Comity of Arrears

Harvard Law and Policy Review echos this blogger's "American Dream Deferred" post

2010-05-27T12:18:00.000-07:00

Harvard's Law and Policy Review recently published an article that echos my sentiments as presented in "The American Dream... Deferred".

To read the Harvard article, go here.

The Harvard article is a great read and a great step forward toward the goals of the Student Debt Reform movement.

BIG NEWS!

2010-04-17T09:22:00.000-07:00

A bill to restore fairness in the student loan industry by allowing private student loans to be discharged in bankruptcy was introduced in both the Senate and the House this week.

This is great news, and it means our elected leaders are listening to us.

The bill still has to go through the process to become law. It must pass in either the Senate or the House by a vote, then be signed by the President to become law.

Check out Senator Durbin's page for more details.

Please call or write your Senators and Representatives and tell them to support this bill!

Scroll to the bottom of this page to see the real-time progress of the bills.

US Compulsory Education vs. Health Care Reform 2010

2010-04-05T20:34:00.000-07:00

Compare Education and Health Care Reform:

"The first compulsory education law in the American colonies was established in Massachusetts in 1647. The Massachusetts General Court passed a law requiring every town to create and operate a grammar school. Fines were imposed on parents who did not send their children to school and the government took the power to take children away from their parents and apprentice them to others if government officials decided that the parents were 'unfit to have the children educated properly'."

Compulsory education was not part of early American society, which relied instead on private schools that mostly charged tuition. The spread of compulsory education in the Massachusetts tradition throughout America ... has been credited to General Richard Henry Pratt."

Schooling is compulsory for all children in the United States, but the age range for which school attendance is required varies from state to state." [From http://en.wikipedia.org/wiki/Compulsory_education#United_States.]

Compare this to the recent health care reform legislation. How, conceptually, is it any different? How, constitutionally, is the concept any different?

Google Disables my blog's ads

2010-03-18T09:52:00.001-07:00

You might notice that this page looks a little different. That's because yesterday, Google disabled my advertising capabilities. I had been hoping to help pay down my student loans by generating a little extra income from this blog. But in an email to me, Google said:

"Hello,

While going through our records recently, we found that your AdSense account has posed a significant risk to our AdWords advertisers. Since keeping your account in our publisher network may financially damage our advertisers in the future, we've decided to disable your account.

Please understand that we consider this a necessary step to protect the interests of both our advertisers and our other AdSense publishers. We realize the inconvenience this may cause you, and we thank you in advance for your understanding and cooperation.

...

Sincerely,
The Google AdSense Team"

It seems that the Student Loan and Banking industry has become a little too powerful. This is just one more reason why we need comprehensive student loan reform now!

Furthermore, there is no way for me to contact Google/AdSense regarding this. The link they sent me to use in order to find more information about disabled accounts speaks to "invalid click activity." It seems Google does not have more information available when they disable your account for "pissing off the advertisers," which is essentially the reason cited in the email for disabling my account. How long will it be before they disable my blog altogether???? Anyone wanna take bets?

Chase Bank Representative Admits They Don't Grant Forbearance.

2010-03-18T09:45:00.000-07:00

In this call, a Chase Bank Representative admits that they don't grant forbearances. I received this call during the week of March 16, 2010. I have edited this call for time effectiveness and to protect sensitive information. Edits are marked with a tone.

The Student Loan Crisis: Chase Student Loan Forbearance Paradox

2010-03-04T07:14:00.000-08:00

Does Chase Student Loans really grant forbearance on private student loans?
Listen to one outrageous Chase Student Loan collector call that I received:

When I first signed for my Chase Private Student Loan, Chase's representatives told me that if I was unable to find employment or make payments after my grace period that there were many "safety" provisions, including forbearance, that would be available in such situations.

