Continuing today on the attack on Federal and Constitutional rights of Equal Protection education and my new task as a regular lobbyist at the Maryland Assembly a what to use one example of legislation that shows the normal approach to Maryland Assembly passage of law. I testified to what I say in my blog all the time------how the old model of strong well-financed public education was the most successful model that deteriorated when policy was taken to privatization and corporatization of higher ed and now K-12. I call this privatization policy THE WRONG PATH TO EDUCATION POLICY.
Below you see yet another attack on equal opportunity and access all having a goal of killing liberal arts and humanities by linking every avenue of funding to STEM and corporate research. I shared the connection of university patenting and now the Maryland E-nnovation policies as blatant corporate structures under the guise of universities AND ALL OF THIS VIOLATES FEDERAL EDUCATION LAW. It is illegal and the Maryland Assembly and O'Malley and now Hogan know this. Hogan is as big a supporter of this than O'Malley as Bush neo-cons work as hard as Clinton neo-liberals on these corporate profits at all cost policy.
The legislative action I highlight today centers on interest-free loans to STEM students. First I wanted to show from where Maryland pols get this idea and then show how Maryland takes a good idea and makes it corporate and unconstitutional. Whenever I attend these corporate university meetings the people are all Wall Street bankers and investment firms, corporate board members, and Maryland corporate non-profits created by O'Malley with names that sound like they represent the public. One of these people from another state asked if what they were doing met legal guidelines to which another stated----MARYLAND HAS NO LAWS. What he meant was that Maryland does not enforce any laws and that was said right in front of the new MARYLAND ATTORNEY GENERAL FROSH'S representative on this board.
THIS IS SYSTEMIC AND WE CAN REVERSE THIS BY SIMPLY ENGAGING IN POLITICS ----RUNNING FOR OFFICE AND/OR BECOMING THE LOBBYIST FOR PUBLIC VOICE.
Below you see higher education policy aimed at low-income students needing loans from the State of Massachusetts since Obama is tying all Federal loans to career job training tracks for low-income this is one way to counter corporate policy. Now, Massachusetts is just as likely as any other Clinton neo-liberal state to pass progressive law and then ignore oversight and let it become corrupt so I don't say this policy is actually working----but at least it is written to meet the needs and legal requirements. Note that Massachusetts has identified that these zero-interest loans are to be for low-income only and it does not mention any particular career path like STEM. Look below this article to see the Maryland Assembly version that does not mention low-income and includes the STEM preface. All of this is unconstitutional and these Maryland pols know this. The Maryland version will end with these zero-interest loans going to selected students that could be any income level exclusive to STEM again, starving our universities for funding for liberal arts and humanities. THAT IS THE GOAL.
Task Force to Study a Program for Interest-Free Loans to STEM College Students in Maryland
Massachusetts No Interest Loan
Funds for the Massachusetts No Interest Loan (NIL) are provided by the repayments of prior borrowers.
Regulations stipulate that the NIL be awarded to students with exceptional financial need, and that the maximum annual loan not exceed $4,000.
A student who receives NIL must:
- Be a legal resident of Massachusetts
- Be enrolled full-time in an eligible program
- Have an eligible Estimated Family Contribution as established by the Commonwealth
Interest Rate Maximum Annual Loan Interest Charged While Enrolled Repayment of Principal 0% $4,000 none 6 months after no longer enrolled at least half-time NIL recipients must sign a No Interest Loan promissory note, available from BU Financial Assistance. They must also complete a loan entrance interview to review the loan terms and conditions of the NIL program.
Both the NIL promissory note and the entrance interview form must be completed and signed before loan funds can be credited to a student’s account.
Exit Counseling is also required of Massachusetts NIL borrowers and is completed online.
Further information on the Massachusetts No Interest Loan is available from Massachusetts Board of Education’s Office of Student Financial Assistance.
