ECMC not to oppose bankruptcy relief for student debtors if the cost of fighting a bankruptcy discharge did not make the effort worthwhile.

But that letter was just bullshit. The Department of Education and its loan collectors almost always oppose bankruptcy relief for student-loan debtors--whether or not it is cost effective to do so.  For example, in Acosta-Conniff v. Educational Credit Management Corporation, an Alabama bankruptcy judge discharged Alexandra Acosta-Conniff's student loan debt. Conniff was a single mother of two children working as a school teacher, and the court reasoned quite sensibly that Conniff would not be able to pay off her student loans.

ECMC dispatched six attorneys to appeal the bankruptcy court's decision: David Edwin Rains, Kristofer David Sodergren, Rachel Lavender Webber, Robert Allen Morgan, Margaret Hammond Manuel, and David Chip Schwartz. Six attorneys--and Conniff didn't even have a lawyer!

Not surprisingly, ECMC won its appeal.  Six lawyers against a single mother of two who can't afford an attorney--it was hardly a fair fight.

Conniff has a lawyer now, and she is appealing the district court's unfavorable decision to the Eleventh Circuit Court of Appeals. ECMC has a platoon of lawyers to represent it before the Eleventh Circuit, and who knows how much that costs?

But ECMC apparently doesn't care how much the appeal will cost, and the Department of Education obviously doesn't care either. Otherwise it would direct its loan collectors not to harass insolvent student-loan debtors in the bankruptcy courts.

Now I am not comparing ECMC's lawyers to Nazi death-camp workers. Being a debt collector's attorney is not intrinsically evil; and any misery inflicted on a student-loan debtor in a bankruptcy court is trivial compared to the horrors of Auschwitz. I feel sure ECMC's lawyers are all decent people.

Nevertheless, I personally could not sleep at night if I were representing ECMC in the bankruptcy courts against people like Janet Roth or Alexandra Acosta-Conniff.  I would ask myself whether I am serving the interests of justice by helping ECMC deprive honest but unfortunate college-loan borrowers a fresh start in life.

But I don't imagine ECMC's attorneys ask themselves that question. And I doubt whether they have trouble sleeping at night. After all, the lawyers have their own student loans to pay off; and everyone has to make a living.


Note: A quick search in the Westlaw data base turned up 557 cases in which Educational Credit Management Corporation appeared as a named party.


References

Fossey, R. & Cloud, R. C. (2015). Tidings of comfort and joy: In an astonishingly compassionate decision, a bankruptcy judge discharged the student loans of an Alabama school teacher who acted as her own attorney. Teachers College Record Online, tcrecord.org. ID Number 18040. 

ECMC v. Acosta-Conniff, 550 BR 557 (M.D. Ala. 2016).

In re Roth, 490 B.R. 908 (9th Cir. BAP 2013).

Natalie Kitroeff. Loan Monitor Is Accused of Ruthless Tactics on Student Debt  New York Times, January 1, 2014.

Paul Krugman exploits the Great Louisiana Flood of 2016 (Redneck Katrina) to promote Hillary Clinton: Krugman's cynicism knows no bounds

Who do you have to sleep with to get a Nobel Prize?

Or perhaps that's the wrong question. Why do the Swedes award Nobel Prizes to arrogant fools like Paul Krugman?

Krugman won the Nobel Prize for Economics, but everyone knows he's nothing more than a shill for the transnational financial oligarchs and a zombie cheerleader for the Clinton campaign.

So I was enraged this morning when I read his New York Times column trying to turn South Louisiana's catastrophic flood (which I have dubbed Redneck Katrina) into a political story that favors Hillary Clinton.

I've got a couple things to say about Krugman's shameless sycophantic journalism. First, Krugman claimed that President Obama's FEMA response to Redneck Katrina was "infinitely superior" to Bush's FEMA response to the 2005 Katrina disaster.