In this call, Chase's collector first tells me that I cannot qualify for a forbearance because I cannot give them a specific time when I can resume making my payments (even though I know that sometime in April I will be able to make the payments), but he cannot tell me what Chase considers a sufficient specific time. Then he proceeds to tell me that I need to give them an exact time when I can make my normal payments. In this call, first I try to explain to the collector that if Chase cannot tell me what information meets their standards for a specific time frame, then I cannot provide information to meet their standards. Then, the collector informs me that since I cannot give Chase a specific time frame when I will be able to resume making my normal payments if I were to get a forbearance, that I need to give him a specific time of when I can make my payment. I try to explain to him how illogical this is.

Like thousands of other student loan borrowers, I feel that Chase lied to me upon entering my private student loan contract. It is now obvious to me that when I signed my loan contract with Chase, Chase misrepresented the forbearance process to me by assuring me that forbearance was an available option. The forbearance process guaranteed to be available to me upon contracting was very important in my decision to choose Chase Student Loans as my lender. I, too, was duped like thousands of others.

Arizona Senator Jon Kyl responds to "The American Dream... Deferred"

2009-11-06T09:34:00.000-08:00

Click on the letter to open a large view:

The American Dream... Deferred.

2009-06-20T07:47:00.000-07:00

June 20, 2009

Dear President Obama;

I have great news; I just graduated from law school! And I saved a bunch of money on my car insurance. But seriously; all congratulations aside, I have an important story to tell you...

I grew up in a working class family. We lived in a small town, in a mobile home trailer. My sister and I shared a bed until I was 12 years old. My father is illiterate and my mother never graduated high school. Needless to say, none of my family had ever gone to college. Fewer than 5% of my peers from my hometown graduated high school and went on to college. I was the exception. I studied hard and graduated high school, then I went to college. I studied hard there too and after receiving my bachelor’s degree, I was accepted to a nationally ranked tier I law school. After 3 years of the hardest educational program imaginable aside from perhaps medical school, I graduated. I now have a J.D. And the people from my small home town call my achievements miraculous, because they are. I am a statistical anomaly in that sense. But I represent a common statistic in another sense: as a graduate student from a non-wealthy family, I have accumulated about $200,000 in student loans despite receiving numerous grants, scholarships and participating in work-study programs. I had no choice if I wanted to achieve my educational goals; you see, my family was unable to provide financial help to me during my college education.

When we are little kids, they tell us about the American dream. They tell us that if we go to college and get a good degree that we can lift ourselves out of poverty and provide a better life for our children than the one we had. They tell us that if we work and study hard, we will be financially stable. But that is a fabrication that is not possible for working-class American kids. And the result of that fabrication is that today’s “middle class” and lower-caste students celebrate college graduation with a congratulatory message:

“You did it. You beat the odds. Now we are pleased to inform you that you will have to beat even greater odds and find a job in a depressed economy that can facilitate not only your rent and living expenses, but can also facilitate monthly loan payments of more than $1,500. Oh, and by the way, that $150,000-plus you borrowed? It will be closer to one million dollars by the time you pay it off, if you ever can pay it off. Happy graduation, Graduate!”

Predatory lending by private and FFELP student loan lenders are suffocating the American dream.

The price of higher education has created a bottomless pit that students from middle and working class families will tumble down for most of the rest of their lives. The government has a safeguard to help Americans out when crisis occurs, such as when they suffer from medical condition that generates colossal medical bills, when their employment is terminated and they are unable to find a replacement job, or when a natural disaster destroys most of their possessions. That safeguard is bankruptcy, but currently no form of student loan is dischargeable without extreme undue hardship (a nearly impossible standard meaning that the student is disabled to the extent that she will definitively never be able to work again, such as if she is comatose and not expected to regain consciousness).

Perhaps in 2005 when the economy was still somewhat strong, this was not a major issue. But now the economy has fallen into disrepair. And the bankruptcy code needs to reflect that.

In 2006 when I entered law school, post-graduation employment rates for my school 6 months after graduation (when loan payments become due) were over 98%. This year, the forecast employment rate is embarrassing. Upon graduation, I know only a handful of students who have jobs to look forward to after taking the summer bar exam. I would be surprised if the employment rates 6-months-out reach 50%. What student can make a student loan payment of over $1,500 per month with no income?

