From ProPublica, co-published with The New York Times:
New Jersey’s loans, which currently total $1.9 billion, are unlike those of any other government lending program for students in the country. They come with extraordinarily stringent rules that can easily lead to financial ruin. Repayments cannot be adjusted based on income, and borrowers who are unemployed or facing other financial hardships are given few breaks.
New Jersey’s loans also carry higher interest rates than similar federal programs. Most significantly, the loans come with a cudgel that even the most predatory for-profit players cannot wield: the power of the state.
New Jersey can garnish wages, rescind state income tax refunds, revoke professional licenses, even take away lottery winnings — all without having to get court approval.
“It’s state-sanctioned loan sharking,” said Daniel Frischberg, a bankruptcy lawyer. “The New Jersey program is set up so that you fail.”
Read the rest of the article here.
Since 2012, I’ve written about the lack of opportunities for borrowers when it comes to the Public Service Loan Forgiveness (PSLF) program.
In June 2015, Sen. Richard Durbin (D-IL) introduced S.B. 1556, Adjunct Faculty Loan Fairness Act of 2015. The bill is co-sponsored by Sen. Al Franken (D-MN). This legislation, if passed in law, would amend current language in the Higher Education Act of 1965 to include
“(II) as a part-time faculty member or instructor who—
“(aa) teaches not less than 1 course at an institution of higher education (as defined in section 101(a)), a postsecondary vocational institution (as defined in section 102(c)), or a Tribal College or University (as defined in section 316(b)); and
“(bb) is not employed on a full-time basis by any other employer.”
This simple, elegant solution will assist millions of teachers. Many part time, temporary faculty teach at multiple institutions and often less than 30 hours per week. Currently, these faculty are not eligible for the PSLF program. Durbin’s bill is critical to the recognition that teaching is a form of public service and that all teachers, not just those fortunate individuals in full time positions, ought to be eligible to participate.
Earlier this week, Professor Diane Ravitch penned an eye opening essay on Arne Duncan’s “legacy” as Secretary of Education. Among the subjects discussed by Dr. Ravitch are No Child Left Behind (P.L. 107-110), with its focus on standardized testing, and other policies that encouraged “privatization and undermining the teaching profession with a $50 million grant to Teach for America to place more novice teachers in high-needs schools” (para.2).
One matter that isn’t outlined in Ravitch’s article is the power the Secretary of Education has in student loan reform and borrower “justice.” According to the U.S. Code, the Secretary of Education “may promulgate regulations limiting the amount of interest that may be capitalized on such loan, and the timing of any such capitalization” (20 U.S. Code § 1087e(5) – “Terms and conditions of loans”). While I am not a member of a legal profession, I interpret this passage from the U.S.C. as granting the Secretary of Education decision making authority over student loan capitalization policies and procedures. It is capitalization that increases the overall amount of the loan, especially on unsubsidized loans; it capitalization that is an obstacle to repaying the loan principal. The basic issue of capitalization has never been addressed by the Secretary; nor have exact details of the Department of Education’s capitalization formulas and policies
Russell Brand (The Trews, E194) on UK students demanding the end to university tuition fees:
Germany abolished tuition for in-country and international students.
It appears lawmakers in Germany came to the conclusion that loan servitude was not only an intergenerational problem striking at parents and students alike, and loan debt is a social (economic) justice issue.