Romney's Republican Nomination Speech: Student Loans Will Be HOT Topic This Election Season

This evening, Romney accepted the Republican nomination for President in Tampa, Florida. One thing is certain from reviewing pieces of his speech: student loans are going to be a huge issue this election season. 

At one point Romney said, "Every new college graduate thought they'd have a good job by now, a place of their own, and that they could start paying back some of their loans and build a future." 

Of course, for millions of recent graduates, that is not happening and the indentured educated class is well aware of this fact. However, I have already raised concerns about the possibility of Romney winning, especially given those he has chosen to oversee higher education initiatives.

I'm reviewing Romney's speech carefully and will provide more detailed analysis tomorrow. In the meantime, it is safe to say that he has hit on a major issue - the student lending crisis - but I am not confident that, if elected, he wouldn't do much in the way of coming up with viable solutions to the problem. 

Photo Credit: J. Scott Applewhite

Presidential Election 2012: What If the Romney-Ryan Ticket Wins?

[Disclaimer: When it comes to writing essays based solely on conjecture, I despise the exercise. That said, I don't mind those who make predictions about the future. In fact, I quite enjoy reading such things, especially when written by clever, smart, thoughtful folks. Nevertheless, I recently told a history student - who wanted to write an essay of this nature - that I steer clear of  such essayistic-hypothesizing. Alas, I am going against my inclinations. But there is a reason in doing so. I am far more interested in hearing your remarks about the possibility of a Romney-Ryan win. So, please! Do share].

The election is over. The celebrating, the hangovers - for both the winners and the losers - have finally subsided. The Obama team is packing up, and newspapers are crammed with headlines, such as, "Romney Wins By Modest Margin of Votes," "Obama Now Out, Romney Now Up," "Democrats Lose After Just Four Years in White House, Making the White House Home: Romneys Already Renovating," etc. Already weary from the pre-election, and now the post-election, media-extravaganza of theorizing upon theorizing upon theorizing, most of the public find their eyes glazing over when reading these headlines.

In fact, the majority of Americans continue to worry about why they are still unemployed, struggling to cover the bills, or fretting - if they are one of the lucky ones to be employed - about their job security.

Photo Credit: Mary Altaffer/AP

Then there are those who are part of the indentured educated class, a class that continues to grow significantly after each graduating class joins the workforce. If these are the headlines, and Romney is heading to office, how are they feeling? What about prospective students who were advised months ago by Romney to "shop around" for colleges when it comes to taking on student loan debt?  Not only that, Romney has made it clear that he will reinstate something similar to now the defunct FFEL program again. (On a side note, even though Obama's efforts to cut out these middlemen and get rid of the program, student lenders are fairing better than they had while it existed. But that's another story). With Romney now in office, Bush-era appointees, like Bill Hansen, who was Deputy Secretary at the Department of Education, will assume power again. Hansen played a significant role in boosting the for-profit industry, a sector of higher education that has the highest default rates and higher number of college drop-outs. Guess who's picking up the cost for those defaults? Guess who's subsidizing this pernicious industry? The American taxpayer. As reporter Kay Steiger recently mentioned, the industry receives over $32 billion in federal student aid.  AEM has discussed the problematic - and outright unethical - practices ruthlessly carried out by the for-profits on many occasions. However, full credit for coverage of the 2-year study that the Senate Health, Education, Labor and Pensions (HELP) committee  published must be given to Steve Burd - at the New America Foundation - who has provided concise, in-depth analysis  on this recent report.


As Steiger notes, Chairman of HELP, Senator Tom Harkin (D-IA), released the report. Harkin is one of the few leaders on the Hill who has not only acknowledged that there is a student lending crisis (at least in my view), but is actively trying to come up with viable solutions to solve it.

Photo Credit: Bill Neibergall/The Register

So, if Romney and Ryan win, what does this mean for those of us with student loan debt? Furthermore, what does it mean for those who are currently in school, and for those who are planning to go to school? It is well-known that Ryan is no fan of Pell. While higher ed insiders apparently don't think there will be drastic changes to allocations for higher education, which incidentally, is paltry when compared to how much we spend on the Defense Industry and the Pentagon, it is quite possible that that Pell Grants would be axed, severely axed. Of course, in this case, we are talking about students in school or planning to attend school. It is hard to say if anything would be done to help the indentured educated class.

With all that said, what do you think? If Romney wins the election, do you think much will change when it comes to those of us drowning in student loan debt? Or perhaps you think it doesn't matter one way or the other. That is, you are so cynical that you think things will only worsen, regardless of who is in office.

More Thoughts About Recent Claims That Student Lending Crisis Does Not Exist

A few days ago, I wrote a piece in response to a discussion by higher education experts who are now claiming that, while student debt is growing, there is not a full blown crisis. Some of the panelists even went so far as to argue that stories about student loan debt are being "overblown" and "sensationalized." There are a number of reasons why this group of experts - who do not really engage with actual student loan debtors or activists who represent them - are making these misleading remarks.

