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We Won a Robust Public Option . . . on College Loans
We won!
When President Obama signs the healthcare reconciliation bill on Tuesday, we can crow about a robust public option - en route perhaps to a more inclusive, cost-effective single-payer system. Soon, private profiteers (and subsidies to them) will be sidelined, and the government will save taxpayers billions by providing service directly to Americans in need.
I'm not hallucinating. We should savor this victory.
Unfortunately, it's not a healthcare victory.
Attached to the healthcare reconciliation bill is an unrelated college loan measure that goes in the opposite direction of healthcare reform. The loan measure sidelines private profiteers - the banks - and saves taxpayers money by making the government something of a "single-payer" which will soon be directly issuing most college loans in our country.
Direct lending by the government will cut out the middleman and save taxpayers, according to the Congressional Budget Office, $61 billion over 10 years - with $40 billion in savings being redirected to higher education in the form of more Pell grants, more aid to minority-serving colleges and more aid to lower-income graduates for paying off their student debt.
What a concept!
Instead of moving to subsidize a bulky private industry and its waste, profits and exorbitant executive pay (as the new health bill does by mandating that millions become new customers of corporate insurers), the college loan reform reduces bureaucracy, profit and streamlines the system.
Yes, the right wing in Congress yelled "government takeover."
And, yes, corporate lobbyists put up a fierce fight to stop this common-sense approach that ends years of wasteful subsidies to private banks.
But Democrats in Congress stood up to them - passing a measure in the public interest that can easily be explained and justified to the public.
It's a far cry from the backroom deal-making Obama and top Democrats engaged in with lobbyists as healthcare reform got watered down, as even a weak public option got jettisoned and as private insurers and big pharma deepened their control over the system.
I want to be happy at a time like this. I keep hearing everyone from liberals to mainstream media to right-wingers hailing this healthcare bill as a world-historical event. Sort of like the first man walking on the Moon.
To the skeptic in me, it's more like "one small step for humankind, one giant leap for private insurance firms."
But, today, it's great to be able to crow about some good news - college loans - where Congress put the needs of the public and students and families above the needs of private interests.
38 Comments so far
Show AllI used to think that capitalism was a good way for providing goods and services. But lately I am really starting to wonder about that idea. It seems to work OK at the smaller scale, but once you move to very large corporations, they appear to be more wasteful and inefficient, than government ever thought of being.
Fair voter initiatives and referendums can keep large corporate economies of scale, but end excessive wealth and power concentration.
Chomsky, Nader, Zinn and other progressive icons who endorse Senator Gravel's National Initiative for Democracy think its a good idea. The Swiss, who have had these for over 150 years know they work very well. And recently, fair voter initiatives and referendums in Oregon raised taxes on the rich, lowering them for everyone else.
"In that case, the corporate interests which now control both parties would quickly perceive the holding of such "initiatives and referendums" as a threat. They would therefore make sure that such "initiatives and referendums" were never held. They'd kill any legislation proposing that such initiatives be held (just as they killed single-payer, & even the feeble "public option")."
It's true that politicians don't want to give up their corporate money fix and bribe-driven re-election chances and will do anything they can to keep the people dependent and from making the decisions. The question is, do We the People who employ politicians need their okay to have voter initiatives and referendums? (They don't call them "voter initiatives" for nothing.) In fact, direct grassroots democracy is the way to bypass "2 parties owned by corporate interests".
Again, for more information, go to: http://www.ni4d.us/
Again, fair voter initiatives and referendums bypass politicians and parties. We don't need their okay to have them.
Sounds interesting but there's one problem. If it works like that, then wouldn't it have worked a long time ago? The right would have used it sooner as well. There has to be a catch because it sounds too good to be true.
In California, these initiatives are a real problem because they are not restricted to citizens. Instead, they are used by corporate and political organizations to fulfill their objectives. Reform requires banning paid signature gatherers, and limiting political advertising.
Savor good times. They seem rather rare.
Prof Cohen:
This is a victory, insofar as it increases grant money, and, to that extent, lessens the financial burden on students.
However, the core problem has not and will not be addressed:
Student debt is permanent.
Clinton signed a law that makes it impossible to discharge student loans in bankruptcy. As usual, the swine in the financial industry, the swine who run education as a business and the swine in Congress blamed the borrowers, that they were abusing the system and costing oh so much money to be pissed away.
Assuming that's true, pissing it away on education (and healthcare and decent food and housing) seems a damn sight better than gifting it to the robber barons who fucked it up--student loans being just a facet of the fuck-up--in the first place.
The so-called Brunner test says it all: Brunner was permanently disabled and receiving disability from the government.
That is, THE GOVERNMENT ITSELF ADMITS HE CAN NEVER WORK AGAIN.
Congress said student loans will be discharged only when there is undue hardship, and the Brunner court held being totally disabled and dependent on a disability check to pay for food, shelter, healthcare, transportation, utilities, and maybe a bit of fun and warmth in his life wasn't enough to meet that test.