I'm not so sure about that. Our recent flood only took place about a week ago, and at least 110,000 homes and business were damaged. Let's see how FEMA does over the next couple of months before we hand out accolades to FEMA. How many refugees will be back in their homes 60 or 90 days from now?

Moreover, speaking as a person who was rescued by the Cajun navy, I think South Louisianians are in a much better position to judge the quality of Obama's FEMA than Mr. Krugman, who is snugly safe in Manhattan.

Second, Krugman has no right to criticize Donald Trump for coming to Louisiana to lend his support to our flood victims. Where does Krugman get off labeling Trump's gesture as "boorish, self-centered behavior"?  After all, President Obama is visiting Louisiana tomorrow.  I suppose Krugman will characterize Obama's gesture as the act of a magnanimous and caring President, when in fact Obama was playing golf on Martha's Vineyard while Louisianians were clinging to to their roofs.

Krugman mocked Trump for handing out toys to Louisiana children,  which he described as a"hamhanded (and cheapskate) effort to exploit Louisiana's latest disaster for political gain." I don't think Louisianians would agree. On the contrary, I think we are all grateful for any assistance we receive, whether it is a toy for our kids, a case of bottled water or a FEMA grant.

Finally, Krugman cynically turned our natural disaster into a campaign ad for Hillary Clinton. Krugman suggests that our flood is a consequence of global warning and that Hillary would make a better President than Trump because she yaks on and on about how she is going to counteract global warming  if she  becomes president while Trump doesn't say much about it.

Well, global warming may be a factor in Louisiana's recent floods and hurricanes.  I can buy that. But Hillary's gassy rhetoric about climate change doesn't change the fact that she is a scheming, money-grubbing political hack who is totally owned by Wall Street.

Personally, I am glad Trump visited Louisiana. I look forward to Obama's visit, and I hope Hillary will visit as well. If she does visit the Pelican State, I hope her advisers tell her not to wear her orange pantsuit. She might get mistaken for an escaped  prisoner from St. Gabriel's Women's Prison, and that would be awkward.

Hillary, please don't wear orange around St. Gabriel's Women's Prison

References

Paul Krugman. The Water Next Time. New York Times, August 22, 2016. Available at http://www.nytimes.com/2016/08/22/opinion/the-water-next-time.html?_r=0

"Looters Will Be Shot"--Except for hedge fund managers, shoddy manufacturers, and owners of for-profit colleges

I passed by a low spot on Highway 16 a few days after the Great South Louisiana Flood of 2016, and I saw a house that had obviously been inundated with water.  Nailed to a tree in the front yard was a spray-painted sign: "Looters will be shot."

But of course, the sign isn't quite accurate. Some looters might get shot: the scumbags prowling flooded subdivisions looking for something to steal. It wouldn't bother me if someone nailed one of them with a Bushmaster assault rifle. That's what those rifles are for, after all.

But other looters are perfectly safe from any kind of vigilante justice.  Hedge fund managers, for example, get a special tax break for the ultra wealthy. President Obama--that hopie change guy--didn't bother to clean up that scam, which he easily could have done.

Other corporate looters run for-profit colleges. In fact, Martin Nesbitt, chairman of the Obama Foundation, is CEO of an equity fund that plans to get into the for-profit-college scam business.

In fact, the working people of America get looted all the time, whether or not they are victims of a natural disaster.  For example, I was pushing a wheelbarrow load of wet sheet rock to a trash pile yesterday, and the axle of the wheelbarrow broke. It couldn't handle the modest load that it was supposedly designed to carry.

A co-worker examined the damage and told me to throw the wheelbarrow on the trash pile along with the sheet rock, which I did. This was a new True Temper wheelbarrow! I'd say whoever bought that wheelbarrow was looted.

And today, I was reminded of another corporate looter. I took some time off from flood-damage cleanup to smoke a rack of ribs in my Cabala's electric smoker--which is a piece of shit. For one thing, Cabala didn't make the smoker; Masterbilt did. Cabala's just put its name on the thing to deceive buyers into thinking they were buying a quality product.