Keep in mind that SB 523 was last year's policy and was voted out of this education committee by all of its members. This meeting today was simply to take more public money for a task force to build the private structure in 'partnership' with private financial institutions and corporations.
THIS IS THE ADMINISTRATIVE STRUCTURE TIED TO OUR HIGHER EDUCATION THAT MAKES STUDENT TUITION SO HIGH BECAUSE IT TAKES FROM THE CLASSROOM FUNDING JUST AS IS HAPPENING NOW WITH K-12.
I testified that SB 523 is unconstitutional in that a policy cannot target STEM for zero interest to the exclusion of others. I also testified that this bill continues the failed policies of outsourcing and privatizing public education which is recognized as a failed policy course. There is some constitutional points to that statement but much is simply opinion. So, the supporters of this bill reference the Massachusetts model policy for this policy and then modify it so that it is purely CORPORATE. I sat at a table of corporate lobbyists from the Defense and Chemical Industries all wanting this corporate structure geared to their industries. I was the only person there lobbying for public interest.
GET OUT THERE FOLKS! JOIN OUR ORGANIZATION TO BECOME THE CITIZEN LOBBYIST!
Whether you are a Democrat or Republican voter you should be against this university as corporation and student and taxpayer as funder of corporate research with ever higher fees, taxes, and tuition.
IT IS A LOSE-LOSE FOR ALL MARYLAND CITIZENS AND DEFINITELY HAS NOTHING TO DO WITH THE DEMOCRATIC PARTY.
Wake up Montgomery County and Baltimore City voters-----your pols are voting for this corporate profit over people mess!
Republican, District 35, Harford County
BRIAN J. FELDMAN
Democrat, District 15, Montgomery County
Department of Legislative Services
Maryland General Assembly2014
FISCAL AND POLICY NOTE
RevisedSenate Bill 523(Senators Feldman and Glassman)
Education, Health, and Environmental Affairs
Task Force to Study a Program for Interest-Free Loans to STEM College Students in Maryland
This bill establishes the Task Force to Study a Program for Interest-Free Loans to Science, Technology, Engineering, and Math (STEM) College Students in Maryland. The Maryland Higher Education Commission (MHEC) must provide staff for the task force.A report with findings and recommendations is due by June 30, 2015. The bill takes effect July 1, 2014, and terminates June 30, 2016.
State Effect:Any expense reimbursements for task force members and staffing costs for MHECare assumed to be minimal and absorbable within existing resources.Local Effect:None.Small Business Effect:None.
The task force must study and make recommendations regarding:interest-free loans or other financing methods employed by other states for students attending college within those states, including those limited to students engaged in STEM curricula;SB 523/ Page 2the use of public-private partnerships to provide funding, in whole or in part, for students engaged in STEM curricula who are employed in the State following completion of a course of study;the performance of secondary schools or courses of study in preparing students for college or postsecondary education courses of study in STEM curricula;the potential benefits of creating additional technology jobs in the State related to employment that is connected with research or similar activities at Maryland military installations; andthe efficacy of a pilot project to provide State assistance to college students engaged in STEM curricula in a local jurisdiction adjacent to a military installation in the State that is engaged in research or similar activities.Current Law/ Background:A few states, colleges, universities, and charities across the United States offer interest-free student loans.
For example, the Massachusetts No Interest Loan(NIL) program was created to provide eligible, needy Massachusetts residents attending postsecondary educationinstitutions in Massachusetts with astate-funded zero-interest loan. Students have a period of 10years to repay their NIL loans.The minimum initial NIL award a student can receive is $1,000, with a maximum award amount of $4,000 per academic year. NIL award amounts are determined according to financial need. A NIL eligible student has a lifetime borrowing limit of $20,000.In Maryland, the nonprofit Central Scholarship Bureau offers a certain amount of interest-free student loans to certain individuals who live within 200 miles of Baltimore City.
