Tuesday, June 15, 2010

"The Plight Of Current Borrowers: An Appeal For Immediate Relief"

Perhaps I should have been more creative with the title of this paper and used something that was similar to this AFL-CIO button? This type slogan may serve to help me think of a good title for my book on the student lending  crisis. However, the title that I chose was practical. So, for the purposes of disseminating information about indentured educated citizens, I was satisfied by its straightforwardness.

Here is the first installment from the paper I wrote for the Rev. Jackson and the Rainbow PUSH Coalition's town hall meeting about student loan reform. Each installment will include a link to the entire version (see the document in its entirety here).

The TOC and Introduction are below (the footnotes, incidentally, have been and will be omitted in these posting, but they can be found when viewing the entire document).

Table of Contents

Part I: Introduction

Part II: Testimonials

Part III: Providing Relief

Part IV: Conclusion

Part I: Introduction

Thank you for inviting me to be a panelist at this important and timely convention regarding student
loan reform.  Since I am currently working and living in South Korea I was unable to make the necessary arrangements to attend in person, and I regret being unable to be present. However, the Rev. Jesse Jackson and the Rainbow PUSH Coalition encouraged me to submit a paper to discuss what I view to be an enormous problem – the student lending crisis and, more specifically, current borrowers who are struggling or unable to pay off their student loans.

My name is Ms. C. Cryn Johannsen, and I am the Founder of Education Matters and an advocate for U.S. citizens who are, what I call, part of the indentured educated class.  I have spent years in and around academia, so I am familiar with and fond of this milieu.  I have a Master’s Degree in the Social Sciences from the University of Chicago and a Master’s Degree in History from Brown University. In 2007 I began a career in publishing and relocated to the Washington, D.C. area. This position provided me with deeper insights into the various structures of higher education. Although I had had conversations about student loan issues with fellow graduate colleagues, professors, etc., those discussions increased in their frequency shortly after moving to D.C. That was a direct result of the financial crisis that affected millions of Americans. Those who have been hit the hardest are not just homeowners, but also include student borrowers. At this point – March 2009 – I began to volunteer on a full-time basis for student loan debtors. In addition to volunteering and advocating on behalf of student loan debtors, I started researching and writing consistently about student loan reform at Education Matters. I sat in on hearings about the student lending crisis on the Hill, had the opportunity to meet the President of The Institute for College Access and Success (TICAS.org), Ms. Lauren Asher, and also attended an alumni event sponsored by the University of Chicago where Secretary Arne Duncan was a guest speaker. On top of making these connections, I made a point to become acquainted with a number of higher education policy analysts, such as Dr. Mark Schneider at AEI, Steve Burd at the New America Foundation, and so forth. The Hill was, naturally, another target; there, I reached out to individuals, and now have working relationships with Moira Lenehan, the Higher Education Staffer in Senator Sherrod Brown’s Office and Mr. Luke Swarthout, the Senior Education Advisor to the Chairman of the U.S. Senate's Health, Education, Labor and Pensions (HELP) Committee, Tom Harkin. Since August 2009 I have and continue to advocate for the thousands of people with whom I’ve been in touch and all for the same reasons: they are struggling or unable to pay off their student loan debts.  In addition, I am an affiliated partner of SponsorChange.org and United Professionals. All of these professional relationships serve to raise awareness about the millions of people who are struggling to pay off their student loans, or even worse have defaulted and therefore rick falling off societal grid. 

I have been in touch with thousands of student loan debtors, and the number of desperate individuals increases each week. My Facebook page is dedicated entirely to the student lending crisis, and I make a point to talk with individuals there (via Facebook chat) who have questions about their student loan debt.  In many instances I have even spoken by phone with individuals who are struggling. I have also created a Facebook Support Group called, “The Support Group for the Indentured Educated Class,”  and have successfully recruited State Support Leaders from across the U.S. Although the group was created just a few months ago, it has nearly 600 supporters, and newcomers join it on a daily basis. Many of these people participate in letter writing campaigns to the White House, the last of which took place on May 24th, 2010. In fact many of the volunteers were able to recruit their parents to join in on this writing campaign. (We sent letters to Mr. Roberto Rodriguez, who serves in the White House Domestic Policy Council as Special Assistant to President Obama for Education, Secretary Arne Duncan, Undersecretary Robert Shireman, and so forth).

Those with whom I’m in contact on a frequent basis, however, represent an infinitesimal percentage of individuals who are falling off the societal grid as a result of owing student loan debt. Many of these individuals have loans that are in forbearance or deferment, and are therefore racking up mountains of debt because of the interest rates affixed to them when placed in these categories.   Indeed, there are hundreds of thousands, if not millions, of people who are already in default, and many more who are fast heading in that direction.

But what exactly are the causes for this student lending crisis? First, the student lending industry is a vast, complex system that includes many players (student borrowers, the U.S. Government, the Department of Education, the private sector, and the entire student lending industry, Nelnet and Sallie Mae being the most notable). Due to the complexity of this system, however, the following discussion will address specific problem regarding current borrowers. At this point, at least in my view and in that of my readers, there seems to be very little that is being done to help these individuals, which raises an important question: Why are current borrowers being ignored by the Obama Administration and, even more specifically, the Department of Education? 