The thermometer on the smoker's lid (marked Masterbilt) registers temperatures up to 700 degrees, but I've never gotten the damn thing hotter than 250.  The plastic handle broke the first time I dropped the lid, and the little wooden side tray is busted. Do you think I was looted when I bought that piece of junk? You're damned right I was.

In fact, the Great South Louisiana Flood of 2016--Redneck Katrina--reminded me again and again of how much cheap crap the multinational corporate looters sell to working Americans. Thousands of tons of debris line the streets of Denham Springs, Louisiana--piles of worthless stuff. Microwave ovens, refrigerators, freezers, fake-wood furniture: all crap.

In fact, I don't think many flood victims mourn the loss of their chattel. They knew it was junk when they bought it. They know the Chinese are making more crap for us right now and that they can buy their new crap at the Denham Springs Walmart just as soon as it cleans up its own flood damage and reopens.

Even our homes are crap, sold to us by looters. The doors on new spec houses aren't made out of wood anymore; they're made from some kind of laminate. If the bottom six inches of one of these fake-wood doors is subjected to water for just 24 hours, the whole door is ruined. I know; I tossed out about 30 of them.

But at least you can save the hinges, you might think, and the door frames. But no--these cheap faux-wood doors are sold new with hinges and door frames already attached. When you throw your ruined door on the trash heap, you might as well toss in the hinges and the door frame.

So--to return to my main point--not all looters will be shot. So if you are a looter who wants to rip off your neighbor, don't steal his home generator. You might get your ear shot off.

No, do what Martin Nesbitt is doing; buy a for-profit college.

References

Blake Neff. America's Largest For-Profit College Sold to Group Led By Obama's Best Friend. Daily Caller, February 28, 2016. Available at http://dailycaller.com/2016/02/08/americas-largest-for-profit-college-sold-to-group-led-by-obamas-best-friend/

Gretchen Morgenson. Ending Tax Break For Ultrawealthy May Not Take Act of Congress. New York Times, May 6 2016. Available at http://www.nytimes.com/2016/05/08/business/ending-tax-break-for-ultrawealthy-may-not-take-act-of-congress.html?_r=0

Red Neck Katrina: The Great Louisiana Flood of 2016 demonstrates that the people of South Louisiana are better than their President

I remember reading awhile back that some Harvard law students petitioned for an extension to take their final exams. They said they were so so upset by racial tensions in Ferguson, Missouri that they were unable to prepare for their tests.

It is a good thing that the people of South Louisiana are made of sterner stuff--otherwise we would all be dead.

Torrential rains--unprecedented in modern times--fell on South Louisiana last week, swelling rivers and bayous and flooding thousands of homes.  The Tickfaw, the Amite, the Comite, the Tangipahoa, Bayou Manchac, Bayou Paul--the list of streams goes on and on; and the people who lived along these waters lost their homes.  A few of them died.

But most were rescued.  Last Sunday, helicopters flew over Livingston Parish continuously, rescuing people off their roofs and ferrying medical emergencies.  National Guard trucks came in by the dozens and evacuated thousands.

But there were simply to many victims for the official first responders to rescue them all. Livingston Parish alone has 141,000 residents; and I estimate that a hundred thousand of them were threatened by flood waters. And Livingston Parish was just one of a dozen parishes that were flooded.

Fortunately, the cajun navy mobilized, and hundreds of South Louisiana men and women launched their boats and prowled the waters of the flooded parishes over the weekend. Who knows how many people they saved. I know one man who launched his duck hunting boat and ferried out 67 people from the town of Central in East Baton Rouge Parish, including two pregnant woman.