STEM fields generally include physical and biological sciences, computer sciences, information systems, engineering (e.g.,civil, electrical, and mechanical), and mathematics.In 2012, public and private institutions of higher education awarded approximately 10,700 associate, bachelor, master, and doctorate degrees in STEM fields.Additional Information Prior Introductions:None.Cross File:None.
Maryland's high student loan debt centers on its allowing the very for-profit education job training corporations to flood the airwaves with commercials and pass laws making all of these online corporations legal and then supplying no oversight and accountability. So, the Maryland Assembly and Maryland Attorney General welcome this predation on Maryland citizens by these for-profit education corporations eating all of our Federal student loan financing. A politician wanting to help students would shout out against this predation----lead in recovering the fraud-----and fight for a state fund to alleviate that debt students have to give them a clean slate.
One of the facts this week at sessions of Taxation for example is that Maryland is seeing a decline in tax base because wages are falling and declining numbers of people in the workforce. No one is tracking which is happening and who they are as the Obama Federal government is dismantling all agencies tied to creating public data that looks at public welfare and socio-economic trends. We know people with large debt are not able to find jobs in Maryland and jobs found are too low in wage to support so many people are leaving the state.
THE MOTTO IN MARYLAND-----FLEECE THEM AND SEND THEM RUNNING! NO PUBLIC JUSTICE OR RULE OF LAW WILL PROTECT YOU IN MARYLAND!
This all happens because of policy our Maryland Assembly pols pass or refuse to pass and it is all centered on moving wealth to the top while loading citizens with the debt and taxation/revenue payment.
MARYLAND IS A CONSERVATIVE STATE BUT EVEN REPUBLICAN VOTERS KNOW HOW BAD THIS IS AND THE FACT THAT GLOBAL CORPORATIONS ARE TAKING OVER THE ECONOMY AND WEALTH INSTEAD OF THE SMALL BUSINESS PERSON ON THE TAKE SHOULD GET EVERYONE ENGAGED!
As this article states, Maryland was ground zero for the subprime mortgage fraud and the corporations committing these frauds so that fraud has yet to be recovered for citizens making even less likely Maryland citizens will be able to pay for higher education.
DON'T WORRY SAY CLINTON NEO-LIBERAL O'MALLEY AND BUSH NEO-CON HOGAN----WE ARE MARKETING FOR THE BEST OF THE BEST IN THE WORLD (aka---wealthy people being the best)----THAT ARE NOT CITIZENS FOR NEW FACES TO FLEECE WITH FRAUD AND ABUSE!
Maryland student loan debt highest in the nation
Apr 11, 2012, 10:48am EDT
Broadcast/Web Reporter- Washington Business Journal
Student loan debt nationally in the first quarter jumped 12.4 percent from the previous quarter, according to data from consumer credit management company CreditKarma.com, with the highest student loan debt levels in the nation in Maryland.
Its quarterly report says the average Maryland resident with outstanding student loan debt was carrying a balance of $33,704, compared to the national average of $29,523. Virginia also ranks high for student loan debt, with an average outstanding balance of $31,703, the sixth-highest in the nation.
Maryland and Virginia consumers also carry higher credit card debt than the national average, CreditKarma data shows. The average credit card debt per consumer in Virginia in the first quarter was $6,592, comported to $6,871 nationally. In Maryland, the average credit card debt was $6,509.
Both Maryland and Virginia rank in the top 10 for outstanding credit card balances.
Look at what is happening to the rest of students being denied access to Federal and state loans because of funding decline----pushed onto private student loans that now act as predatory lenders in hawking zero interest student loans only to be allowed to let those interests soar. Who gets the zero interest STEM loans described above? The limited resource will be selective you can be sure.
What is not addressed is the predatory structure of allowing private financial institutions be involved in this student loan process as this Maryland bill states private loaning corporations will be behind the lending of zero interest STEM.
