Fairness For Struggling Students Act Would Reform Private Student Loan Bankruptcy Rules
The Huffington Post | By Tyler Kingkade
Three U.S. Senators unveiled legislation Wednesday to reverse a 2005 change in bankruptcy laws that makes it nearly impossible to have private student loan debt discharged.
The Fairness for Struggling Students Act of 2013 is cosponsored by Sens. Dick Durbin (D-Ill.), Sheldon Whitehouse (D-R.I.) and Jack Reed (D-Ill.). For Durbin, a high-ranking Democrat, it’s the return of legislation he authored in the previous session of Congress.
Student loans are the largest form of consumer debt, topping $1 trillion nationally, but they’re the only type not eligible for bankruptcy. Rich Williams, a former higher education advocate for U.S. Public Interest Research Group, described private student debt as “a special circle of bankruptcy hell reserved for dads who avoid child support and tax evaders.”
Federal loans haven’t been eligible for discharge in bankruptcy since 1978, to safeguard taxpayer money, but it wasn’t until 2005 that this was extended to private student loans. Durbin’s office noted in a release that private student loans are quite different from federal loans. Government-issued student loans carry mostly favorable terms, lower interest rates, income-based repayment plans and more deferment and forbearance options. Private student loans often have double-digit interest rates and have no income-based repayment options.
In a release, Durbin’s office said:
In 2005, the law was unjustifiably changed to give private student loans the same privileged bankruptcy treatment as government loans, even though private student loans have vastly different terms and fewer consumer protections. Today’s bill would restore the bankruptcy law, as it pertains to private student loans, to the language that was in place before 2005 so that privately issued student loans will once again be dischargeable in bankruptcy like nearly all other forms of private debt.
The American Association of University Women is on record supporting the bill. In 2012, the Consumer Financial Protection Bureau, the U.S. Department of Education, FinAid.org publisher Mark Kantrowitz, and The Institute For College Access and Success all called on Congress to make it easier for debtors to find relief of their private student loans in bankruptcy. Even Sallie Mae, one of the country’s major private student loan players, said they’re open to reforming the bankruptcy law.
Martha Holler, a Sallie Mae spokeswoman, confirmed to the Wall Street Journal on Wednesday they still support “reform that would allow federal and private student loans to be dischargeable in bankruptcy for those who have made a good faith effort to repay their student loans over a five- to seven-year period and still experience financial difficulty.”
Whitehouse said in a statement “This bill gives us the chance to right that wrong.” Reed said it “would restore limited bankruptcy protection and send an important message to lenders and students that they need to be responsible.”
The Wall Street Journal reports bankruptcy lawyers, who stand to gain business if student borrowers have expanded bankruptcy options, are backing Durbin’s legislation.
EARLIER ON HUFFPOST:
Support the Student Loan Forgiveness Act of 2012
Please click here to sign the Petition
By Robert Applebaum (Contact)
To be delivered to: Rep. John Kline (MN-2), The United States House of Representatives, The United States Senate, and President Barack Obama
Since 1980, average tuition for a 4-year college education has increased an astounding 827%. Since 1999, average student loan debt has increased by a shameful 511%.
In 2010, total outstanding student loan debt exceeded total outstanding credit card debt in America for the first time ever. In 2012, total outstanding student loan debt is expected to exceed $1 Trillion.
In short, student loan debt has become the latest financial crisis in America and, if we do absolutely nothing, the entire economy will eventually come crashing down again, just as it did when the housing bubble popped. Reasonable minds can disagree as to the solutions, they cannot, however, disagree on the existence of this ever-growing crisis, as well as the unsustainable course we’re on towards financial oblivion.
As a result of more than 30 years of treating higher education as an individual commodity, rather than a public good and an investment in our collective future, those buried under the weight of their student loan debt are not buying homes or cars, not starting businesses or families, and they’re not investing, inventing, innovating or otherwise engaged in any of the economically stimulative activities that we need all Americans to be engaged in if we’re ever to dig ourselves out of the giant hole created by the greed of those at the very top.