Exacerbated interest accumulation and outrageous student loan payments harm the country as a whole when these students can’t pay their rent, and can’t pay for necessities for their children and other dependents. PBS recently aired a special report that follows a woman and her young daughter who lost their home due to student loan payments in the current economy. I highly recommend you take a few minutes to watch this quality report at http://www.pbs.org/video/video/1158570286.

Under changes made to the bankruptcy code in 2005, private student loans were given the same preferred treatment as government-guaranteed student loans. Currently, both government-guaranteed loans and private student loans are not dischargeable except under very extreme circumstances. Even when borrowers die, private lenders may continue to seek payment from the borrower's estate and from the co-signers.

Private student loans are the fastest growing and most profitable sector of the student loan industry. Since 2001 the market for private student loans has grown at an annual rate of 27% to $17.3 billion in 2006 – roughly 20% of total student borrowing. Ten years ago, only 5% of total education loan volume was in private loans. The interest rates and fees on private loans are often more onerous than credit cards and adjustable-rate-mortgages. Private loans often carry interest rates of at least 15%, and higher rates are not unheard of. One of my loans has an interest rate of 18%, despite my co-signer grandmother’s perfect credit score. Unlike federal student loans, there is no government regulation over the terms and cost of these loans. When students need money to continue attending school, we have no choice but to take these outrageous loans or drop out of school.

Previously, only government issued or guaranteed student loans were protected during bankruptcy– meaning that only federal or state loans were not dischargeable. This protection that had been in place since 1978 was intended to safeguard federal investments in higher education. Under the 2005 changes, a provision was added that extended the same bankruptcy protections to private lenders participating in the student loan industry.

Ideally, the bankruptcy law, as it pertains to private student loans, needs to be restored to the language that was in place prior to 2005, so that privately issued student loans will once again be dischargeable in bankruptcy, placing student loan companies in the same position as virtually all other private creditors.

The goal of student loan reform is to relieve pressure on the middle and lower classes and increase our spending power, to deepen our national commitment to an educated public, and to expand the equality of opportunity. In the absence of a bankruptcy code change, or prior to such a change taking effect, we need emergency legislation that will help us. A partial quick list of ideas that could help now include: a governmental provision that will function to pause our payments due and the interest accumulating on student loans, a federal consolidation program for student loans with extended forbearance due to the economic crisis, and increasing the effective aid from public service programs like Teach for America and the Peace Corps that allow a small pay-off (such as $4,000 to $17,000) of student loans. Even the military’s student loan repayment program needs tweaking to make it a viable option; as it stands if I sign a 6 year commitment with the military, they will repay some of my student loans, but the amount is less than one-fourth of the total-- I would still be unable to make the remaining monthly student loan payments from the military salary.

The cost of education has outpaced earnings and potential employment. Remember that trailer I grew up in? My parents and grandparents co-signed for many of my student loans and as a result, my parents may lose their sole, small abode if I encounter some economic hardship and default on my student loans. My grandparents may lose their home too. The result? America will have 5 new homeless persons including two elderly couples, with grandfather being a war veteran who survived Pearl Harbor. Our parents and grandparents have often co-signed on these loans, because they too believed the American Dream that a good education will save us all. And the lenders begin to go after the parents and grandparents soon when students can’t pay. Those who still have houses left after the foreclosure crisis probably won’t be able to retain them for very much longer.

Langston Hughes once wrote: "What happens to a dream deferred? Does it dry up like a raisin in the sun? Or fester like a sore-- And then run? Does it stink like rotten meat? Or crust and sugar over--like a syrupy sweet? Maybe it just sags like a heavy load. Or does it explode?"

Please don't let us find out what happens to the American Dream Deferred.

My peers and I need your help. America needs your help. Don’t let the private student loan lenders do to this country what the mortgage industry and banks did to it. Please work to give us American-educated students some legislation that helps us protect our families, our homes, and ourselves in this economic crisis. Otherwise, the American Dream may dry up and crust over during my generation.

Sincerely,
Sabrina Fladness