Meanwhile, an entire generation of students pushed to sign up with private student loan lenders all Federally insured by the way just like subprime mortgage loans and Federally insured Fannie and Freddie-----are being crushed with debt. Think about the coming bond market crash to see what will be an entire generation trapped in this debt with no job prospects all while policies as happening in Maryland sets up a completely separate access for student loans that skirt all Federal equal education protection opportunity and access laws.
Look at this article----the charts do not post to see Maryland citizens with an average of $26,000 student debt with for-profit education being one of the highest conditions of debt.
Starting Today Interest On New Student Loans Rises By 20%
Submitted by Tyler Durden on 07/01/2014 17:35 -0400
While the new quarter has started with a bang for the capital markets and those 1% who actually benefit from one after another record high courtesy of the Fed's "fairy dust", July 1 is an important date for another group of Americans: students. However, instead of more wealth, America's aspiring intelligentsia has something far less pleasant to look forward to, namely more debt, because today is when higher interest rates for education loans kick in. Starting July 1 all new loans for the 2013/2014 student year will increase from 3.86% to 4.66%, a 20% increase.
As a reminder, while the rate on student loans was lowered to 3.4% during the financial crisis, last summer this reduction expired which would have caused the rates to double to 6.8% had it not been for a last minute deal linking loan rates to US Treasurys, which luckily for students, are at historic lows for now.
Yet while the 80 bps increase per annum may seem like a lot when starting from a sub-4% base, according to Bloomberg calculations "the average monthly payment would go up about $10 a month—an amount that won’t make or break many borrowers. Over 10 years, the increase could add about $1,350 in interest expenses."
This math is based on the assumption that the average graduate with debt, which would be 7 out of every 10, had on average some $29,400 in loans. Of course, since the rate hike affects future debt incurrence, that calculation is wrong. As for the trend, it is not a US student's friend:
The national share of seniors graduating with loans rose in recent years, from 68 percent in 2008 to 71 percent in 2012, while their debt at graduation increased by an average of six percent per year. Even though the financial crisis caused a substantial decline in private education lending while these borrowers were in school, about one-fifth (20%) of their debt is comprised of private loans, which are typically more costly and provide fewer consumer protections and repayment options than safer federal loans.
In other words, a far greater issue for students is not the interest on the debt, but the debt itself, which in a time of ZIRP has become equivalent to money (it isn't) and students have had little reluctance to borrow every possible loan they could find resulting in a student loan bubble of epic, $1.1+ trillion proportions. Will today's rate hike - modest as it may be - be the pin that pops it?
As for the rate hike, Bloomberg has some soothing words:
In recent years, the increased income graduates earn has generally kept up with rising student loan payments. Borrowers whose monthly loan expenses are out of whack with what they earn also have additional back-up repayment options. Whether the overall affordability will hold up depends on a number things, including how much and how quickly rates rise. Congress’s cap on undergrad student loans stands at 8.25 percent. Given the average debt in the example above, rates at that level would add about $65 a month in payments—almost $14,000 over a loan’s duration.
Of course, this too is based on a flawed assumption: that college graduates can find work. Unfortunately, as the following chart showing the labor participation rate of Americans aged 20-24, or those graduating from college, the labor force is increasingly more devoid of recent college grads. The result: an overabundance of those who "earn" zero income. It is here that even the smallest increase in rates will be felt most as there is no income to offset any interest payments with, let alone increasing interest.
I have shared this before but it is directly tied with the cross-over between public education and corporatization as U of M College Park becoming more the corporation by the minute is allowed to give selective scholarship to KIPP----a national charter chain that is corporate by any definition coming from the raging corporate Texas. Private donors here in Baltimore give to KIPP as if buying stock.
KIPP is the structure in Baltimore that will lead to Wall Street national charter chain schools when they end the ridiculous charade of charters being public. This tie to U of M seeks to make the KIPP schools more popular for parents needing scholarships for their children so U of M is promoting what will be this Wall Street charter chain.
