THE word “crisis” pops up frequently in “Ivory Tower,” a compelling new documentary about the state of higher education in America.It pops up in regard to the mountains of student debt. It pops up in regard to the steep drop in government funding for public universities, which have been forced to charge higher and higher tuition in response. That price increase is also a “crisis” in the estimation of one of many alarmed educators and experts on camera.
And “crisis” isn’t even their direst appellation. Andrew Delbanco, a Columbia University professor of American studies who functions as the movie’s conscience, notes an “apocalyptic dimension” to today’s discussion of college’s failings. The movie is set on verdant campuses. It’s rife with lecterns, books and graduation gowns. And yet it’s a kind of horror story.
Scheduled for theatrical release next month, “Ivory Tower” does an astonishingly thorough tour of the university landscape in a brisk 90 minutes, touching on the major changes and challenges, each of which could sustain its own documentary.
There are thousands of students like Vanessa at the University of Texas, and millions like her throughout the country — high-achieving students from low-income families who want desperately to earn a four-year degree but who run into trouble along the way. Many are derailed before they ever set foot on a campus, tripped up by complicated financial-aid forms or held back by the powerful tug of family obligations. Some don’t know how to choose the right college, so they drift into a mediocre school that produces more dropouts than graduates. Many are overwhelmed by expenses or take on too many loans. And some do what Vanessa was on the verge of doing: They get to a good college and encounter what should be a minor obstacle, and they freak out. They don’t want to ask for help, or they don’t know how. Things spiral, and before they know it, they’re back at home, resentful, demoralized and in debt.When you look at the national statistics on college graduation rates, there are two big trends that stand out right away. The first is that there are a whole lot of students who make it to college — who show up on campus and enroll in classes — but never get their degrees. More than 40 percent of American students who start at four-year colleges haven’t earned a degree after six years. If you include community-college students in the tabulation, the dropout rate is more than half, worse than any other country except Hungary.
There is $1 trillion in federal student debt today, and the possibility of default on those taxpayer-backed loans poses an acute risk to the economy’s recovery. Congress, faced with troubling default rates in the past, has made it especially hard for borrowers to get bankruptcy relief for student loans, and so only some hundreds try every year. And while there has been attention to aggressive student debt collectors hired by the federal government, the organization pursuing Ms. Jorgensen does something else: it brings legal challenges to those few who are desperate enough to seek bankruptcy relief.
That organization is the Educational Credit Management Corporation, which, since its founding in Minnesota nearly two decades ago, has been the main private entity hired by the Department of Education to fight student debtors who file for bankruptcy on federal loans.
The number of U.S. students who borrow money for college continues to climb, while the number of graduates who are paying off these loans is slipping.
A new report by the Department of Education found that 64 percent of grads from the class of 2008 borrowed for college, compared with 64 percent for the class of 2000 and 49 percent for those graduating in 1993. The average amount that the students borrowed has continued to spiral up, rising from $14,000 in 1993 to $24,700 in 2008.
While the debt load was larger for the later graduates, they were less likely to have begun repaying their college loans a year after graduation. Sixty percent of 2008 grads were repaying their loans a year after receiving their degrees compared to 65 percent for the 2000 grads and 66 percent for the earliest grads in the study.
A larger number of the most recent graduates, at 31 percent, faced high monthly loan payments -- defined as amounts that were greater than 12 percent of their income -- than their counterparts who graduated in 1993 and 2000 (22 percent and 18 percent, respectively.)
Whether students borrowed for college was partially dependent on what type of institutions they attended. For the most recent graduating class that the report covered, 90 percent of students attending for-profit schools took out a loan, compared with 62 percent who graduated from public universities and 70 percent who attended private, nonprofit schools.
WASHINGTON -- Sen. Elizabeth Warren (D-Mass.) unveiled her first bill Wednesday, designed to set student loan interest rates at the same level the Federal Reserve offers to big banks.
With some student loan rates set to double on July 1 -- from 3.4 percent to 6.8 percent -- Warren's bill would reduce student loan interest rates to 0.75 percent, opening the Fed's discount window to students.
"Every single day, this country invests in big banks by lending them money at near-zero rates," Warren told The Huffington Post. "We should make the same kind of investment lending money to students, who are trying to get an education."
The freshman senator said she plans to mobilize students -- those most affected by student loans -- to help get the bill through the Senate. "This is about their lives and if they are active in this fight, we can make this change," Warren said.
The Fed justifies loaning money essentially for free to major banks so they can maintain liquidity during emergencies. But Warren noted that student loan debt also affects the economy. Research by the Federal Reserve Bank of New York, reported by Washington Post's Wonkblog, found that the amount of student loan debt of Americans under the age of 25 has doubled in less than a decade, from $10,649 in 2003 to $20,326 in 2012. Along with this increase in student debt comes a decrease in the likelihood someone will take out an auto loan or a home mortgage. That burden is a drag on the economy.