Now for the good news: there’s finally hope on the horizon! Representative Hansen Clarke of Michigan has just introduced H.R. 4170, the Student Loan Forgiveness Act of 2012, in the House of Representatives – legislation designed to lend a helping hand to those struggling under massive amounts of student loan debt.
For a brief summary of H.R. 4170’s main provisions, please copy & paste this URL into your browser: http://tinyurl.com/7akydbk
To read the full version of the actual bill itself, please go here: http://tinyurl.com/6txure8
To read answers to some of the most frequently asked questions about the Student Loan Forgiveness Act of 2012, please go here: http://tinyurl.com/8xh4csd
Student loan debt has an undeniable and significant suppressive effect on economic growth. The Student Loan Forgiveness Act of 2012 directly addresses this enormous boot on the neck of the middle class and represents a glimmer of hope for millions of Americans who, with each passing day, find that the American Dream is more and more out of reach.
Therefore, we, the undersigned, respectfully request that Congress bring H.R. 4170, the Student Loan Forgiveness Act of 2012, up for consideration and commit to holding a straight, up-or-down vote on it this year. Thereafter, we, the undersigned, respectfully request that President Obama sign this legislation into law.
There are currently 1,066,637 signatures
Kids Luv fundraiser sends message and money to raise awareness for college students financially unable to complete college.
Posted by Sarah Piehl
pacificpalisades.patch.com link
Pacific Palisades: Last weekend Kids Luv held a fundraiser at P2 (formerly Pali Skates), to raise awareness for students who are financially unable to complete a college education. Kids Luv is a new clothing brand based on a collection of books written by children, to help raise awareness on issues that face the young generation today.
The daylong event drew crowds all day and into the evening. Face painting, popcorn, cotton candy, tie dying and a volunteer DJ were a big hit. Children were invited to draw and write what the earth means to them. If their work is selected, it will appear in an upcoming book, “Kids Luv the Earth.” Others titles include, “Kids Luv Politics,” “Kids Luv Growing Up,” Kids Luv The Ocean,” “Kids Luv Love” Kids Luv Cooking and ” Kids Luv Healthy Cooking.”
Kids Luv was founded in 2009 by Julie Herwerden, whose daughter Poppie was denied a loan in her final year of college at Parsons in New York. A teacher of art and tutor in the Pacific Palisades, Julie found a way to help all students affected by this situation. Last year more then one million students were denied access to federal loans according to the Project on Student Debt.
All the profits from the books and merchandise sold on June 2nd & 3rd, 2012 will go to Scholarship America. Scholarship America mobilizes support for students getting into and graduating from college.
The event was well supported, including several Palisades merchants, like P2 for hosting the event and selling Kids Luv merchandise in the store, Mayberry’s restaurant for making Hannah’s Home Style Mac N Cheese recipe from “Kids Luv Healthy Cooking” and Lenny’s Deli for the Kids Luv cookies and peanut butter and jelly sandwiches, for the event.
Several of Julie’s Art Students (Cassie, Drew, Abby and Elena) made friendship bracelets and necklaces to make money to contribute to the cause.
This Kids Luv event raised enough money to send $1,000 to Scholarship America.
Kids Luv t-shirts are on sale at P2 in the Palisades, and all the books and tshirts are available online at https://kidsluv.info/store/
Both sides fail in student loan debate
Published: 9:29 PM 05/31/2012
When elephants fight, the grass suffers. In the fight between our two major parties on how to help college students, the facts suffer.
The debate is ugly. In a recent volley, MoveOn.org ran a full-page print ad in Politico on May 3 headlined “Republicans Must Think We are Stupid” with a picture of three sullen youths. The copy states, in part, “Republicans in Congress say they’ll only keep rates low if they cut funding for women’s health.” It adds that Mitt Romney “supports a budget that would cut Pell Grants by as much as $170 billion.” It concludes, “Keep Stafford loan rates low, and do it in a way that doesn’t try to pit students against women.”