THIS IS NOT CONSTITUTIONAL FOLKS AND IT INVOLVES THE OVERSIGHT OF THE OFFICE OF GOVERNOR AND APPOINTED DEAN APPROVED BY THE MARYLAND ASSEMBLY.
If I or someone would have been there to shout----THIS IS NOT CONSTITUTIONAL when this policy was approved----it would not have been approved. So, education advocates that say they are fighting for strong public education would have been there to protect Federal public education laws against infringements like this!
UMD Forms Partnership with KIPP Charter Schools Network
August 15, 2013
COLLEGE PARK, Md. – The University of Maryland and KIPP (Knowledge Is Power Program) announced today the creation of a formal partnership to attract and recruit KIPP students, including those in the Baltimore and Washington, D.C. regions. Through this partnership, KIPP students will have access to existing programs and resources created for low-income or first-generation college students, as well as scholarships created through a gift from Charles Daggs, UMD class of 1969 and a KIPP Bay Area board member. This partnership will also help to support KIPP's mission to increase college competition rates for underserved KIPP students throughout the country.
"We all win by creating new opportunities and upward mobility," says University of Maryland President Wallace D. Loh. "This new partnership extends our success with talented, low-income students, and our progress closing the achievement gap. It creates a much richer learning environment for all students. Congratulations to KIPP and our alums, whose vision makes this possible."
This fall, four KIPP students – three from Baltimore City and one from Washington, D.C. – will enter UMD's freshmen class. Three of these students have been awarded full scholarships through the Daggs gift and the UMD Incentive Awards Program.
"This partnership will support our hardworking KIPP students as they work toward a degree from one of the best public universities in the country," says Richard Barth, CEO at KIPP. "We are so grateful for Chuck Daggs's generous gift, which is helping to support this partnership and providing much-needed resources to some of our top graduates who have excelled in their schools and communities, to help them attain an excellent college education."
Established in 2002, KIPP Baltimore consists of two schools – one elementary school and one middle school. In Washington, D.C., KIPP operates nine schools – one high school, three middle schools, and eight elementary schools. All schools are free, open-enrollment charter schools that offer a rigorous, college preparatory education.
KIPP Baltimore and Washington, D.C. are part of a national network of 141 KIPP public charter schools. A report released this year by independent research firm Mathematica showed that KIPP middle schools nationwide are producing positive, significant and substantial achievement gains for students in all grades and four subjects—math, reading, science, and social studies. Mathematica researchers found that KIPP achieved these academic gains with students that entered middle school with lower achievement scores than their peers in neighboring district schools.
KIPP – the Knowledge Is Power Program – is a national network of open-enrollment, college-preparatory public charter schools with a track record of preparing students in underserved communities for success in college and in life. KIPP was founded in Houston in 1994 and has grown to 141 schools serving more than 50,000 students in 20 states and Washington, D.C. More than 95 percent of students enrolled in KIPP schools are African American or Latino, and 86 percent qualify for the federal free and reduced-price meals program.
This is what the Maryland Assembly allows to happen even as we know this partnership is bad for public education for both the higher education U of M and the K-12 public schools. That is where the lead against this corporatization would come.
BRING ON A TEXAS PRIVATE CHARTER CHAIN SAY MARYLAND ASSEMBLY AND BALTIMORE POLS!
March 31, 2011
High attrition, public funding fuel KIPP results, study finds High levels of attrition, selectivity and government funding have positioned Knowledge is Power Program (KIPP) schools as academic leaders, according to a national report published Thursday, which found that the charter network’s lauded outcomes in recent years have been a result of serving a distinct population of students while receiving high amounts of public funding.
The report was published by Western Michigan University, and jointly released by Columbia University, in addition to the National Center for the Study of Privatization in Education. The study looked at “What Makes KIPP Work: A study of student characteristics, attrition and school finance,” basing its conclusions on publically available federal and local data.
