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Education

Her mom was helping pay off her student loans. When she passed away, the debt had doubled.

This is why we need student loan reform.

Photo by Towfiqu barbhuiya on Unsplash

person holding brown leather bifold wallet

College is expensive. Parents work multiple jobs, put pressure on their children to perform at the top of their class in order to earn merit scholarships, all in the hopes for college to be mostly paid in full. Inevitably many students and parents have to take out student loans in an effort to fill in the gaps left by financial aid.

In the case of one Twitter user, Michelle Miller, her mother agreed to pay back half of Michelle’s student loans to ease the burden on the new graduate. After graduation the daughter owed approximately $30,000 and, split between the two of them, it meant they would each need to pay back $15,000.

Michelle lamented on Twitter about how her mother insisted on paying back her agreed-upon portion of the student loans though the daughter offered to take over payments. When Michelle’s mother informed her that the original $15,000 turned into $40,000 after interest, Michelle decided to save money in preparation to take over payments. However, her mother refused to allow it. Miller’s mother was expected to pay $400 a month on the student loans, but this would cut into her retirement, leaving her below the poverty level. To her mother, it was worth it to hold up her end of the bargain. Unfortunately her mother became unexpectedly ill and passed away before she was able to retire or pay back the loans. When going through her mother’s paperwork after her death, Michelle was met with a shock.

The loan amount had doubled. Michelle’s mother hid that the interest rate on the loans had brought the grand total to $80k that she could never afford to pay back. But this story is not unique. Many borrowers go into debt thinking the benefit of the degree will outweigh the burden of student loan debt but the cost of an education continues to skyrocket and the interest rate on loans makes paying it back nearly impossible. When you go to school and take out loans, you expect to be able to afford monthly payments and hope to pay it back in a timely manner, eventually freeing up income, but that’s not always the case. A lot of people find themselves in a similar situation as Michelle’s mother. They take out a dollar amount that is repayable, only to look up and see they’ve repaid the original balance but they still owe more than they originally agreed to borrow.

man wearing white top using MacBookPhoto by Tim Gouw on Unsplash

If stories like Michelle’s are the norm, why aren’t we doing more to regulate student loan companies? Presidential candidates like to talk about student loan forgiveness, and some have come up with actionable plans, but it doesn’t solve the long term issue of student loan practices. The truth of the matter is that children who three months prior had to ask permission to use the bathroom are now expected to understand the long term implications of borrowing money from a company that doesn’t care that the average person can’t pay it back plus interest.

Seventeen- and 18-year olds with a dream of attending college and questionable loan practices is a perfect storm for continued crisis in the student loan arena. Until we can figure out how to better regulate the lending companies in charge of student loans, the next generation will repeat the cycle. People shouldn’t have to choose between pursuing their dreams and taking debt to the grave.

This article originally appeared on 5.4.22

From Your Site Articles

student debt

Policy

Free college is becoming a reality across America as 30th state is set to pass funding bill

Photo by Leon Wu on Unsplash

Graduation is easier to celebrate when you're debt-free.

Taking on college-related debt is something that most Americans now expect when graduating high school, especially if their parents are middle class or working poor. There are only so many scholarships to go around and so much you can earn from work study. In fact, the average millennial has just under $40,000 in student loan debt and Americans owe around $1.7 trillion in student loans. Taking on large amounts of debt fresh out of high school has become the norm, but that may be changing soon.

Some states are already offering two free years of college for graduating high school students, and now the 30th state is ready to sign on to do the same. Some states are taking it further than two years of free college and extending it to four years with the option to use the program for trade and technical schools as well. In New Mexico, the Opportunity Scholarship provides free college to its residents and expands that even further to include adult learners, returning students and immigrants regardless of immigration status. That last provision is unheard of, because, contrary to popular belief, undocumented immigrants are not typically able to participate in any sort of government funding or programs due to their lack of social security number and other documentation needed for participation.

The long-term effects of free college could be massive for the average American. It would open up the door for other opportunities that may have otherwise been hindered by holding so much college debt. Homeownership would be easier to come by for graduates due to an inherently lower debt-to-income ratio. It could also allow college graduates to save more money for retirement, a down payment on a house or to open their own business because they wouldn’t have to spend a large portion of their earnings on student loan payments. This could help bridge some of the wealth gap between higher earners and people that went into a lower paying profession such as teaching or social work.