In my own family, my wife and her parents were stranded by high water in the town of Denham Springs. My stepson talked his way past police barricades and launched his boat at the Denham Springs exit on Interstate 12.  He managed to get everyone to safety and back to Baton Rouge without the assistance of any government official.

The great Louisiana flood of 2016 was not triggered by a named storm, so I'll call it the redneck Katrina. This deluge does not rank with the original Katrina of 2005; far fewer people were killed. Nevertheless, it was a catastrophe on a monumental scale. At least 40,000 homes were flooded; and I think that tally is likely to grow higher.

But the national news gave us very little coverage. Perhaps the demographics are wrong--most of the victims were working-class white people. Or maybe we had the misfortune to be flooded at the same time people in Milwaukee were rioting.  Or perhaps Anderson Cooper and Andrew Cuomo simply don't give a damn about the nameless Southerners who inhabit the water country of South Louisiana.

I was one of the people who was rescued out of Livingston Parish on Sunday night. As our party motored home driving down the wrong side of Interstate 12, I was deeply moved to see a long line of pickup trucks and boat trailers parked behind the police barricade that kept the highway closed. Obviously, they were waiting for daylight to go into Livingston Parish to rescue more stranded families.

And I realized that the people of South Louisiana are a great people, and they deserve a better President than the one they have.  Barack Obama has no clue about the courage, grit, and spirit of these amazing people.

 President Obama was playing golf on Martha's Vineyard while people were clinging to their roofs. He was sipping chardonnay with the moneyed fat cats while the Cajuns were rescuing their neighbors out of their homes.

Barack can cry real tears when a policemen shoots a black man--even a black man carrying a gun. But I'll bet he didn't give Southerners any thought at all during our flood. After all, most of the flood victims were white people who didn't vote for him.

Incredibly, and to the world's shame, the Europeans gave the Nobel Peace Prize to a man who thinks about no one but himself, a man who has not done a single generous thing in his entire life.  The nameless men of the Cajun navy displayed more courage, more self sacrifice, more humanity in one hour than Barack Obama has displayed over his entire life.

Barack Obama despises the people of South Louisiana. He despises their courage, their religious values, their respect for human life. He obsesses on gun control, not realizing that guns serve a useful function in our part of the world.  After all, Barack doesn't need a gun--he has the Secret Service.

And another thing: The people of South Louisiana are better than the media elite who control our news and our culture. These people who only show up to cover disasters that are photogenic--that make them look courageous because they stand in the rain on Bourbon Street after a hurricane.

I picture Barack Obama, Hillary Clinton and Erin Burnett all perched together on the roof top of a double-wide in Ascension Parish with the water rising and the snakes slithering about.

I'll bet they would very happy to see a Cajun skimming over the water in a mud boat. And if the Cajun who pulled up to rescue them had a Glock in his dry box, well that would probably be OK. Barack would probably skip his lecture on gun control and just scamper into the boat.

Parents who take out PLUS student loans to pay for their children's college education: Don't be such a fool

I'm sorry, so sorry

That I was such a fool

I'm Sorry (1960)

Sung by Brenda Lee

Lyrics by Dub Allbritten & Ronnie Self

Most country and western songs are about regret: I'm sorry I cheated on my wife; I regret mouthing off to a biker in the honky-tonk, I wish I hadn't shot a man in Reno.

I don't know of any C & W song about student loans, but there should be. A recent survey reported that about 50 percent of student-loan debtors regretted how much they borrowed to go to college. More than a third said they would not have gone to college had they realized what it would cost them.

But the people who are really, really sorry are the parents who took out loans to pay for their children's college education.  If they co-sign a private loan for a child, they are on the hook for it even if their child dies.  And parents will find it is virtually impossible to discharge a co-signed student loan in bankruptcy, whether it is a private loan or a a federally subsidized loan.

In fact, I say this unequivocally: Parents should never borrow money to pay for their child's college education.