KIPP runs two schools in Baltimore. The Knowledge Is Power Program opened the Ujima Village Academy, a middle school, in 2002. In 2009, KIPP opened an elementary school, KIPP Harmony Academy. Both are located in Northwest Baltimore, serving very low-income populations, and are among the best schools in the city.
But nationally, the report found, on average about 15 percent of students drop from KIPP cohorts every year, compared to 3 percent in public schools. Moreover, between grades 6 and 8, about 30 percent of KIPP students drop off of the rolls. The attrition rates in the report, which did not compare KIPP's attrition to similar schools in the district, or in neighboring districts, showed a "tremendous drop off" said the report's lead researcher, Gary Miron.
A very high number of students who disappear from the cohorts are African-American males, the report found. However, KIPP does serve primarily African-American students.
The report also concluded that KIPP's high outcomes, when compared to public schools, could be a result of serving significantly less special education students, and English language learners—two populations that are more prone to be less competitve academically and more expensive.
Steve Mancini, spokesman for KIPP, said Wednesday that while the organization welcomes being the subject of objective and rigorous assessments, the organization “rejected the core conclusions that the report is making” about the network’s success being tied to weeding out students--particularly because it did not compare attrition rates to comparable data of other schools.
Mancini said that KIPP received the report around noon Wednesday, about three days after national media--including the Baltimore Sun-- had received it, and didn’t have time to comb through it. But deep spot-analysis of some sections of the report showed “factual misrepresentations,” he said.
The report, which has countered recent studies on the highly lauded charter network, cautioned that KIPP’s program won’t be a viable model for the country to improve public education. Miron, who called KIPP the "darlings of the feds" said the study's results should raise questions because, according to report, the charters receive more in per-pupil revenue from federal sources ($1,799) than any other group.
Researchers also found by using a federal dataset on school finance, that for the year 2007-2008, KIPP received more per-pupil public revenue ($12,731) than any other comparison group. "Charter schools don't generally receive more than public schools, but KIPP does," Miron said. "It's remarkable."
But KIPP vehemently challenged the report’s conclusion that it generated about $5,760 per-pupil in private funding, another finding that researchers called surprising, but that Mancini called “sloppy research.” The number was based on reviews of the organization’s nonprofit filings from the IRS, but Mancini pointed out that the report based its conclusion on a subset of 28 schools, as opposed to the 56 that were operating during 2007-2008, the years of study.
“That number is just too high,” Mancini said. If researchers had factored in all of the schools operating, the per-pupil expenditure would have dropped by about $2,000, Mancini said.
More importantly, " the report fails to acknowledge that KIPP and others turn to private funding to compensate for the inequities in public funding on several fronts – capital expenses, start-up costs and general operating costs," Mancini said.
KIPP Baltimore schools were recently the source of a controversial debate in the district after it went head-to-head with the Baltimore Teachers Union for a long-term agreement on how it would pay its teachers for its mandatory extended school days. The organization, which has served students in low-income Northwest Baltimore, said it wanted to plant its roots in the city and buy a building.
The organization said it would have to close its doors on June 30 if they had not reached a sustainable agreement.
The debate divided the city education community, as many thought it to be an embarassment if the high-performing KIPP charters--there are 99 across the country--couldn't function in Baltimore. After nearing a battle in the Maryland General Assembly, KIPP was able to come to a 10-year-agreement with the union.
It should be noted that Gary Miron has done research for the American Federation of Teachers, the parent-company of the BTU.
Elizabeth Warren is toted as progressive for these kinds of policy stances. This is not a bad stance but we have yet to prosecute, recover and write off a trillion dollars in for-profit education fraud that makes up much of the student debt for which Warren speaks. It is low-hanging fruit with plenty of evidence and yet all of these students are being soaked with this debt and fees......Warren does not make this her primary stance.
Zero interest rates for students is the new subprime for private lenders all tied with the idea of raising rates and fees. These need to be closed down as more and more people unable to access the smaller funded Federal and state loans are lured to these predatory loans with no oversight and accountability and states offering no legal help as students are fleeced.