Thirty states signing on to this type of initiative would bring us much closer to having universal college. And this would help give a fighting chance to those who may feel like they started life on the lowest rung. New Mexico’s Higher Education Department Secretary Stephanie Rodriguez told CNBC, “We want to be the national example of how you create a higher education ecosystem system that’s inclusive and accessible, so nobody is turned away from the opportunity to go to college.”

Maine would be state number 30 to allow for free college if the bill passes. Governor Janet Mills has proposed a plan that would make two years of community college free. When speaking to CNBC, Morley Winograd, president and CEO of the Campaign for Free College Tuition, said "If we get to 50, it's mission accomplished." Most are “last dollar” scholarships, which essentially means that any federal aid and private scholarships would be applied first, and the state-funded scholarships would cover the remaining balance.

If all 50 states signed bills similar to the ones in the other 29 states, it would make free college a reality and many families struggling with how to afford to send their children to college would rejoice.

From Your Site Articles

There's no doubt that millennials are one of the most talked about generations.

But millennials are also one of the most misunderstood. They are often mischaracterized as "lazy, entitled, and narcissistic." They are accused of killing a whole ton of industries ranging from diamonds to beer. The list goes on and on.

But one of the most bothersome misconceptions about millennials is about the alleged reasons they can't afford to buy homes.

For instance, on July 26, the "Today Show" featured a study asserting that millennials can't afford to buy homes because they're spending too much on bachelor parties. The study, sponsored by real estate site Zillow, reported that attending "nine destinations bachelorette parties in your life time" could rack up a hefty sum of approximately $13,788.

Photo via iStock.

"In other words, you could spend up to 35% of a down payment on a median-price home (in certain areas of the country) celebrating a friend’s nuptials," reported "Today."

But here's the thing: The study doesn't mention how many millennials are jetting off to destination bachelor parties. Not all millennials are attending or can even afford their friends' destination nuptials or pre-nuptial festivities. In fact, a lot of millennials are choosing to stay unmarried.

"Studies" like this come up with a lot of obscure rationales for why millennials can't afford homes, but they're not painting the full picture.

It's not just bachelor parties getting the blame for millennials' financial woes. Some reports and pundits claim millennials spend too much on avocado toasts and coffee rather than saving up for a down payment for a home.

But there's one thing all these studies seem to leave out: Most millennials can't afford to buy homes because of massive college debt.

In the United States, approximately 45 million people have student loan debt. Americans owe more than $1.2 trillion in student loans with the average debt amount being $30,000. Millennials make up most of these borrowers, with 63% claiming to have more than $10,000 in outstanding college debt.

— (@)

It's no secret that paying back student loans can take up huge chunk of a person's monthly income. In addition to high interest rates and potentially negative effects on credit scores associated with student loans, millennials are earning less and struggling to find jobs compared with previous generations. It's no surprise that saving for a down payment for a house is nearly impossible for many millennials.

The effects are probably more widespread than people think. According to the National Association of Realtors, 80% of millennials blame student loans for not being able to purchase a house. About 52% of millennials also can't qualify for a mortgage due to their debt-to-income ratio, Marketwatch reported.

But skipping college — and the debt it often comes with — doesn't seem to make purchasing a home any easier. Millennials without college degrees have a harder time finding employment than those who do, which in turn means it'll be more difficult for them to save for a down payment or qualify for a mortgage.

Photo via iStock.

But — not all hope is lost for aspiring millennial homebuyers.

It's not impossible for millennials carrying student loan debt to afford a house. There are some steps that can help:

Benefits packages for some employees might include student repayment assistance. Some companies are helping their employees by paying off a certain percentage or sum of their workers' college debt.
Public Service Loan Forgiveness, a federal program, sounds just like what it's called: The government will provide student loan forgiveness for direct loans if the borrower takes a career in certain government, public service, or nonprofit organizations, and has made 120 monthly payments.
To reduce debt-to-income ratio, look into lowering the monthly payments or refinancing student loans with a private lender. Borrowers who have already graduated and maintain a steady income might qualify to refinance that loan for a lower interest rate.

All generations can agree: The student loan crisis needs to be addressed.