Yet our federal government peddles Parent Plus loans--student loans taken out by parents--as a good way to help finance a child's college costs. DOE recently posted a blog telling parents that "PLUS loans are an excellent option if you need money to pay your child's educational expenses," although it cautions that parents need to make sure they understand the loan terms before they take out a PLUS loan.

And what are those terms? DOE's blog posting says that the current interest rate is 6.31 percent and that monthly repayment begins immediately. Monthly PLUS loan payments are not postponed while the child is still in college.

DOE then summarizes various PLUS loan repayment plans, including an income-contingent plan (ICR) that allows parents to pay 20 percent of their discretionary income for 25 years.

Of course it is madness for parents to pay a fifth of their discretionary income for 25 years in order for their child to go to college. There are lots of college options that don't require that kind of sacrifice.

DOE assures parents that any unpaid balance on their PLUS loan will be forgiven after 25 years. But note that DOE doesn't tell parents that they could have a big tax bill for the amount of the loan that is forgiven.

And DOE didn't warn parents that they will find it almost impossible to discharge a PLUS loan in bankruptcy should they run into financial trouble due illness, job loss, or some other financial calamity.

DOE ends its deceptive blog on this cheery note. "Yes, there's lots to consider when it comes to taking out a Direct PLUS loan, but there are many benefits to getting one if you need help paying your child's education."

In fact, there's nothing to consider. If your children can't finance their college education without you going into debt, then they need to develop another plan.

My guess is that a lot of parents take out PLUS loans to help their kids go to some fancy East Coast private school, which is foolish.  If your children cannot afford to go to Harvard or Dartmouth or Amherst without putting you into debt, then they need to enroll at a nearby public university and take a part-time job at McDonald's.

Trust me. You and your children will be better off if you avoid all college options that force Mom and Pop to go into debt. Johnny Cash was sorry he shot that guy in Reno, but he was not any sorrier than you will be if you take out a loan to send your child to college.

Johnny Cash: He shot a man in Reno, but he's really, really sorry.

References

Jessica Dickler. Buyer's College buyer's remorse is real. CNBC News, April 7, 2016. Accessible at http://www.cnbc.com/2016/04/07/college-buyers-remorse-is-real.html

Jessica Dickler. College costs are out of control. CNBc News, July 16, 2016. Accessible at http://www.cnbc.com/2016/07/12/college-costs-are-out-of-control.html

Citizens Bank. Millennial College Graduates with Student Loans Now Spending Nearly One-Fifth of Their Annual Salaries on Student Loan Repayments. April 7, 2016. Accessible at http://investor.citizensbank.com/about-us/newsroom/latest-news/2016/2016-04-07-140336028.aspx

Lisa Rhodes. PLUS Loan Basics for Parents. Homeroom, August 8, 2016. Posted on the Official Blog Of the U.S. Department of Education. Available at http://blog.ed.gov/

Restaurant chains can file for bankruptcy if they borrow too much money--but the bankruptcy courts are virtually closed to distressed student-loan debtors

A least four large restaurant chains have filed for bankruptcy this year--a sign perhaps that the economy is slipping back into recession. Companies that own Logan's Road House, Fox & Hound, and Johnny Carino's are among the casualties.

Craig Weichmann, an investment consultant who specializes in restaurants, said the bankrupt restaurant chains were burdened by high debt loads and lagging same-store sales.  Restaurant chains took advantage of low interest rates to borrow a lot of money, but older restaurants are losing customers to new chains. Now the old chains can't manage their debt.

But, hey, bankruptcy can be a good thing for businesses that borrow too much money.  “In [the] old days, filing for bankruptcy was the end of the world," Weichmann explained.  "In reality, there comes a time when filing for bankruptcy permits a group to come out sustainable and healthy.” In fact, Weichman said, a lot of companies come out of bankruptcy "with a new life.”

Is this a great country or what? Business owners who borrow money recklessly while paying themselves fat salaries can stiff their creditors by filing for bankruptcy without changing their lifestyles at all.

