Wednesday, September 30, 2009

Part II: Final thoughts played to a tune of desperation

Instead of delving into the testimony from each of the witnesses who testified on Panel I and Panel II at the House Judiciary Subcommittee hearing last week, I want to focus on a few points from the written testimony that highlight the severity of this situation. Moreover, an eloquent post by a new connection, Mr. Blair, on my previous piece about this hearing warrants attention in the second part of this discussion. Based upon the significance of his comments vis-a-vis  my own initial and now settled thoughts about this hearing, it precludes me from carrying out the analysis I had planned on doing. In a word, Mr. Blair's comments made me realize the pointlessness of providing the reader with a point by point discussion on the content of each person's testimony.  Nevertheless, here's a quick list of the witnesses who testified (for those of you who wish to read their written testimony, their names serve as hyperlinks to those documents):

Panel I

Panel II
(b) Rafael I. Pardo, Associate Professor of Law Seattle University School of Law
(d) Brett Weiss, Joseph, Greenwald & Laake, P.A. 

Ms. Asher and Mr. Weiss were the strongest witnesses. Both were poised and able to relay the most disturbing information, along with substantial statistics, to the Subcommittee (the empty chairs on that end, by the way, was disheartening).  One of the most disturbing pieces of evidence came from Mr. Weiss's testimonial document. Prior to reading this document, I had - naively - assumed that one could escape private student loan debt through death. It seems in certain instances that that isn't even a way out! In a portion of his document that discusses the way in which courts have similar "restrictive standards to co-borrowers" (this topic of co-signers also came up, and it clearly overwhelmed Congressman Cohen), Mr.Weiss explained, "We recently heard a particularly poignant experience from a co-borrower looking for solutions:"

"Heather from St. Petersburg, FL (in her own words)

I co-signed for my boyfriend's loans so that he could go to school to become a pilot. When he signed up with the school, they only had 2 banks they wants us to to get loans through (Wachovia or Sallie Mae and only one that was accessible from their web site (Wachovia) were he was supposed to sign up for the loan. So he ended getting a private loan from Wachovia (which is backed by TERI) instead of a federal loan, although I am not sure what the difference is. Unfortunately, he passed away a couple of weeks before his training was complete. Now the loan deferment period is coming to an end and obviously they want their money. I've done outreach to see what my options are and it's not looking very promising  . . . They also sent a letter, addressed to him, stating that the loans don't offer a death discharge [my emphasis] . . . . I understand that I am responsible for paying these loans since I did co-sign for them, it just doesn't make sense for me to pay the entire loan amount when I got nothing from didn't even get to go for a ride!"


I realize it's hyperbolic to claim that one cannot escape their loans via death. But why is it not possible for a company like this one to at least re-negotiate the terms of this debt? It's also amazing that a company can be so brazenly cruel and send a letter addressed to the widow's dead husband. 

There are also examples of how they criticize people for having had children. Again, Mr. Weiss's document explains this type of situation. A borrower seeking to reclaim some semblance of a life was accused of being reckless for making a personal decision to have a family. Weiss continues:

"Creditors have presented a wide range of aggressive arguments to discredit borrowers' testimony about hardship. In one recent case, creditors aggressively questioned a woman about why she had children [my emphasis] after she took out student loans if she was not going to be able to afford both children and loans. In this case, the creditor's counsel got the borrower to acknowledge that she had borne all of her children after she took out the loans. He then asked her if her children had been 'planned' to which she responded that she was Catholic. Counsel then dropped the subject until closing argument, at that time referring to her religious choice. Counsel said that 'you have to make the decision to have a family in light of what you can afford."

I won't even get into the story about an aspirant who can't take a vow of poverty until she's paid off her student loan debt! (Rest assured, supporters, I've already been in touch with Ms. Torres - the aspirant - and told her about the Forgive Student Loan Debt Movement).

Why have so many people in this country been put in such a shameful financial situation? Why are so many of them struggling to just make ends meet? Even worse, why does it seem that no one seems to give a damn?

I have some other questions I'd liked answered:

(a) Why did the House wait until after the proverbial train had left the station to hold a student loan bankruptcy hearing?

(b) It is is my understanding too that the Senate is trying to keep Senator Sherrod Brown's debt swap bill from being considered. Why is that?
(c) Why are both of these bills just about putting a cap on the riches the lenders receive, and aren't doing a damned thing to address the existing debt problems from which we're all struggling? 
(d) Finally, I wrote on behalf of one particular student who was clearly misled by her university. 

