Living the American debt

As the nation slips ever deeper into the Great Recession, the Occupy movement continutes to spread across the country. The protester ranks are filled with the unemployed, underemployed and a growing group that combines the two together but stands on its own — student loan debtors.

There is a growing roar both on Wall Street and in Washington for student loan debt relief, as many who have lost jobs or are working part time have to sacrifice paying their loans to put food on the table, gas in their cars and pay the bills. Debt continues to grow for many of these people as compounding interest is piled onto their original debt. This places many of these people in a hole so deep that it seems like there is no way out. As public outcry over the economy grows, action appears to be on the horizon, both from Washington and from the Occupiers.

Last Wednesday, in an effort to bring some relief to the Occupiers and students all over the country, President Obama announced plans to speed up a piece of legislation passed by Congress last year. According to, this piece of legislation, “reduces the maximum required payment on student loans from 15 percent of discretionary income annually to 10 percent.” It also reduces the number of years one must wait before reaching debt forgiveness from 25 to 20 and will allow individuals who receive money from the Federal Family Education Loan Program to consolidate that loan with their direct government loans into one lump loan at a lower interest rate.

The legislation, originally schedule to take effect in 2014, would take effect in 2012 under Obama’s plan. Despite his best efforts, however, both proponents and opponents of relief are not happy.

New York University professor Andrew Ross, for example, has proposed his own more extreme solution: just say no. He believes students should make a “Pledge of Refusal,” and stop paying their student loans altogether. In their anger and despair, many Americans would rather destroy their credit even further by refusing to pay their loans. They consider it an act of rebellion, but they are really just making a bad situation worse.

However, many people who have large amounts of student debt are in need instant, more drastic relief. This could come in the form of partial, or, preferably, total debt forgiveness. Such drastic relief would improve the credit ratings of affected borrowers, improving their chances of buying a home and taking out loans for other ventures, such as buying a car or setting up a small business. This relief would improve the overall spending power of these people.

However, opponents charge that such measures will and have already had profound consequences. These opponents, primarily Republicans, say the changes already put forward by Obama have resulted in poor customer service for borrowers and that thousands of workers from student loan lenders have already been laid off.

In addition to the lay offs and poor customer service is the staggering amount of debt. The total amount of student loan debt in the US varies from the Federal Reserve’s number of $429 billion to’s number of $829 billion. A refusal to pay any of this debt would force the government to pick up the tab.

“These are the times that try men’s souls,” wrote Thomas Paine nearly 235 years ago. These words have as much meaning now as they had when they were written. They were true during the Great Depression, during two world wars and every other point of American hardship. It has been decades since Americans have suffered as much as they are suffering now.

It was during the hard times of old that great leaders rose up to guide the nation and steer us to calmer waters — that is not the case anymore. While Obama and the Democrats recognize the need to give indebted college graduates a break, Republicans say we cannot afford to. With the national debt the way it is, and the downgrading of the national credit rating, the point has to be conceded to the Republicans. Perhaps, at least for a few months, the government can issue a freeze on student loan payments and interest while the president and Congress hammer out a compromise that can create jobs, provide relief and create a plan to help students and graduates pay their debts at the same time.

Then again, given the track record of the 112th Congress and our president, we may have to tighten our belts a little more and soldier on as best we can without their help.

Aaron Manuel is a broadcast journalism senior and may be reached at [email protected].


  • pt 1. I fully awknowledge that student loan debt can be crippling. Furthermore, it is true that student loan debt is the most dangerous form of debt in that it cannot be discharged in bankruptcy. But what many who propose a bailout of student loan debt forget, is exactly why student loan debt is non-dischargable. There was a time, no too long ago, where tons of anecodotal reports in the media of Medical residents declaring bankruptcy, discharging their student loans, and then going on to lucrative practice after residency. The prevailing outrage was that, while the debt was forgiven, the benefit of the education would last a lifetime. So student loans were made non-dischargable to correct this. (cont)

  • pt 2. So, to avoid a repeat past outrages, would those arguing for a student loan bailout be willing to give their degrees (and any professional accreditations/certifications) back in return for loan forgiveness? If you don't pay your car note, the car gets repo'd. If you don't pay your mortgage, your house gets foreclosed. So, shouldn't it be that if you don't pay (get forgiveness) your student loans, your university publicly rescinds your degree? I'm sure a lot more people would warm to the idea of student loan reform if this were put on the table for discussion.

  • Bauer, I see your point. However, not everyone is majoring in a potentially lucrative field. A degree in education or a masters in social work is not going to pull in the same amount of money that a medical degree would. While ethically questionable, shedding 6 figures worth of student debt after a residency would allow the person to open a practice and have more disposable income, which would help benefit the economy. We spend 900 billion a year on defense, so for two years defense gets 450 billion and the student loan debt is forgiven. Perhaps tuition costs would come down if not everyone could get a loan for school. Or we could make like Europe (or California before Reagan) and offer free higher education for state schools. Getting into those free colleges would have to be more difficult than it is now, but less difficult than getting into a military academy. Or a tuition cap to keep the schools from gouging the students.

    • "However, not everyone is majoring in a potentially lucrative field. A degree in education or a masters in social work is not going to pull in the same amount of money that a medical degree would. "

      GeoTex if someone is willingly going to take loans for a major that will not make that money back WHAT THE HELL is that person thinking? If you invest a $100 into something and get only $50 back then you eat the loss…your not forgiven for making a poor choice and given $50 to make up for it. I really like roman history but I'm not a history major because paying for a history degree is not going to get me far in life.

      Its not ethically questionable its plain out wrong and it does not overall benefit the economy. Whoever issued the loan loses that money which has a negative affect on the economy, cancelling out the benefit gained. Not to mention it will make loans harder to get and raise interest rates.

      Everyone should be responsible enough to carry out their own cost/benefit analysis of their actions…when you mess up you live with it and improve. When we start going down the path of babying people we end up the situation we are in now.

  • Let us not, in our excitement to get Uncle Sam in on the Bailout Bandwagon, forget that, he can, at will, call in student loans in the form of garnishments, etc., right up to and including your paycheck, and your SS check, etc. Also, there's a difference between a foreclosure and a forgiveness. They are not the same and ought not be compared. And bankruptcy, while I'm at it, does not discharge a debt — it restructures the payment plan, giving the debtor some breathing room, as it were, but does not absolve said debtor. But it looks shitty on your credit record, so folks tend to avoid it. (cont.)

  • Also, I wish folks would stop the Great Depression comparisons. There is none. The GD was a miserable experience, lasting years and created mass poverty on a scale the likes of which we have not seen since. It is true that FDR seemed a knight in shinning armor, and many of his bold plans helped millions, (WPA, etc., ) but it's critical to remember that many of the safeguards he put in place, FDIC, SS, etc, did not exist before him. Thus, when a bank failed, your life savings went ka-put! Just like that. Ergo, people did jump out windows, did ride the rails to find work in another town, and did endure hard-scrabble lives of the type we now witness among the homeless ( minus the resources they have). My own great-grandfather found himself on the streets of Washington D.C. hawking apples for a nickel to feed his wife and 3 young children. He was not alone. Previously, he's been a respectable farmer. In the end, the GD survivors gained a kind of grit and moral steadiness which the survivors of today's recession will never match, but who could benefit enormously from their endurance and hardship.

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