I Kind of Ruined My Life By Going to College
I think we all recognize that the cost of higher education is getting pretty crazy. According to the report U.S. Department of labor, the cost of college tuition grew over 79 percent between 2003 and 2013, drastically outpacing increases in the cost of clothing, housing, medical needs and almost every other expense in American society(http://www.usnews.com/news/articles/2013/10/23/charts-just-how-fast-has-college-tuition-grown).
As I was reading Consumers Report about college debt I felt the need to help any one that is indecisive about why he or she should go to college. Almost every American knows someone who is encumbered by student loans. Fewer know that growing alongside 42 million indebted students owe $1.3 trillion in college debt. This is making a formidable private industry that has been thriving by those very loans.
A generation ago, the federal government opened its student loan bank to profit-making corporations. Private-equity companies and Wall Street banks benefited on the flow of the federal loan dollars peddling those very loans to students that sometimes could not afford and then collecting fees from the government to hound students when they defaulted.
Step-by-step, one law after another have been enacted by Congress to make student debt the worst kind of debt for Americans and the best kind of debt or return for debt collectors. Today, just about everyone involved in the student loan industry makes money off of the student-banks, private investors, and even the federal government. Once in place, the privatized student loan industry has largely succeeded in preserving its status in Washington. And in one of the industry’s greatest lobbying triumphs, student loans can no longer be discharged in bankruptcy, except in rare cases.
At the same time, societal changes transpired to drive up the basic need for these loans: middle-class incomes decline, college costs soared, and states retreated from their historical investment in public universities. That is if states have continued to support public higher education at the rate they had in 1980, they would have invested at least an additional 500 billion in their university systems, according to an analysis by reveal from The Center of for Investigative Reporting.
The cohesiveness for students and their families have changed drastically, with little notice. Today, there is a student debt class like no other: about 42 million Americans bearing 1.3 trillion in debt that is altering lives, relationships, and even retirements.
Many common complaints are how am I going to plan for the future when I spend most of my money on my debt. One of the beneficiaries in the profit spree behind this that is the federal government. By the Department of Education’s own calculations, the government expects to earn 20 percent for the loans it made in 2013. Today student debt is $140 billion a year industry, and unlike many of student customers, the business’s future looks promising.
In the last decade, Wisconsin has cut back it’s state University. In 2003, students paid about 30 percent of the University of Wisconsin system’s role educational cost, according to data compiled by the State Higher Education Executive Officers Association. By 2013, students have been responsible for about 47 percent, and more state cuts to higher education are expected. What this means is when states cut back funding on higher education, like Wisconsin, universities have to raise tuition to cover costs making students borrow more money which then brought in more money for those thriving industries. By 2014, 70 percent of Wisconsin students graduated with debt-third-highest percentage in the nation for students at public and nonprofit colleges, according to the nonprofit Institute for College Access & Success, or TICAS. Thank you Scott Walker!
Wisconsin trajectory follows a national trend. After World War II, the state’s appropriated more and more funds for public higher education, and by 1975, they were contributing to 58 percent of the total cost. He says they have steadily reduced their share, pressured by, among other things, the rising costs of Medicaid and prisons. Today, state support is at 37 percent, says the data from the U.S. Bureau of Economic Analysis.
As states cut back funding, universities have to raise tuition, to cover the borrowed money from the students. The student loan brought even more money for the thriving industry. The next step: collecting all that debt.
Calls, at All Hours
The work was automated and fast-paced by machines that robo- dialed the delinquent borrower’s. Look at this case example of Jessie Suren’s. Ms. Suren’s, job that paid $12 an hour, was to engage with the borrower, tried to get some money out of people who were delinquent on student loans. At the massive call center in Hattiesburg, Pennsylvania, Suren felt like she was working for the enemy. The 28-year-old owed about $90,000 in student loans.
Suren states that some calls were terrifying, angry borrower’s would curse and threatened, declaring the student was jobless and broke. Other calls were heartbreaking; borrowers would say he or she or their children were terminally ill and needed the money borrowed back. Whatever the story was, Suren would say, what would happen if they do not pay. The American Education Services, a loan servicing company, could take their tax refund and garnish their wages. After hanging up, Suren would sometimes reflect on her own student loans. “This is going to be me after a couple of years,”she would think.
The federal government holds about 93 percent of the $1.3 trillion in outstanding student loans. That makes the Department of Education, effectively, one of the world’s largest banks, but one that really deals with its customers. In 1980s, will the department began contracting with private companies to take over debt collection. Then after privatization, a surge of investors poured into this field. Established debt-collection firms were brought up by the privately held investor funds controlled by the likes of J.P. Morgan Chase and Citigroup.
Today, one in four borrowers are behind in their payments, according to the Consumer Financial Section Bureau, with an estimated 7.6 million in default. As borrowers struggle to make payments, debt collections rise. Contractors are expected to make more than $2 billion in commissions from the government this year, according to the Nationals Consumer Law Center.
San Francisco graphic designer Brandon Hill says that collectors debt collectors from Sallie Mae began calling him, “yelling and screaming,” about his past due payments as early as 5 AM. After he complained to state regulators in 2013, Sallie Mae and Navient Credit Finance turned around and sued him for immediate repayment of a combined $73,000 in student loans as records show. “I was soon for complaining,” he says. His lawyer is negotiating a settlement.
In a letter to the California attorney general’s office, Sallie Mae wrote that the company had, “acted inappropriately,” and contacting Hill. The flurry of 5 AM called occurred because Hills Cell phone has a Virginia area code, the collectors assumed he was on the East Coast, a Sallie Mae official role.
Retired, University of Cincinnati professor, Mary Franklin says, “student dead doctors told her they would garnish her disability insurance benefits because she has fallen behind on student loans dating back decades. I tried to explain to them that I was ill,” she says. The company says the federal government does not care. Eventually, she says, she managed to resume payments.
Congress revise the program again in 2010 that took back control of issuing federal school loans. Government would now give loans directly to the students. Other progress has been made too, new regulations introduced after 2013 now limit a student’s federal loan payments to as low as 10 percent of discretionary income. In 2015, the Obama administration launched a pilot program to test whether federal employees could efficiently take over the job of collecting unpaid student loans, while at the same time being more helpful in less aggressive than private collectors.
To Deanne Loonin, a lawyer who monitored student debt for years for the National Consumer Law Center, the Treasury experiment is focusing on one of the biggest problems confronting borrowers. “We need to eliminate the private collection agencies from this process, she says. They are incentivized just to collect money, not to work out ways that might be better for the borrowers. We need to see what else might work.” “We ought to invest in the future, not take from the future,,” says Thomas G Mortenson, a senior scholar at the Pell Institute of Study of Opportunity in Higher Education. With students owing so much in college that he or she cannot plan for the future. If you like to read more check out: http://www.consumerreports.org/student-loan-debt-crisis/lives-on-hold/
What have you encountered with your debt collectors? Do you have any advice for other people who may be going into college? Connect with me…