Warren pointed to the GI Bill and National Defense Education Act loans, which funded her education. "It wasn't just soldiers that got the education, it was the whole economy that benefitted from that investment," Warren said. "Why not give students a break? Why not let them in on the same great deal that the big banks get?"
According to the Project on Student Debt, college students who graduated in 2011 owed more than $26,000 in student loans, which Warren said is, "crushing our young."
Warren ran for Senate promising to fight against an economic system she described as "rigged" in favor of big business. She said her legislation is intended to raise questions about why banks get a dramatically subsidized loan rate and what can be done to reduce debt burdens for students and consumers. The simple answer -- that the Fed could subsidize students instead of banks -- is an uncomfortable one and goes to a core inequality at the heart of the financial system.
Student-loan debt is not just a problem for young, recent college graduates searching for their first jobs. Growing numbers of adults nearing the ends of their careers are accumulating such big debt, too, and they don't have a lifetime to pay it back.
In fact, student-loan debt is growing fastest among adults ages 60 and older, with more than two million people in that age group now owing an average of $19,000, according to the Federal Reserve Bank of New York. Their default rates are rising, too, and increasing numbers of retirees are seeing their Social Security checks garnished because they fell behind on student-loan payments.
Many of these older borrowers thought they could increase their marketability by earning an advanced degree later in life but are struggling to make ends meet instead. The number of people over age 50 enrolling in graduate schools more than doubled over the two decades between 1987 and 2007, when more than 182,000 enrolled, according to data from a survey published every 10 years by the U.S. Department of Education. The total amount of outstanding student-loan debt among this age group reached $155-billion in 2012.
This new legislation will be a combination of two bills from the 112th Congress: Rep. Hansen Clarke's Student Loan Forgiveness Act (H.R. 4170), as well as The Graduate Success Act (H.R. 5895).
This legislation would establish a new “10-10” standard for student loan repayment as the new standard repayment plan. In the “10-10” plan, an individual would be required to make ten years of payments at 10% of their discretionary income, after which, their remaining federal student loan debt would be forgiven.
The Student Loan Fairness Act would also combat crushing interest rates of public and private loans by capping federal interest rates at 3.4% and allowing existing borrowers whose educational loan debt exceeds their income to convert their private loan debt into federal Direct Loans, then enrolling their new federal loans into the 10/10 program.
This bill works to jumpstart the economy and adds to the public service workforce by rewarding students who enter public service professions and work in underserved communities with a reduced period for loan forgiveness.
The Student Loan Fairness Act also sends a lifeline to student borrowers who have fallen on difficult times. The bill seeks to ensure that no one will be pushed into poverty because of illness or loss of their job and extends interest-free deferments to unemployed borrowers of unsubsidized federal student loans and those enrolled in the “10-10” repayment plan. It also seeks to replace the current, 10 year “Standard Repayment Plan” for the full amount of the loan balance with the “10-10” plan as the default repayment option for borrowers entering repayment.
The final component of the legislation promotes financial responsibility in higher education and incentivizes students to be mindful of educational costs and for colleges and universities to control tuition increases.
Low-income strivers face uphill climbs, especially at Ball High School, where a third of the girls’ class failed to graduate on schedule. But by the time the triplets donned mortarboards in the class of 2008, their story seemed to validate the promise of education as the great equalizer. Angelica, a daughter of a struggling Mexican immigrant, was headed to Emory University. Bianca enrolled in community college, and Melissa left for Texas State University, President Lyndon B. Johnson’s alma mater. “It felt like we were taking off, from one life to another,” Melissa said. “It felt like, ‘Here we go!’ ” Four years later, their story seems less like a tribute to upward mobility than a study of obstacles in an age of soaring economic inequality. Not one of them has a four-year degree. Only one is still studying full time, and two have crushing debts. Angelica, who left Emory owing more than $60,000, is a clerk in a Galveston furniture store. Each showed the ability to do college work, even excel at it. But the need to earn money brought one set of strains, campus alienation brought others, and ties to boyfriends not in school added complications. With little guidance from family or school officials, college became a leap that they braved without a safety net. The story of their lost footing is also the story of something larger — the growing role that education plays in preserving class divisions. Poor students have long trailed affluent peers in school performance, but from grade-school tests to college completion, the gaps are growing. With school success and earning prospects ever more entwined, the consequences carry far: education, a force meant to erode class barriers, appears to be fortifying them.
With the elimination of the subsidized-loan option, graduate students who take out large amounts of loans could owe hundreds of dollars more per month. For example, a graduate student who has borrowed $65,000 in subsidized loans from the federal government—the maximum amount now allowed—would have to take out an unsubsidized loan, requiring $207 more in payments per month in interest over the course of 10 years, including while still enrolled in school.