Wow! Romney wants to cut Pell Grants “by $170 billion”! He must hate this program! I had to research this. MoveOn’s hit on Romney cutting Pell Grants seems to be based on his praise for the House-passed Ryan 10-year budget. However, Romney has broken with the Ryan plan, in part by supporting lower interest rates on student loans.
The student loan and grant programs were goosed up by a Democratic Congress and President Obama as a short-term fix in the darkest days of the recession. A closer look at the numbers shows the $170 billion in “cuts” are really an attempt to rein in out-of-control spending on the program. Now MoveOn is attacking Republicans who do not agree that this should be a permanent and growing entitlement.
As the House Budget Committee reported, the cost of the Pell program is projected to more than double, from $16.1 billion in 2008 to an estimated $36.4 billion in 2013, because the recession made more students eligible for the program. A $17 billion cut for one year wouldn’t even make up the Department of Education’s expected $20.4 billion Pell Grant shortfall for 2012.
President Obama’s re-election website puts a positive spin on the increase, stating that Obama “made college more affordable by doubling funding for Pell Grants, increasing the number of recipients from 6 million to 9 million since 2008.” Yet a House Budget Committee report astutely called Pell Grants “the perfect example of promises that cannot be kept.”
House Republicans are at least planning for long-term funding, albeit at a lower rate than some would prefer. Democrats have no visible plan to make up for these shortfalls other than an annual $7 billion addition to the deficit.
Second, the House-passed plan to pay for keeping interest rates low on student loans relies on a health care “preventive fund” created under Obamacare. It is not a “slush fund” as Republicans claim, nor is it targeted at “women’s health” as MoveOn and some Democrats claim. The program was created to prevent costly health problems, improve treatment and ultimately cut medical expenses. The fund subsidizes preventative treatment programs that screen for cancer, fight obesity, promote smoking cessation and reduce heart disease. Both parties tried to position this issue inaccurately by defining the fund deceptively.The facts may be irrelevant to fringe groups like MoveOn, which infamously ran the “General Petraeus or General Betray Us?” ad, but there are other important factors they’re overlooking. First, interest rates are not going up on all student loans. The affected loans only account for one-third of newly issued student loans and about three percent of current outstanding debt. Moreover, President Obama’s threat of $1,000 in higher payments looks a lot more manageable when it’s broken down over 10 years and works out to about $9 per month.
Third, if Republicans are stealing from “women’s health,” then so are Democrats, because many Democrats voted earlier in the year to take money away from the same fund in order to raise doctors’ Medicare reimbursements.Finally, both parties are in agreement that the lower interest rates should be maintained. President Obama and Democrats appear to have made this part of their political strategy to appeal to younger voters, while Republicans seem to have been caught off guard, even though their presumptive presidential nominee has taken the same position.More, these loans are divorced from the reality of whether any individual loan makes sense. Half of today’s college graduates are jobless or underemployed. Yet, we have three million jobs waiting for people with the right skills. Logically, it makes more sense to offer low interest loans to those students who will be trained in specific areas.The real issue is how we discuss the tsunami of upcoming issues as we choose among guns, butter and more debt. Rather than just robotically funding all existing benefits, we need to dig deep and question our assumptions. On the issue of college education, I would favor skills-based community colleges, and science, technology, engineering and math (STEM) education. We also need to consider that our tenure system and age discrimination laws make college unaffordable and block many of our best graduates from getting jobs.Beyond the partisan rhetoric and election year politics, we need adult discussions about choices and sacrifices. The problem of Pell Grants won’t be solved with massive unfunded increases in the size of the program, nor by indiscriminately slashing funding. Instead, the program should be reformed so that it better meets our nation’s needs.
Kids Love Healthy Cooking is now available!
Visit kidsluv.info/kids-love-store to order your copy.
Now Published…
Kids Luv Healthy Cooking is published.
Posted: 01/24/2013 3:31 pm EST | Updated: 01/24/2013 3:34 pm EST