Last fall it started. Congressional legislators like Senator Dick Durbin (D-Ill.) proposed – and president-elect Obama supported – “cram down” legislation allowing bankruptcy judges the ability to modify mortgages of primary residences. If lawmakers thought this was a good idea, it was certain that future legislation would allow modification of other loans including automobiles, credit card debt and student loans.
Business Week writer Alison Damast introduces us to Robert Applebaum and the Web site StudentLoanJustice.org. Loan justice… what a hoot.
In just two short months, Robert Applebaum has become something of a spokesman for a generation of people burdened with student loan debt. Applebaum, a 35-year-old attorney in New York, started a Facebook group in January called “Cancel Student Loan Debt to Stimulate the Economy,” fed up with news reports about bank executives spending millions to redecorate their offices and receiving hefty bonuses. “I wanted to rant, so instead of sending an e-mail to a couple of my friends, I decided to start a Facebook group,” says Applebaum, who finished law school owing $80,000 in student loans. “I figured maybe just a few of my friends would join.”
He was wrong. By the end of the second week 2,500 people had joined, and the group now has more than 138,500 members, many of whom are pressing their representatives in Congress for legislation that would forgive student loan debt. “It’s just snowballed,” says Applebaum.
More class warfare. It’s not fair that you have a job that pays more than I get. Wahhhh, wahhhhh, WAHHHH! I deserve it! I want it!
Applebaum, who graduated from Fordham Law School in 1998, took a job as an attorney at the Brooklyn District Attorney’s Office after graduation, at a starting salary of $36,000 a year. His salary was so low that he put his loans in forbearance for five years, until they ballooned to $100,000. “Despite having a law degree, I’m middle class and I don’t have any money at all,” he says. “I don’t own a house or a car. My only assets are my couch and television.”
Applebaum seems to have made a bad investment choice. He elected to go to law school, get into serious debt and made assumptions about what his salary would be after law school.
Chances are, he never researched what his salary would be after law school.
Alan Collinge is another victim, with my emphasis added.
Alan Collinge, author of The Student Loan Scam and founder of StudentLoanJustice.org, has been a student loan activist for nearly four years. He is working to reverse the bankruptcy laws and establish limits on how lenders pursue borrowers. Collinge graduated with three degrees in aerospace engineering from the University of California several years ago and $38,000 in student debt, which he’s still working to pay off. He’s traveled around the country talking to elected officials and working to restore what he considers “basic consumer” rights. As of yet, he’s had no luck, but he hasn’t given up hope. “Until someone shows me why student loans should specifically be exempt from bankruptcy protections, it’s definitely a fight worth fighting,” he says.
Looks to me that Collinge is not even looking for a job in aerospace. Maybe he likes what he sees in the community organizer field.
Damast missed an important part of this story. Sure, she’s pulling heart strings by telling stories of victims who had to take drastic measures – like have mom and dad mortgage the house to help – but what is the root cause?
College costs have gone through the roof. Tuition inflation rates have average twice that of general inflation since the mid-1970s. With tuition hikes averaging about 8 percent per year, that means that tuition can double in nine to ten years.
Recently, college tuition cost increases have slowed down due to demand, but they still are going up. What are colleges and universities doing to keep costs reasonable? State schools certainly do not seem to be cutting off illegal aliens getting in-state tuition rates, they love these programs since more government funding is guaranteed to come their way.
At the federal level, reduced student loan interest rates, tax deductions for loan interest, tax deductions for tuition, and more Pell Grants simply provide an environment where schools can increase tuition at will. In Florida this week, the state claims a 15 percent increase in tuition at state universities is justified because rates are below average in the United States. They note some of the tuition increase will be offset by increased Pell Grant funding provided in the stimulus package.
Update: Yup, Allah Hot Air is on this topic earlier this afternoon, and I heard Howie Carr was discussing as well. Allah seems to have his own student loans to pay off…
Unfair to those who repaid their loans or didn’t have loans in the first place? Sure — but no more so than dumping oceans of TARP cash on the banks that created the crisis. And if, if the stimulus effect of loan forgiveness is as profound as these guys think, taxpayers would be repaid in the form of a quicker economic rebound. One question, though: Why do they assume forgiven debtors would spend the savings instead of pocketing them or using them to pay off other debt a la tax rebate checks? The answer, maybe, is the sheer amount of money we’re talking about. In my case, forgiving federal loans would save me north of $8,000 a year; toss private loans in there and it’s a cool ten grand. I’d sock some of that away, but with tens of thousands dollars suddenly freed up, I’d also start looking at home prices in the area. Stimulating! Exit question: Who’s onboard?
Dude, I like your stuff, but I’m not paying anyone else’s mortgage and I don’t want to pay your student loans. I paid mine off years ago, and we’re still paying off my wife’s loans – at an interest rate of about 1 percent (that’s free money folks). What more do you want?