So now the government garnishes 15% of Brunner's disability check.
Until he dies.
Which, if you think about it, will come a little sooner now, eh?
In this imploding economy, going into any kind of debt (unless you're a bankster) is really stupid.
Educators who have accepted students based on the ease of obtaining student loans are the reason tuition increases at several times the rate of inflation.
Educators, perhaps even yourself, have known about this for decades.
Student debt of any amount (Pell Grants rarely cover it) is indentured servitude, which used to be illegal, but has come roaring back in various guises.
So stop crowing. Colleges and universities have got a bit more cash guaranteed now, but hordes of students are tying a millstone to their necks and don't believe it.
"Student debt is permanent."
Great post. I'm in the same boat for having defaulted on loans from graduate school. I'll be in peonage for the rest of my days. And like any other sizeable loan amount, the longer you go without sufficient work to pay it off, the bigger the balance becomes and then you chase your tail. Forever.
Brunner is as close to evil as a court decision gets. You can show the hardship, but there's a second test to Brunner that is almost impossible to meet: you need to demonstrate that you'll never get a job sufficient to repay the loans. In short, you have to "prove" the future. There is almost no other legal hurdle in any other realm as high as that set by Brunner.
So if you're one of the millions of people who are working shit jobs with advanced education and experience, you almost need to switch jobs out every year or two to keep a step ahead of the IRS (I work nothing for more than a year and a half). Rumor has it that eventually they get tired of chasing you OR waiting for you to get the plum job required to pay back the debt and eventually write the loan off. I've been on the treadmill for nearly a decade now, and no news yet about whether or not I can regain my freedom.
Who'd have thought that following the old conventional advice about "bettering" yourself could have such devastating consequences?
Thanks again for posting this. In other times, this would qualify as a serious outrage. But with everything else going wildly wrong, the indenturement of a few million former students understandably takes a back seat on the outrage checklist.
I don't know how this has played out in your situation, but Brunner was on disability and the government itself says he'll never work a job again.
So while that prong of the test is basically impossible to prove, I don't think it mattered in the Brunner case itself.
I do know that here is a new federal program that allows you to repay based on your income...and if you fall below poverty level, you pay nothing. If any debt remains when you hit retirement, it is forgiven. This happens more quickly if you work in a public service job. Of course the catch is you can't be in default. Defaulted loans can be rehabilitated, but there are many folks who defaulted before this modicum of sanity was introduced.
Get this, people. Under the previous (40 or so years) of student lending, when a student defaulted, the government paid off the lender and the banks made back their original loan, plus essentially usurious interest and fees tacked on. IT IS IN THE LENDERS' INTEREST FOR THE STUDENTS TO DEFAULT. THEY THEN EARN MANY TIMES WHAT THEY WOULD EARN FROM SLOW PAYOFF, AND THEY EARN IT EARLY IN THE LIFE OF THE LOAN, NOT TEN OR TWENTY YEARS LATER.
Any economist can crank out a "present-value" calculation showing why 100 dollars today is worth several times 100 dollars over twenty years.
Students are naive when they go in, believing that this is a wise move, it will ultimately help them, and in many cases this is beyond dispute.
The rampant abuse and profiteering is likewise beyond dispute.
To quote Frank Zappa: If there is a Hell, its fires burn for Them, not Us. (sorry for yelling)
There is something wrong with this logic. If this is single payer, then students should be getting more in grants, not loans. I don't see any victory here. What about the costs of health care, rising unemployment among the young, more public schools closing resulting in less educated children that not even homeschooling or expensive private schools will solve, and the fact that more of them will be thrown into wars as a means of supposedly paying for the education? This "victory" sounds too good to be true but please correct me if I sound too pessimistic about this.
I don't see it either, unless someone can show me "in my own language."
I like Professor Cohen, but after all, he is a professor at a university that will be kept in business.
Not that I have anything universities, but not if it saddles me and mine with unpayable debt.
There is a Darker Side to these institutions.
"To the skeptic in me, it's more like "one small step for humankind, one giant leap for private insurance firms.""
Exactly.
Good one.
The quote that comes to my skeptic mind is the old Hollywood line:
"Show me the money honey."
What is the bill going to do for all the people already saddled with student loans, and for educations that didn't pay-off, employment-wise, for paying them back?
Speaking as a parent with student loans, and offspring wanting to go to college, but without a parent to bankroll them, I will be encouraging them to look very, very, very suspiciously at what they're now offering, in another attempt by Congress, to sweep the real problems in the American economy under the rug for X number of more years.
Yes, Barack and Michelle had student loans. But they went to Princeton and Harvard, and enjoyed well paid positions that enabled them to pay these loans back. (After not all of us can run successfully for Congress or make millions writing a book.)
And measley Pell Grants are virtually nothing against the sea of debt.