When she stepped foot on her campus as a freshman with a clean academic record, the Financial Aid Office had her take out the wrong loans. I'm almost certain of it. I wrote to Sec. Arne Duncan, to the Attorney General of her state, to President Obama, etc. I haven't heard one thing. Nothing. I think that her case alone warrants some sort of official investigation into possible wrongdoing at the school she attended. So why hasn't anyone responded? Why are we all being forgotten here? Have we not raised our voices enough? Where's that so-called "change" we can believe in?

The little that has been done on the Hill is too little and perhaps too late for millions of Americans struggling with student loan debt. Some of the Representatives who happened to attend this hearing struck me as . . . to put it bluntly . . . painfully out of touch, and so unaware of what it means to be a struggling professional today that they made me dream of being in a place of power that would allow me to draft legislation that would actually mean something for people who are caught in this student lending crisis . . . It also made me think about the stark division between baby boomers and the generations who have come after them. (Mind you, I'm speaking thematically by the way. I'm aware that there are a large number of people who are described as baby boomers who support our cause).

I will defer to the eloquence of Mr. Blair to make this final point. After I posted the first part of this discussion, Mr. Blair wrote in response: 

"Excellent report, and very encouraging. Thank you!

I believe very much in your statement regarding advanced degrees hurting ex-grad students in the current job market.

In America large corporations thru small businesses value people that they can subjugate 
more than they do people who possess critical thinking skills. Companies want someone 
who is programmable, not someone who wants to learn and excel, or improve the organization for which they work. This attitude is contrary to best management practices (see learning organizations - Peter M. Senge).

We (recent graduate students - irrespective of age [my emphasis]) paid to gain those skills which are abrasive to incumbent baby-boomers who want nothing more than to retire fat and happy, just like they were planning to retire before they lost all their money in risky investments. But now they must "work" longer to retire at the same level they had planned. Now the baby-boomers are in fierce competition with themselves, and others outside of their demographic, to 1. keep their jobs, 2. do as little work as possible, 3. make as much money as possible before they retire.

So, our generation(s) must now bear the weight of having to compete with a glut of older workers who are in many ways obsolete in their productivity by default of an unwillingness to learn from younger people who they may consider to be a threat to their positions of authority (and perceived  superiority). We must also pay back our over speculated student debt.

We recent graduates of more advanced degrees who are younger seek innovation and efficiency out of a real economic necessity; to pay back our student loans in a timely equitable manner. We also seek the leverage to take our own risks with our own ventures, just like the baby-boomers have. Right now with a disproportionate burden of debt we cannot pay off more quickly we do not have the freedom to organize and innovate, particularly for start-up type ventures. This hurts America. We need the leverage to take risks to innovate. Right now we can only follow orders; orders which are leading us in a direction of dilution, without a clear vision for the future. Let them put our money back into our mouths where it belongs. We've over-speculated on the value of our student loans because of promises of a chance of higher wages which are less likely to obtain."

While I am inclined to believe that what we're seeing is a type of internecine warfare between those in the middle-class, Mr. Blair's remarks about a generational struggle have persuaded me to rethink my original beliefs (i.e., that the crisis resembles an internal type of class struggle). Regardless of theoretical speculation and which one makes more sense, we're all finding ourselves in a desperate collective situation. When you begin to receive emails from college grads telling you, "Thanks for your help! I have a college degree and just went on food stamps today!" you know this problem is serious and that it's not going away. 

Try as they might to ignore us and this serious issue, the student lending crisis is here to stay. Allowing for private loans to be discharged in bankruptcy is, as Mr. Applebaum put bluntly, "like putting a band aid on a gunshot wound." 


Karen said...

Very thought provoking post as usual. I have tried to not look at this as a generational thing as I believe divided we will gain less in the long-run. I am technically a "boomer"--born at the tail end of the baby boom. I took out loans for graduate school, like many other women of my generation, as we returned to the workforce or struggled to overcome the "motherhood penalty" (see Cornell study 2005)and get promotions. Many of us needed the promised better jobs and salaries to make up for divorce, widowhood, and the strains of caring for our parents. Like younger students we were assured that education = job opportunity. Now we face the same horrible debt burden as younger graduates coupled with the ugly reality of age discrimination in hiring. Not to mention that there simply just are not enough jobs for all of us -- boomers, gen X, gen Y -- due to a failed economy. I'm thrilled we have this issue in the spotlight and hope we can continue to have discussion without turning on each other.

Cryn Johannsen said...