The student debt burden has rapidly grown for years, and with the present system unchanged, there are no signs of that stopping. Making matters worse, the current administration has proposed cuts to programs that would help borrowers suffering from steep college debt. Secretary of Education Betsy DeVos has proposed to cut $13 million from a program that provides loan forgiveness for defrauded students.

— (@)

The best way to tackle the ever-growing student loan bubble is to address it head on. Stand behind candidates that propose student loan forgiveness, urge local representatives to propose free tuition programs, and call your congressional representatives to come up with legislation to regulate and reign in college debt.

We can no longer afford a generation to be ridden with debt. It's time to take action now.

From Your Site Articles

Why ITT Tech closing down is a good thing for all of us.

For almost 50 years, ITT Technical Institute has offered technical and vocational training in everything from nursing to engineering to criminal justice.

You probably first heard of ITT Technical Institute through one of their inspirational and increasingly self-aware commercials, like this one starring two brothers who said they were the first in their entire family to earn college degrees.

Image via The Associated Press/YouTube.

It's one of the largest for-profit schools in the country, meaning that unlike a regular college university, ITT is a privately owned, publicly traded company.

Well ... it was anyway.

Recently, ITT Tech announced that it would be closing its doors for good, ceasing all classes and operations across the country.

Not to mention officially crystalizing the utopia-like vision of Alice Cooper's "School's Out" into stark reality.

Hundreds and thousands of ITT's students and alumni will be affected by the closure, a fact the school was quick to point out. Not to mention the 8,000 staff members who lost their jobs.

Image via The Associated Press/YouTube.

It's hard not to feel for ITT's students, who have just had their education ripped out from under them. When you look at the questionable practices of for-profit colleges, though, it's clear that their students, and all of us, will probably be much better off without them in the long run.

ITT's closure is the result of a long-term crackdown on for-profit colleges led by President Barack Obama.

In August 2016, the U.S. Department of Education stopped letting ITT enroll students who rely of federal aid because the school failed to meet accreditation standards. ITT, which relies heavily on that federal aid to make its money, very quickly found itself unable to operate.

It's just another example of the closures and legal issues that for-profit institutions have begun to face. As Sen. Richard Blumenthal (D-Connecticut) said, ITT's announcement should put the entire for-profit college industry "on notice" because "predatory practices, the exploitation of taxpayers and the deception of students have no place in our higher education system."

What's ol' "Gloomy-Blumey" talking about?

Here's a quick look into the dark abyss of for-profit colleges:

Some have been known to encourage their recruiters to intimidate low-income students by exploiting their pain and fear, essentially making students feel like they have to enroll if they want a better future.

Image via The Associated Press/YouTube.

Because of those predatory recruiting practices, ITT Tech schools have alarmingly low graduation rates and alarmingly high student loan default rates.

Worst of all, though? When the government restricted the ability of for-profit colleges to profit from federal loans, veteran's benefits — such as the GI Bill — remained exempt. Some schools (including ITT) found that loophole and started targeting veterans for recruitment, in one case even going as far as sending recruiters to a Wounded Warrior camp in North Carolina to talk to veterans with brain injuries.

Much like prisons, when you add the words "for profit" to the education system, things get real gross.

Again, it's hard not to feel for the students, who are completely innocent of the wrongdoings their schools are committing. Most of ITT's students came from low-income families and communities — two factors that have been proven to be a barrier to higher education. Not to mention America as a whole needs more vocational and technical schools, not fewer — something that Obama has supported for the entirety of his presidency.

Photo by Sean Gallup/Getty Images.

All that said, the displaced ITT students are not without (better) options.

The U.S. Secretary of Education himself wrote an open letter to ITT students urging them to continue their education and stating that the Department of Education is committed to helping them do so.

U.S. Secretary of Education John King Jr. Photo by Olivier Douliery/Pool/Getty Images.

Plus, ITT was never really helping low-income students in the first place. A Senate committee investigation found for-profit colleges can be up to four times more expensive than community colleges while providing significantly less opportunity for success.

Down the line, the closure of ITT could put a big chip in America's positively gargantuan student debt problem.

Students at for-profit schools often take out loans at higher rates than anywhere else and are more likely to default, leaving them with crippling debt, which means for-profit schools like ITT aren't just fueling the student debt problem, they're profiting off it.

There's a long way to go, but when for-profit schools go down, student debt might go down with it. America gets better when fewer of our students are being taken advantage of by a corrupt system disguising itself as opportunity.

