Sojourners has published an article http://sojo.net/...
by Moi that explains education debt.
Let’s stop calling this system “student loans,” a phrase that evokes an image of college-age kids borrowing a little spending money while they work their way through school. It’s education debt. The present system is broken and is turning former students into indentured servants.
It is a national crisis, make no mistake. Education debt does not have the ordinary protections of other debts in consumer finance law or bankruptcy law, including protection against predatory lending practices and preventing creditors from forcing a debtor into homelessness. If a "student" loan goes into default, for any reason, the fees and interest rates increase exponentially. And the debtor has NO WAY to appeal
confiscation of income tax refunds or even Social Security payments.
Not part of the published article is this: A third of education debtors are older than 40, and the government is garnishing the Social Security pensions of a growing number of retirees.
See the excellent graphic that goes with this story below the fold.
While President Obama's "Student Aid Bill of Rights" is a prudent and necessary step towards aiding college students, his announcement comes late for the seven million borrowers already indentured to their education debt. In "Forgive Us Our Debts [6]" (Sojourners, April 2015), Virginia Gilbert investigates the cause-and-effect battle of education debt and the way it is hindering a generation of college students. How big is the student debt burden? See [link below] for the poor report card reveal.
http://sojo.net/...
The economic costs of this rising debt enslavement have been tallied by the media: Education debt slaves aren't buying homes; they're not buying new cars, furniture or other big ticket items; they're passing up lower-paying jobs in non-profit organizations, schools or churches; they're taking jobs they're over-qualified for, displacing people with less education.
The social costs are being felt as well:
The federal Consumer Financial Protection Board held public hearings on the impact of education debt and published its findings in May 2013. … The report commented on the growing social costs of high indebtedness of educated people: “The United States faces a critical shortage of primary [health] care providers. ... High debt burdens can impact a medical student’s choice of practice area, leading some to abandon geriatrics and family medicine in favor of more lucrative specialties, exacerbating the primary care shortage.”
The report said this was a problem affecting not only the practice of physicians, but all medical staff, including nurses, medical technicians, aides and paramedics.
But economic and social costs to society are not the whole issue. This is an issue of conscience as well. Many, many passages in scripture -- Old and New Testaments -- urge readers and listeners to be kind to debtors, to forgive debts, to refrain from impoverishing people who owe you money, to share one's bountiful harvest with the hungry, to remember when you were down and out and God saved you.
In the gospel of Matthew, when Jesus's disciples ask him to teach them to pray, he gives them a few sentences we have come to call The Lord's Prayer, including the plea, "Forgive us our debts as we forgive our debtors." (Matt. 6:12)
Ethicist Obery M. Hendricks says the plight of debtors in the gospels “was not just an unfortunate unfolding of the natural scheme of things; it was unjust and against the law of God. ... In other words, the people’s poverty was not the result of laziness or incompetence; it was the result of the greed of others. To be poor while others are rich, and to have to pay to borrow what should be freely lent, if not freely given, is not the way of God’s kingdom.”
Education debt has degenerated from a program to help people become better educated citizens into a cash cow for lenders, with the federal government becoming the biggest loan enforcer. This has got to change.
Here are my suggestions for change:
6 STEPS TO FIX ABUSE IN THE CREDIT PROCESS
1. Restore the right of debtors to have education loans reduced or discharged in bankruptcy.
2. Allow for refinancing and establishing extended payment plans (without interest accrual) for all education loans, including those from private lenders and those with irregular payment histories.
3. Cap the penalties and interest rates on education loans, and establish a cutoff point of total expense not to exceed double the amount of the original principal. It should be retroactive, especially for debts more than 15 years old.
4. Apply all consumer credit restrictions and requirements to lenders and collection agencies of education loans, including private loans.
5. Restrict education debt collectors’ access to federal payments such as Social Security, income tax refunds, and earned income credits, especially without due process.
6. Create more opportunities for debtors who are paying exorbitant penalties and interest rates under previous rules to reduce or discharge their debts and shorten their payment periods. —VG
(A special thanks to
Sojourners editors for lowering the pay wall and allowing me to quote extensively from the article. I wrote it, but they own it. Together we'll get the word out).