In fact, restaurant owners can file for bankruptcy repeatedly. John Carino's owners filed for bankruptcy a second time only three months after emerging from an earlier bankruptcy.    According to the Austin Business Journal, the company owed $19 million to its creditors and roughly $905,000 in back wages, vacation time and bonuses to its employees, plus back taxes and lease obligations."

Yes, America is truly a great country--unless you are a student-loan debtor.

Although some bankruptcy respond humanely when destitute student-loan debtors file for bankruptcy, other courts give them a chilly reception. Even college borrowers who received no benefit from their college experiences and can't land a decent job often find it very difficult to discharge their student loans in bankruptcy.

Remember Brenda Butler, whose bankruptcy case was decided earlier this year? She borrowed a modest amount of money to get a degree from Chapman College (a reputable institution), and she made good faith efforts to pay off her loans for almost 20 years. But a bankruptcy court in Illinois refused to discharge her student loan debt, which had more than doubled in size since she graduated, and forced to her to remain in an income-based repayment plan that obligates her to make loan payments until 2037!

Poor Ms. Butler. Instead of going to college, she should have borrowed money to start a restaurant.

References

Butler v. Educational Credit Management Corporation (In re Butler), Adv. No. 124-07069, 2016 WL 360697 (Bankr. C.D. Ill. Jan. 27, 2016). Available at  http://www.leagle.com/decision/In%20BCO%2020160127751/IN%20RE%20BUTLER

Korri Kezar. Why a Dallas restaurant company's bankruptcy is part of a trend. WFAA.com. August 10, 2016. Available at http://www.wfaa.com/news/local/dallas-county/why-a-dallas-restaurant-companys-bankruptcy-is-part-of-a-trend/293988701?utm_campaign=Daily%2BBankruptcy%2B%26%2BRestructuring%2BNews%2Bfrom%2BChapter11Dockets.com&utm_medium=email&utm_source=Daily_Bankruptcy_%26_Restructuring_News_from_Chapter11Dockets.com_24

Michael Theis. Italian restaurant chain again files for bankruptcy. Austin Business Journal, July 27, 2016. Available at http://www.bizjournals.com/austin/news/2016/07/27/italian-restaurant-chain-files-again-for.html

The White House Council of Economic Advisers issues a feel good report on federal student loans: Ignoring reality

President Obama's Council of Economic Advisers reminds me of the French Army during the spring of 1940 as German panzer columns were streaming toward Paris. Although  the Germans had crossed the Meuse River and French troops were fleeing everywhere, General Alphonse Georges sent a message to General Maurice Gamelin that his soldiers were holding firm and fighting in the Marfée Woods. "We are calm here," Georges assured Gamelin.

In fact, French troops were not fighting in the Marfée Woods. They were south of the Woods in full retreat.

The Council of Economic Advisers report: Don't worry about debt--college is a good investment

Let's now take a look at a report issued last month by President Obama's Council of Economic Advisers. Titled Investing in Higher Education: Benefits, Challenges, and the State of Student Debt, the report basically repeats the old bromide that college is a good investment and that long-term income-based repayment plans are the smart way to deal with rising levels of student indebtedness.

Of course it is true that college graduates earn more over their lifetimes than people who only have a high school degree. But that does not mean that college is always a good investment. People who graduate from college may simply have more initiative and resources than people who do not graduate. As the CEA report admitted, "students who attend college may have been more skilled or more connected and thus would have earned more [than non-college completers] regardless."

At the very least, college graduates have the self-discipline necessary to sit through four years of boring college classes and listen to a lot of postmodernist bullshit. And that's the kind of self-discipline that can help a person obtain a relatively well paying job--whether or not that person has a college degree.

In my view, the CEA report's breezy reassurances about the value of a college degree glosses over a bleak reality, which is this:  Millions of Americans are suffering because they took out student loans to go to college and can't pay them back.

