What started as an awareness raising and ethnographic styled walk through Sierra Leone, this site now details the encounters of a not so academic academic who spends more time occupying Wall Street and squats than a university...

Friday, April 6, 2012

Student Debt and House Bill H.R. 4170

So I just thought I'd weigh in quickly on this house bill HR4170 (summary, full, petition) that is trying to forgive aspects of student debt.  And before anyone gets all excited... no you would still have to pay your existing loans - there would just be an end in sight.  I do though have some very serious reservations about the whole thing.  Yeah, great, so the one trillion dollars already accrued in student loan debt may become more manageable for those of us buried under it, but that does NOT solve the problem or the causes.

The bill is marketed as both helping individuals and the economy.
Excessive student loan debt is impeding economic growth in the United States. Faced with excessive repayment burdens, many individuals are unable to start businesses, invest, or buy homes. Relieving student loan debt would give these individuals greater control over their earnings and would increase entrepreneurship and demand for goods and services. (full)
But obviously there are some serious issues that quick summaries and marketing doesn't lay out.  Firstly, debt default does leave a hole in the banks balance sheets (often covered by insurance or hedging with other investments, etc. etc ( and whose loses I don't have much sympathy for)).  It also makes the act of student lending more risky and less profitable - especially with a cap on interest rates at 3.4%.  This is not as I think things should be, but as capitalist lending is based pretty much solely on rate of return.  Thus, there will in the longer term be less money lent to students making school actually perhaps less accessible.  And while, according to the petition, "since 1980, average tuition for a 4-year college education has increased an astounding 827%, [and] since 1999, average student loan debt has increased by a shameful 511%."  So how are we going to cover this gap in the future?
"While current borrowers would be eligible for full forgiveness under the plan, future borrowers would be subject to a $45,520 cap on forgiveness (based on the average overall cost of a four-year degree at a public university). The aim is to incentivize students to be mindful of educational costs and for colleges and universities to control tuition increases." (summary)
(fyi: $45k doesn't cover one year of most any graduate school)

Yes, if we forgive some student debt right now you are going to make the people holding the 1 trillion dollars of debt happier, but you are actually harming the education system in this country for the future as "the bill would not affect funding for existing student aid programs", or the educational and research systems themselves.  The ONLY way to sort out the education issues in this country are to FUND the educations themselves.  Fund the schools, fund the research, fund the students, FUND IT ALL!!

It is great to say things like:
(1) A well-educated citizenry is critical to our Nation's ability to compete in the global economy.
(2) The Federal Government has a vested interest in ensuring access to higher education.
(3) Higher education should be viewed as a public good benefiting our country rather than as a commodity solely benefiting individual students. (full)
It is an entirely different thing to actually do something about it.  This bill is a start to help the people buried under this debt.  But tuition is not going to come back down on its own, nor is people's ability to pay for it going to somehow miraculously appear.  For the future of education (and the economy) you must do so much more.  Among other 'minor' things (like changing the entire way our socio-economic and political system operates), SPEND GOVERNMENTAL MONEY ON EDUCATION!!!!

Billions and billions of dollars.

At EVERY level.

(and EVERYONE knows where that money can come from!!)

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