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 MSNBC.com, 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 FinAid.org’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]
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