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Dear Senator:
I am a licensed acupuncturist and a member of the advisory board of Student Loan Justice. As I am sure you are aware, we have a major financial crisis in this country with student loan debt: Approximately 44 million people owe an outstanding 1.5 TRILLION dollars in student loan debt.
According to a recent Brookings Institution report, approximately 40% of this debt is in default, forbearance, or IBR with only minimal payments being made, in all, basically somehow 40% of these loans are not being repaid at all. This study was done on loans from people who graduated in 2004. Now people are borrowing $38,000 on average to go to college, which is much more than borrowers took out in 2004. In a few years, I would think the total for 2018 graduates will be pushing 75% (or more!) due to the exponentially rising costs of college.
As I am sure you are aware, student loans cannot be discharged in bankruptcy except in very exceptional circumstances which are very expensive and extremely difficult to prove, especially for people who are already broke.
Furthermore, a very high percentage of borrowers are being kicked out of Income Based Repayment programs due to onerous paperwork requirements, and supposed “lost paperwork”. This has been well documented. This puts them into default, which is extremely detrimental and stressful and adds huge amounts of stress and extra interest, penalties, and fees. Never mind the fact that their income could be easily verified and their IBR automatically renewed annually by info readily available through the IRS (but this is not being done).
Government is also MAKING, not losing, money on student loan defaults. Alan Collinge at Student Loan Justice found very clear evidence of this in government documents online.
Additionally, discharging student loan debt, even when someone has a total and permanent disability, is a very high hurdle which requires excessive documentation and is often not granted, even in the face of overwhelming evidence. Never mind the fact that this should be done automatically when someone is awarded a disability award from SSDI.
There is also the problem of a great many borrowers who borrowed, for example, $25,000, paid back $25,000, but then still get bills from Sallie Mae, Navient, or the Department of Education for $25,000, essentially not crediting any of their payments towards their loan. This is an extremely common occurrence.
You can read the stories of affected borrowers Here. Simply click on NC and read what this is doing to people from our state.
Please also find the John Burns Real Estate Consulting study (2014) which shows on page 3, that student loan debt is costing the real estate industry 414,000 LOST TRANSACTIONS PER YEAR – at a cost to the industry of $80 BILLION dollars annually. Imagine how much this is also costing others who sell home-related goods (Lowe’s, Home Depot, appliance sellers, etc.) It is also dragging down the general economy, the stock market, and by extension, YOUR RETIREMENT – and everyone else’s, because everyone’s retirement is in 401k’s invested in the stock market now, instead of defined benefit pensions.
This is happening on the watch of every other elected member of Congress. It is also completely unacceptable and must change immediately.
We have a good bipartisan bill in the House, HR 2366, that would reinstate bankruptcy protections to student loan borrowers. This would make the DOE and other lenders “play fair” and end the fraud, coercion, and outright loan sharking that is going on in the student loan business. It would also give desperate former students who have no way to pay these loans off a way out so they can get a fresh start (something our current president has done 5 times, by the way).
What I need from you is for you to email my good friend Alan Collinge, the president of Student Loan Justice. Allow him to brief you on this situation. We need a Republican senator to co-sponsor a companion bill to HR 2366 in the Senate. We already have a Democratic Senator who is willing to do it if he can find a willing Republican counterpart. This shouldn’t take much of your time, and doing so would be a great effort of good faith on your part to your constituents who have student loan debt.
I look forward to hearing back from you on this. My support, come election time, will go to whoever supports this bill. Forty-four (44) million Americans (and growing) and their families feel the same way. We are being defrauded and harmed by these extremely harmful policies on student loans. If you help us, we will help you come election time and we will greatly appreciate his help. If not, we will have no choice but to find and support someone who will help us instead.
Thank you for your help.
Derek Williams
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Related:
Student Loan Debt Hits Record High, and That’s ‘Good’?
Student Loan Justice Founder Alan Collinge rebuts Forbes’ claim.
The Disturbing Truth About Student Loans
Are student loans officially crashing?
Student Loans: Failing the Student and Society
The entire lending system may vanish into illegitimacy.
The True Cost of Student Loan Forgiveness Programs
Our government has apparently found a way to get blood from a stone.
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Photo credits
Feature photo: Getty Images
Inset: StudentLoanJustice.org
Derek, thanks for posting this and for the work you did. I was an older student when I went back for my PhD 15 years ago. I thought I knew what the costs would be and that I could pay them back, but as you well know, once you embark on a PhD program you know how long the course work will take, but can’t know how long it will take to complete the dissertation research and have it approved by your PhD committee. It took years longer than expected and the costs mounted. A partial PhD is not worth… Read more »