Now, Congress will never work for these students as we have Clinton neo-liberals in control that love those tens of billions coming from the people to fund corporate subsidy----but our state assemblies should be moving away from this private funding source and would if we elected pols that were not global corporate wealth and power neo-liberals and neo-cons.
Notice as well that the Warren created Consumer Financial Protection Bureau makes suggestions to Wall Street that no one believes they will listen to while failing to bring all of that student loan fraud to court. This board has tied itself to the same US Justice policies that have capped awards and settlements with no guilt having no teeth.
Proposal to Cut Student Loan Interest Rate to Near-Zero Percent
May 10, 2013 By Al Krulick
Today, more and more attention is being paid to the $1.1 trillion in outstanding student loans owed by more than 38 million American borrowers.
That’s because student loan debt now exceeds credit card debt for the first time. Also, there’s mounting evidence that student loans are beginning to crowd out other types of borrowing and spending, and most importantly, eating into the housing and auto markets – two key traditional drivers of economic growth.
The federal government is attempting to meet this looming crisis on two fronts: Modify private student loans, much like mortgage modifications; and slash the interest rate on federal student loans to near-zero percent.
Cut Student Loan Interest Rate to Near-Zero Percent Senator Elizabeth Warren (D-Mass.) this week introduced the Bank on Students Loan Fairness Act, her first piece of stand-alone legislation.
The aptly titled bill would require the student loan interest rate on all new subsidized Federal Direct Stafford Loans, which the government pays the interest while the student is still enrolled in school, set at 0.75 percent — the same rate the Federal Reserve offers to the nation’s biggest banks.
In offering her bill, Warren pointed out that the federal government generates a profit of more than 36 cents for every dollar lent to student borrowers. The Treasury is expected to earn $33.5 billion off student loans made during the 2013 fiscal year, according to the Department of Education’s budget.
“We shouldn’t be profiting from our students who are drowning in debt, while we’re giving a great deal to the big banks,” Warren said on the Senate floor. The average student loan debt is currently $26,800.
While it’s highly unlikely that Congress will agree to Warren’s low-ball gambit, the senator has laid down the gauntlet, challenging her colleagues to confront the looming July 1st deadline when subsidized Stafford Loan rates are set to double from 3.4 percent to 6.8 percent.
If Congress refuses to act, incoming college freshman could end up paying $5,000 more for the same student loans previously taken out by their upperclassmen, but at the much lower rate.
Refinance Private Student Loans The Student Loan Affordability report, released this week by the Consumer Financial Protection Bureau (CFPB), contains proposals that seek to modify private student loans.
The report outlines several options it wishes private lenders to explore and potentially endorse, including: Interest rate reductions, term extensions, principal forbearance, principal reductions and possibly rolling over all private student loans into the federal student loan portfolio.
While private student loans account for only 15 percent of all student loans, they comprise 80 percent of all high-debt loans, which are those above $40,000.
But unlike federal student loans issued by the government and regulated by the Department of Education, private lender loans don’t allow for repayment options and usually carry higher interest rates.
These proposed modifications would help both consumers and lenders forestall default, much like restructuring federal student loans when the borrower is having trouble repaying them.
If Congress chooses to turn its back on a generation of student borrowers, while maintaining the same financial institutions that helped crash the economy, it would send an unmistakable signal regarding where its priorities lie.
A few weeks ago, Congress responded within days to the complaints of airline passengers who endured travel delays after the sequester had reduced the number of federally paid air traffic controllers. A hastily passed bill allowed the Federal Aviation Authority to free up funds designated for airport construction in order to keep the number of controllers high enough to prevent future airport snafus.
Congress now has less than two months to respond to a much greater threat to the economy, not to mention the futures of millions of young Americans. When other interest rates remain low, there seems little justification to maintain relatively high rates for those least likely to afford them.
Will Congress act, or will it look at the calendar, see that school is out, and just go home for the summer?