Are student loans the worst or The Worst Ever? Franchesca Ramsey and Benjamin O'Keefe break it down for us.

How do your feelings about your student loans stack up against your feelings about your college experience?

Franchesca Ramsey nails the conflicting feelings so many of us have right at the start of her latest "Decoded" video, "5 Reasons Student Loans are Bulls**t":

All GIFs from MTV News "Decoded"/YouTube.

Yeah, I am glad I learned so much at school (I discovered my love of sociology!), but the journey to earning a college degree came at a huge cost.

In this video with Benjamin O'Keefe of "The O'Keefe Brief," Franchesca and Benjamin break down how the student debt repayment struggle has become all too common.

Here are the five reasons student loans are bulls**t:

1. College in America used to be free.

Did you know that the public college system was created in 1862 so anyone could financially access higher education? Federal land-grant colleges provided education for free — or close to it — for almost 100 years. Since then, tuition has skyrocketed.

IDK about you, but this difference kinda makes me want to cry. I so wish I was born a few decades earlier. *glares at mom and dad.* All screenshots via MTV News "Decoded"/YouTube.

2. Your tuition is probably funding your administrators' luxury cars ... or yacht ... or both.

Time to take a look at what's behind the ever-increasing college price tags. (Just a hunch, but I think increasing administrator salaries while cutting student scholarship moneymight play a role here.)

3. Student loan debt is nearly impossible to shake — even if you declare bankruptcy.

There's this thing where you can claim that having to pay your loans back would cause "undue hardship" and get them cancelled. Except it's basically impossible to get approved. Just ask this woman living on $10,000 a year.

4. Lenders intentionally make student loans complicated so you struggle to pay them back.

They're like the iTunes Terms of Agreement — student loan repayment terms are long, complicated, and clearly not made for users to understand.

5. There are those pesky private universities that treat students like consumers, not scholars.

Schools are increasingly competing to get the best and the brightest. Except now they do it by making some major (and often unnecessary) facility upgrades. The result? Well, the money for that luxury dorm and lazy river has to come from somewhere ... (Hint: your wallet).

I mean, it's nice that the school has a pool and all, but ... chances are that perfecting my backstroke won't pay my bills.

Luckily, not all is lost. Student loans are a hot topic in politics today, and you can urge your government representatives to take action.

Want to hear all the bulls**t? Check out the full video below:

student loan debt

Her mom was helping pay off her student loans. When she passed away, the debt had doubled.

This is why we need student loan reform.

Free college is becoming a reality across America as 30th state is set to pass funding bill

There's a reason most millennials can't afford to buy a house. And it's not avocado toast.

There's no doubt that millennials are one of the most talked about generations.

"Studies" like this come up with a lot of obscure rationales for why millennials can't afford homes, but they're not painting the full picture.

But — not all hope is lost for aspiring millennial homebuyers.

All generations can agree: The student loan crisis needs to be addressed.

Why ITT Tech closing down is a good thing for all of us.

For almost 50 years, ITT Technical Institute has offered technical and vocational training in everything from nursing to engineering to criminal justice.

Recently, ITT Tech announced that it would be closing its doors for good, ceasing all classes and operations across the country.

ITT's closure is the result of a long-term crackdown on for-profit colleges led by President Barack Obama.

Here's a quick look into the dark abyss of for-profit colleges:

Much like prisons, when you add the words "for profit" to the education system, things get real gross.

All that said, the displaced ITT students are not without (better) options.

Down the line, the closure of ITT could put a big chip in America's positively gargantuan student debt problem.

Watch these two deliver real talk on why the student loan game is rigged.

Are student loans the worst or The Worst Ever? Franchesca Ramsey and Benjamin O'Keefe break it down for us.

How do your feelings about your student loans stack up against your feelings about your college experience?

Here are the five reasons student loans are bulls**t:

1. College in America used to be free.

2. Your tuition is probably funding your administrators' luxury cars ... or yacht ... or both.

3. Student loan debt is nearly impossible to shake — even if you declare bankruptcy.

4. Lenders intentionally make student loans complicated so you struggle to pay them back.

5. There are those pesky private universities that treat students like consumers, not scholars.

Luckily, not all is lost. Student loans are a hot topic in politics today, and you can urge your government representatives to take action.

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