Karen - thanks for your input. As you know, I emphasized the fact that I was playing on this baby-boomer images vs. "us" (whoever falls into that category) thematically. I am inclined to believe we're facing a significant and paralyzing form of internecine warfare, i.e. the "cogs of the middle class" (again I'm using that term polemically) are fighting tooth and nail to keep other educated-middle class people (and even worse lower class individuals - they are always on the edge of all of this discourse, and that's why I make a point of referring to them too) from succeeding. While I recognize there are other forces at play, a lot of what's happened is a result of bad-thinking, bad policy decisions, and corrupted institutions. That's not even mentioning the parasitic relationship that we have going on between the banks and those in office (ahem . . . just take a look at Larry Summers), the incestuous ties between the DOE and Sallie Mae, etc.

I did, however, study humor in 19th-century German magazines. There were a lot examples of generational resentment. I think it's certainly something that ought to be avoided in this case. However, I do think that George Dubya Bush is a fine example of the worst in what we think of as a so-called Baby Boomer. He was born with a silver spoon in his mouth, he never fought in a war (as his father did), and things were pretty dang easy for him. Of course, I could be criticized for that remark. It's true, Bush comes from the most elite family in the U.S., but I still think he's emblematic of the above critiques. I do apologize to those supporters who are Republican. I will be honest, I am not a fan of Bush. However, that doesn't mean I'm rabidly anti-Republican. I'm not in the least.

Diane said...

We can't ignore the generational issue any more than we can ignore racism. Ageism exists on both ends of the spectrum. As long as boomers are having to compete for jobs with recent college grads, we'll be clawing at each other for every dollar. Guess who profits?

Anonymous said...

The same thought has passed through my I wish I could be a politician and do something about this cause. I wish we could elect you to some type of legislative office. How much does it pay I wonder? Will it cover my medical school debt?
It seems to me that the only politician interested in student loan debt is Jesse Jackon, but when was the last I have heard anything newsworthy about his movement is the question.
It doesnt surprise me that these politicians seem out of touch, it explains why this problem has not been addressed before. Im sure the majority of these politicians had their education paid for by mom and dad.
And lastly...I cringed when you wrote about the case of the creditors questioning the right to have children. Do they really believe the money should go toward the banks before the mouths of kids? How insane! The greed astounds me. What happens if you have child support and student loans? Who wins that battle I wonder. I wish we could all just win the lottery.

Anonymous said...

The solution is simple. Make student loan debt discharagble in bankruptcy just as every other debt is. We don't have the ability Benjamin Franklin did of getting out of his student loan debt, moving to another city. This debt follows us for life, and sometimes after death. While I only have $22,000 left of my $64,000 in student loans. I've been paying them off since 1993. My wife who graduated in 1999, has barely made a dent in her $106,000 in student loans because she moved to a 30 year payment system. So, while we can theoretically afford then $600/mo payment now instead of the $1300 payment it was, it's highly unlikely we'll ever see this debt paid off or ever have a reasonable standard of living.

Diane said...

That sort of student loan debt is obscene. I went to a state university as an "in-state" student and graduated owing about $5,000 (in the 70s). The interest rate was very low and the loan was easy to pay off. Many times over the years I wished I'd gone to beauty college instead, so at least I'd have a craft I could practice. A degree in English and Classics doesn't get you anywhere, but at least it didn't leave me broke.

Anonymous said...

That same degree would cost you about 30k now or more at an avg. state school. And to make matters worse, if you cant find a decent job out of school and default, your loan will double in debt value in just a few years. Thats what needs to change. The outrageous interest and penalties need to dissapear, so that any payment will deduct from the principal forever ! Even if you pay sporadically. Or at least a system re-designed to be close to that ideal. Ok, to be fair... report late payers to the credit bureaus, and that makes life tough enough for many. But at least there would be hope to pay it off in less that a decade. Am i on to something here? I hope so.

dzyns said...

i am also considered a cusp boomer. . .but in reality i am an x-er. . .and our issues are over 20 years old.

we will pay till we die.

but is it more comforting that there is a nebulous someone somewhere out to get us? . .

or is the more likely scenario(which for me is scarier) .. .

lack of forethought
lack of discernment
eye on the prize thinking
from our elected officials on down. . .
'let them eat cake' kind of obliviousness.

Cryn Johannsen said...

Dzyns - I don't entirely disagree with you, and appreciate your remarks. But I think one of the things we all ought to work on collectively is to act in a way that enables us to change this dreadful situation. Rest assured, I am not criticizing you for being so disenchanted and cynical. It's easy to have those feelings. I know all too well.

I had a brief exchange with Noam Chomksy in last fall (via email). He was sorry to hear I was leaving the country, because I explained to him that I'd like to stay and be an activist and help student debtors. I later read about a question someone asked him recently after he gave a talk. The person asked, "Dr. Chomksy, you are always fighting for people and that gives me hope. But with all the suffering and problems in the world, do you yourself ever feel hopeless?"

Chomsky replied, "yes, every single evening."

And yet he continues to be an activist.