Given the severity of this situation, this is neither the time nor the place to point fingers at either institutions or specific individuals. While my work on Education Matters and at SponsorChange’s Philanthroteer focus on those sorts of critiques, I am reaching out in a way that I hope will lead to actual results. Today it is my sincere hope that the panel, particularly Mr. Shireman, and the Rainbow PUSH Coalition will consider my suggestions for short-term and long-term solutions to the student lending crisis. Indeed, if the Rev. Jesse Jackson and the Rainbow PUSH Coalition wish to make a difference in helping student loan debtors, they ought to shift their attention toward current borrowers. As one woman who’s on the verge of defaulting told me a few months ago, “Cryn, if it weren’t for you, I don’t know where I’d be right now.” This statement has been echoed time and time again from student debtors. They shouldn’t have to feel that way. They shouldn’t have to feel that I am the only person who is advocating for or listening to them. One thing is certain:  instead of alienating these hard-working U.S. citizens, it is time that we come up with solutions to help current borrowers and take drastic steps to end this crisis.

Gauging the Severity of the Student Lending Crisis

But just how severe is the student lending crisis? If one were to carry out a cursory search at the New York Times (NYT), the Wall Street Journal (WSJ), or other major news outlets, s/he would be hard pressed to find much evidence of anything related to student loan reform, let alone a full-blown crisis. Prior to a recent article in the NYT by Ron Lieber,   the major news outlets had really not covered this issue, and the few pieces that have been published online have essentially allowed readers to place the blame on the debtors. This blame is one of the reasons I am urging the Administration to take a stand on behalf of student debtors (I’ll elaborate more on this point in final section on short-term and long-term solutions). So, it was with great relief to see that the Times had finally written a noteworthy piece about student loan debt. Even though I applaud Mr. Lieber’s work, its publication is far from timely. (Incidentally, the Washington Post has failed entirely to write any articles about student loan reform).   Although there is a dearth of articles by major news outlets on the subject, there is more than enough evidence to illustrate the fundamental problems of this industry, and how it has been allowed to – thanks to the fact that it has never been regulated – operate in such a way that can best be described as “legalized loan sharking.” For the purposes of brevity, here is a short list of some startling statistics which illustrate how the student lending crisis is not only brewing,  but already affecting and destroying millions of Americans’ lives:

(a)    In the prior academic year alone (2009-2010) over 6.9 million students borrowed money for their education.

(b)    There was nearly $131 billion in outstanding private loans in 2008. In addition, there is $544 billion in outstanding federal loans for fiscal year 2009, up from $502 billion 2008.

(c)    Average debts for graduating seniors increased by 24% from 2004 to 2008, therefore, rising from $18,650 to $20,200.

(d)    Those who receive Pell Grants – these are individuals who come from families who earn less than $50,000 a year – will borrow more than others. In fact, 87% of 2008 graduating seniors who had been given a Pell Grant at one time or another had taken out student loans. 

(e)    Two-thirds of college student borrow for their education.

(f)    On May 26, 2010, Tim Ranzetta recently noted, “Sallie Mae executives [indicated] in an investor meeting that of the $6 billion in non-traditional private student loans (euphemism for subprime loans), they projected 40% would default [my emphasis].”

It should be noted again that the student lending industry is a highly complicated system, and the institutional and individuals relationships within it are inextricably intertwined,  thus making it a challenge to focus on relevant and specific problems related to the student lending crisis.  Since my work has been on issues surrounding current borrowers, I argue that they are the ones who deserve immediate attention. Moreover, I think it is highly problematic to divide groups into categories such as for-profit versus non-profit schools, or individuals who only have federal loans in contradistinction to those who have private loans, or dividing those who are undergrads with debt versus those who are graduate student with debt. While I understand the rationale for making such distinctions at times (analyzing data, making sense of student loans for a non-specialist audience, etc.), that can be (and, in fact, has been wielded against student loan debtors. Many current borrowers with whom I’m in touch are quite aware of how this data is used to distort their difficult financial circumstances. Little is being done to help these borrowers, and too much emphasis is being placed on prospective ones.

With the recent passage of legislation for prospective borrowers (SAFRA), it is time to turn towards helping those who are current borrowers. In addition, the student lending crisis is an inter-generational problem, and that means that the solutions arrived at today will affect the millions of young Americans who might someday find themselves in a position to pursue higher education. Indeed, if we do not deal with the student loan debt burden of current borrowers, we will be leaving behind a volume of unresolved debt to future generations.

This short-list of statistics demonstrates the overwhelming sociological problem that the U.S. is facing as a result of the way in which higher education is financed. But even more powerful are the hundreds and hundreds of stories that individuals debtors have shared with me over the past year and a half. Their testimonials provide insight into the human element of the student lending crisis.  Indeed, these individual voices provide us with deeper insights into how the crisis is destroying people’s lives.

Stay tuned for the first section from "Part II: Testimonials"

1 comment:

Anonymous said...

Brilliant, as usual!