Graduate students also will no longer be eligible for special incentives for repaying their loans on time. Students now pay a 1-percent origination fee when they take out a loan but are given a refund equal to half that amount when they make 12 successive on-time payments in the first year after graduation. The Congressional Budget Office estimates that eliminating this credit would save the federal government $3.6-billion over the next 10 years.
NASW is promoting loan forgiveness for social workers as part of its on-going work to improve working conditions, salaries, and other benefits for members of the profession and to ensure that consumers have access to qualified professionals. NASW will continue its support for proposals to provide loan forgiveness for social workers in child welfare and schools, while also working to secure loan forgiveness and educational supports for social workers in other practice areas.
The student debt load of many top private university graduates is lower that the debt load of their peer graduates at top public universities, according to a recent Reuters report.
The report tallied the average debt load at the University of Michigan as about $27,000. Conversely, the average debt load at Princeton University is roughly $5,000, at Yale University is roughly $9,000 and at Harvard University is roughly $11,000.
Forty-four percent of U-M and University of California at Los Angeles students take out loans to attend, whereas less than 30 percent of Harvard, Yale and Princeton students acquire loans, according to the Reuters report.
"Thanks to generous financial aid policies and large endowments, students may find that an Ivy League degree, for example, often requires less borrowing than a degree from many much less expensive state schools," the report states.
You see, our dad cosigned Christopher's private student loans with Key Bank. When Christopher died, Key Bank came after my dad to get their money back. Our dad has had to come out of retirement to make the monthly payments. When Christopher died, my family didn't just lose a loved one -- we inherited debt for an education that will never be used.
Key Bank's action's are dramatically out of step with the status quo. The federal government and even large private student lenders like Sallie Mae and Wells Fargo all forgive student loans once the borrower dies. But over the years, Key Bank has ignored our calls to take this humane step.
In the years since Christopher's death, my family has tried to keep others from facing what we have. We've worked with members of Congress to pass "Christopher's Law," which would make sure student borrowers and their families know exactly what could happen if they die or become disabled, and we've started a website about our efforts to get Christopher's Law passed (http://chrisbryski.blogspot.com).
Across the East River, a 35-year-old Hunter College graduate student named Monica Johnson woke up with debt on her mind. She's always thinking about student debt: the $88,000 she racked up between college and graduate school, and the legions of Americans whose unpaid student loans now total close to $1-trillion, twice the amount owed five years ago, according to the Federal Reserve Bank of New York.
Student-loan debt now exceeds credit-card debt in the United States, with full-time undergraduates borrowing an average of $4,963 in 2010, according to the College Board.
Most students do not pay the full cost of college, but more and more are taking out loans. And if borrowers face severe financial problems, their student loans cannot be forgiven in bankruptcy, unlike most other forms of debt, such as gambling debts, that can. Some observers predict that student debt will be the country's next big financial crisis.
Young people like Ms. Johnson, who are starting adult life deeper in debt than students a decade ago, see themselves as part of a new generation of serfdom. Even as their debt grows, she and others say that student activism around the issue is weaker in the United States than in other countries due to a psychology of shame and guilt.
Over 50,000 college grads across the country have joined a campaign on change.org urging student loan giant Sallie Mae to stop charging unemployed borrowers a $50 fee for forbearance on their loans, according to PRWeb.
The campaign was launched by Stef Gray, a recent college graduate who took out private loans through the company and was hit with the $50 fee when she requested a delay on the repayment of her loan due to unemployment. After graduating, Gray found herself without a fullt-time job and with no co-signers for her loan, since her parents had passed away. As a result she was forced to go into forbearance, or suspend the repayment of her loans.
Gray told PRWeb, “For Sallie Mae to tack on these extra fees just to pad their profits is to kick people like me when we’re already down. Charging a forbearance fee is wrong, and more than 50,000 people who agree are standing with me.”
The campaign is gaining strength as millions of student loan borrowers could be seeing the interest rates on their loans rise significantly unless Congress extends a rate reduction passed in 2007 and set to expire this July. While the current interest rate, based on the 2007 reduction, is 3.4 percent, the rate could double to 6.8 percent, adding more fuel to the fire of protests against student loans.
As of Friday afternoon, nearly 70,000 people had signed the petition.
But the trend has some worried that top-tier, taxpayer-funded universities are increasingly out-of-reach to middle-class students whose families might make too much for significant financial aid but not enough to afford all of the college expenses.
Experts point out that the nation's middle class, overall, has shrunk, which could account for some of the percentage dip at top-tier public universities. They also point out that average in-state tuition continues to rise.
"There has been a real change in the overall distribution of income in the country. It's becoming much more unequal," said Sandy Baum, an economist and policy analyst for the College Board. "That's making many families make difficult choices about college, especially as costs increase."
At all public, four-year universities, the percentage of incoming freshmen from families who make between $40,000 and $100,000 has dropped 8%, while the percentage of incoming freshmen from families making more than $100,000 rose 10%, according to federal data.