CEA report:  Cheerleader for long-term income-based repayment plans

Part of the CEA's 78-page report was devoted to singing the praises of long-term income-based repayment plans (IBRPs). About 5 million people are in these programs now, and CEA Chairman Jason Furman wants to shove more people into "these smarter repayment plans."

In my opinion, the CEA's discussion of IBRPs was utterly deceptive. First of all, the report described these plans based on the unstated assumption that most people who enter IBRPs will pay back the principal on their loans. But I don't think they will.

The report provided this unrealistic example of how the IBRP program works:  A 2008 college graduate who leaves college with $31,000 in debt and earns an income of $31,000 a year (the median income for a 2008 college graduate) will pay off the debt in 17 years, assuming typical income growth and a 2 percent inflation rate. (The COA's illustration appears in Figure 41 on page 63 of its report.)

But of course, a great many people signing up for IBRPs are not college completers who go into jobs that pay the median income for new college graduates. A lot of people in these plans are people who didn't complete college, weren't able to find well-paying jobs, or who entered IBRPs after struggling for many years to pay off their loans under standard 10-year plans. Brenda Butler, for example, whose bankruptcy case was decided this year, entered into an IBRP after trying unsuccessfully to pay off her loans for 20 years. As the court noted, she won't finish paying off her student loans until 2037--42 years after she graduated from college!

And although the CEA report touts the fact that people in IBRPS who are unemployed won't have to make any payments on their student loans during their period of unemployment, the report failed to mention that interest accrues during the time borrowers are not making payments.

In fact, the report made no mention of accruing interest for IBRP participants and no mention of the fact that many people who enter IBRPs after defaulting on their loans have loan balances far larger than the amount they borrowed due to accruing interest, penalties, and collection fees.

And the report made no mention of the tax consequences for people who complete IBRPs but fail to pay off their loan balances. The government forgives the unpaid debt for these people, but the amount of the forgiven debt is considered taxable income by the IRS.

Conclusion: The CEA says "We are calm here" while millions of student-loan debtors are suffering

It is now clear that the Obama administration's central strategy for dealing with the student-loan crisis is to push millions of people into PAYE, REPAYE and other long-term income-based repayment plans that stretch out people's loan payments over 20, 25 and even 30 years. The CEA's example for how such plans work does not portray a typical IBRP participant. Most people do not enter these plans immediately after graduating from college, they do not earn the median income for new college graduates, and their income trajectories are not typical.

Many IBRP participants are people who did not graduate from college, or who graduated from college but did not find a job that paid well enough to service their student loans. Many have defaulted and have seen their loan balances go up due to accruing interest and the fees and penalties that creditors stuck on to their loan balances.

In fact, I believe most people in IBRPs will never pay off their loan balances because their income-based payments are not large enough to cover accruing interest. Thus most people in these plans will be faced with big tax bills when they finish their payment terms because the amount of their forgiven debt is considered taxable income by the IRS.

Now I fully expect that tax regulations will eventually be amended so that forgiven loans will not be considered taxable income, but that doesn't change the fact that most people in IBRPs will never pay off their loans.

In short, the CEA, like General Georges during the Battle of France, is saying "We are calm here" while in fact the student loan program is collapsing.

French troops retreeating during the Battle of France:
"We are calm here."

References

Jason Furman. The Truth About Higher Education And Student Loans. Huffingon Post, Jul 19, 2016. Accessible at: http://www.huffingtonpost.com/jason-furman/the-truth-about-higher-ed_b_11060192.html

Council on Economic Advisors. Investing in Higher Education: Benefits, Challenges, and The State of Student Debt. July 2016. accessible at https://www.whitehouse.gov/sites/default/files/page/files/20160718_cea_student_debt.pdf

Note: References to the Battle of France come from The Collaps of the Third Republic by William L. Shirer. The quotation from the message by General Alphonse Georges can be found on page 650.