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Take this mortgage scenario as an illustration of how they are pushing the "denial" message. Perhaps this group could come together to solve the mortgage crisis. They could all say that most mortgages aren't underwater and that all mortgage borrowers just need to be better informed about borrowing. That would mean the crisis would be solved! It's similar to the new Bureau's fact sheet and how the lenders, the very institutions who have created the problem and preyed on borrowers, are now offering financial literacy programs. There again, the problem is solved, because the lending institutions are providing information about the dangers of borrowing too much for college, even though most Americans don't have a choice and must borrow large sums of money to earn a college degree. Luckily, they have these financial literary programs that have been designed by the lenders themselves! That means, if the borrower and the borrower's family takes out too much money, well, it's their own fault. They should have known better. And if the borrower is paying their student loan debt in a timely fashion, then what's the problem? There isn't one, right? Well, according to these experts, that's right. This type of analysis completely overlooks the borrower's reality and all those complex everyday life facts, i.e., she might be living at home, working two or three low-wage jobs, uninsured, and thus living month-to-month. But as long as she's sending in her loan payments every month, there isn't a crisis. No problem here. So, dear American public, please carry on with your business.

To ensure that our voices are heard, please donate in order to help AEM's research on the student lending crisis. Thank you for your continued support. 

I also take issue with one of Sandra Baum's comment. Baum, incidentally, used to work for the College Board (hereafter, referred to as CB). CB used to be a private lender. Now, it describes itself as such: "an organization made up of colleges." Sounds vague and perhaps innocuous. However, CB was a private lender until 2007. I had a day-long debate with Baum and another one of her colleagues, when she was a consultant at CB many years ago. It was frustrating, too, because Baum did not disclose the fact that CB had been a previous lender. The content of debate, in my view, seemed disingenuous because she failed to tell me this fact. But I don't wish to digress. Here's my point about Baum's recent remark at this panel. The headlines do not divert us from the real issues, as she asserted. In fact, the headlines lead us to the real issues that borrowers are facing, and I think she knows that.

Furthermore, the KC Fed economics needs to read the NY Fed report on student loans, a report that is quite grim. He also has demonstrated his lack of knowledge of the subject by comparing historical cohort default rates. It's a known fact, or at least it should be, that these rates are manipulated by the schools and that better measures of default rates are available. For instance, the 2013 U.S. Budget, put out by OMB, estimates that Stafford loans issued in 2013 will have a life of the loan default rate of 23%.

Bottom line: with the increasing numbers of conferences and persistent claims that student loans are not a problem is proof that they are indeed a problem. If they weren't a problem, there would not be such a barrage of experts denying this truth.

Question: How Should We Solve The Student Debt Crisis?

Despite what some experts claim, most policy makers and politicians accept that we are facing a student debt crisis.

In the next few days, I will be discussing ways in which the problem could be solved. But for now, I would like to hear from you. How should we solve the student debt crisis?

Stay tuned for my analysis, and thanks for sharing!

-Cryn
Founder & Exec Dir
AllEducationMatters.org

Higher Education Panel Claims There Is No Student Lending Crisis

Outstanding student loan debt has now surpassed $1 trillion. Default rates are up at an alarming rate. Even the Department of Education admits they are concerned about the increase in borrowers defaulting on their loans. Studies, not just articles, are showing that more and more borrowers are struggling or unable to pay off their student loans. Despite all of this evidence, a group of experts - some of whom have ties to the lending industry - claim that the student lending crisis is being sensationalized. At a recent higher education conference, for instance, policy makers - once again -  dismissed the problem. 

The claim is enormously problematic, especially when there are numerous advocates and experts in various fields who, as just mentioned, have evidence - strong and conclusive evidence - that there is a full-blown crisis.

So, the question remains: when will these panels invite advocates who actually represent the voices of the borrowers? That would make for a more lively and honest discussion. For the time being, however, the same experts will downplay the issue. While they continue to do so, millions of more educated Americans will join the ranks of the indentured educated class. 

Mark Kantrowitz Argues That Six-Figure Debt Is Uncommon

Mark Kantrowitz claims that six-figure debt is a rarity, and says that journalists are sensationalizing the problem. While it might be true, based upon his findings, that there is not a huge percentage of people with that sort of student loan debt, the fact remains that we are in a full-blown crisis. Journalists and activists are not the only ones who acknowledge the crisis. Higher education policy analysts, politicians, and other experts recognize the problem. More importantly, those who are being crushed by their debt, and also realizing that their window of opportunity for financial security in the future is narrowing, know all too well that the crisis is worsening. Those stories matter.

Furthermore, there is no debate that the dramatic increase in default rates on student loans is worrisome.  This is an obvious sign that people are failing to pay back their loans, and that more Americans are falling off the grid. For what reason? Pursuing higher education.

So, while Kantrowitz's findings might be accurate, it does not change that fact that we are still in a deep, long student lending crisis. It also doesn't change that fact that our leaders aren't doing anything substantial to change that fact. When it comes to leaders, we could use some more Browns and Harkins on the Hill.

I also take issue with Kantrowitz's claim that the stories are all sensationalized. Interestingly, a few months ago, he was quoted in a NYT article, and his tone was quite different. I was glad to read his comments in that piece, because it was the first time I heard him express public sympathy for borrowers. Now, I could be mistaken, perhaps he's done it in the past, but his remarks were notable.

What do you think about his findings?