Recently I experienced a wave of frustration related to my student loan debt. This happens from time to time, and really anything can set it off. Debt is stressful, as most of us are aware. Before I dive in, though, I’ve got to say that I’m more fortunate than many; I’ve been able to steadily pay on my debt for a while now. It’s still sizable enough to haunt me, but at least it isn’t a Poltergeist-style terror. That’s not insignificant.
Nothing so far is unique. Thousands of former students are dealing with the exact same thing, though in varying levels of distress or ease. What makes it slightly different is what degree I went into debt for.
I received a Master of Theological Studies degree from Vanderbilt Divinity School. So we’re talking about 1) a graduate degree, as opposed to a bachelor’s, which is widely regarded as necessary in this country to participate in the job market; and 2) a professional degree, meant to lead to practical ministerial work for the social good.
The Department of Education will forgive the federal loans of thousands of students who attended Corinthian Colleges, Secretary of Education Arne Duncan announced Monday.
Corinthian, a large for-profit education company, last month filed for bankruptcy amid multiple charges of fraud.
Duncan explained the move as an attempt to counter "the ethics of payday lending," according to the New York Times.
But the announcement is proving divisive, with critics citing the potentially huge taxpayer burden — the cost to the government could amount to as much as $3.5 billion if every former Corinthian student applies for relief.
Supporters, on the other hand, are hailing the move as a compassionate stance for students in unexpected need.
The New York Times reports:
“A lot of men and women have been hurt by this unfortunate situation, including low-income and minority students,” said a joint statement from Representative John Kline, the Minnesota Republican who is head of the Education and Workforce Committee, and Representative Robert C. Scott, Democrat of Virginia, the ranking minority member.
“Helping those eligible students who have been harmed is the right thing to do,” the statement said.
Mr. Duncan also said the department planned to develop a process to allow any student — whether from Corinthian or elsewhere — to be forgiven their loans if they had been defrauded by their colleges.
Read more here.
In January, I received a phone message from a friend of ours. She needed to talk with me, she said. About something.
Not long after, I got an e-mail from Cordera (not her real name), our friend’s daughter:
“I am writing to you because my family and I have run into a problem. This summer President Obama passed the Deferred Action for Childhood Arrivals [of undocumented immigrants]. Over a long course of paperwork and appointments with the USCIS, I was able to receive a work authorized social security card and employment card. [But] without a student visa, I was not able to file for a loan. A few weeks after my first attempt, I found a bank that would be able to grant me a student loan with a US citizen or permanent resident as the co-signer. My father's uncle offered to help but . . . he was denied the credit.”
She wanted us to co-sign for a private loan in the amount of $35,000 to cover her first year of college. My heart sank. We couldn’t co-sign. Or we wouldn’t. I wanted to discourage her because of unfavorable and variable rates, immediate repayment, and long-term consequences of excessive indebtedness. I spoke with her university’s financial aid officer who intoned piously that the cost of the university experience was but one factor to consider: Cordera needed to hold onto her dreams, despite the crippling price tag of those dreams.
Yesterday, as Congress battled over the future of interest rates on student loans, I was invited to the East Room of the White House to hear President Obama call on Congress to keep college affordable. Upon arrival, I found that most of the invitees were college students 20 years old and younger—at 36, I felt pretty old.
It was like being at a rally at on a college campus. What made it interesting was that Obama was directly speaking to those most affected by this pending Congressional action – college students.
College students who need to borrow for school, on average graduate with more than $25,000 in debt.
On July 1, the federal interest rate for student loans is scheduled to double from 3.4 percent to 6.8 percent unless Congress intervenes. The new rate would affect federally subsidized Stafford loans, which are provided to almost 7.5 million low- and moderate-income students nationwide each year.