If Congress was really going to put something intelligent together, they would forgive all present student loans for people not earning a very comfortable salary that has them well on the road to closure; and put through a program that guarantees every American a right to a college education, if they can earn the grade, and they are willing to give back a certain number of years in public service to their country.
This service could be anything from military to Peace Corps, Vista, working in schools and parks, medical centers. So no hand-outs, but making college a real option for students, for a change. Not setting them out in life, in a bleak looking economy, and saddled with debt.
So otherwise, short of hearing the nuts and bolts of how this bill plays out, I don't see that the Democrats have done much of anything on this problem. Once again, it's the donkey and carrot show.
Like not getting single payer, we have another pile of legislative ka-ka.
Unless someone can show me otherwise. I wait with bated breath.
It shortens the time until debt forgiveness from 25years to 20 and reduces the level from 15% to 10%.
I'm not sure that the additional debt forgiveness made it through but originaly there was to be a much better deal for people that took public service jobs.
Thank you for your straightforwardness.
So some of us will be 70 instead of 75 ..
Not to mention that there aren't any public service jobs to begin with.
So it's kind of like expanding Medicaid, when there aren't any doctors for those presently in the program.
"So some of us will be 70 instead of 75 "
If you graduate at 50.
And by public service I mean Teachers, Social Workers and the like.
I'm graduating at 55.
We can bank on this. Ithaca College will not be hiring, nor will the public schools or the Department of Social Services or whatever else the student loan people are referencing as "the public sector," if one "stoops" to "take a job" there:
http://studentloanjustice.org/
(read some of the personal stories shared at this website)
http://www.nytimes.com/2008/08/24/business/24loans
or google, "That student loan so hard to shake" new york times
(this article has some stories of middle-aged borrowers)
http://www.nytimes.com/2009/04/18/your-money/student-loans/18student
or google, "in a grim job market student loans are a costly burden" new york times
There won't be too many openings in Congress either, and if anyone wants a job in the next Obama administration, they must turn in all their internet handles.
Yes, I'd like to know what it's going to do to help us, too. We keep telling older individuals to go back to school and learn a new trade. I went back to school in my 30s, assumed massive debt for a Bachelor's (single person, no children to support, very little income but didn't qualify for grants), then decided to go into teaching. So many people told me it was a solid profession, we'll always need teachers, etc. I got further into debt to get a Masters- then, of course, you have to pay high fees for the state's exams, and after passing them you get to pay another fee for background check and licensure. No jobs available for a couple of years, then I finally get one-- and schools are closing and districts everywhere are cutting positions. I'm about to lose mine.
I hope you're able to hang on to it NMLib. I think the teaching shortage is one of the biggest employment myths they've been pushing for the universities for a while. So, when Obama was talking about training another generation of teachers, I kind of shivered. I think it's a total racket, like the percentage of people they say are unemployed, and the real numbers. For some time now.
Thanks for your thoughts, but I know the job is gone. If we had a decent education budget and revered education the way they do in other countries, these cuts wouldn't have to be made, teachers wouldn't be laid off, and schools would not be closing. Classroom sizes will continue to get bigger.
As for unemployment numbers, I never believe them. When I was unemployed briefly a few years back, I never filed for unemployment and started wondering how many other people didn't, either. If you don't file, you're not in the system- and you're not counted.
I am thinking it would be easy for the government to assess a more accurate figure by using the census. A couple of key questions. I received ours by mail the other week with instructions to fill it out and send it back, that it was required by law.
Why don't they ask more relevant questions while they're at it?
Because they want to evade taking responsibility to really redress these issues.
This legislation on education is a move in the right direction, but we should be getting what Australia got back in 1972, free university education for all citizens. After Australian Labor won that general election and became the party of government it put this through with health care for all citizens, land rights for the indigenous people, an immediate pull out from Vietnam, equal pay for women-- not bad for those folks down under. The US Government at the time wasn't at all impressed at the time especially with the immediate pull out from Vietnam, with this happening as the US president was saying the USA just couldn't do that.
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This legislation on education is a move in the right direction, but we should be getting what Australia got back in 1972, free university education for all citizens. After Australian Labor won that general election and became the party of government it put this through with health care for all citizens, land rights for the indigenous people, an immediate pull out from Vietnam, equal pay for women-- not bad for those folks down under. The US Government at the time wasn't at all impressed at the time especially about the immediate pull out from Vietnam which the US president said the USA couldn't do.
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Free?
No such thing.
Paid for out of the general fund maybe, but that simply disguises the fact that it's paid for by taxes. That's not free.
It's not a bad thing. Things have to be paid for and an educated populace is a common good, so worth spending tax money on. So is Healthcare.
But it's not free.
The way they trashed HCR was by designating specific taxes to pay for it. Mandates are nothing more than a tax increase, which is necessary whether under this plan or under Single Payer, but they are levied in the most disagreeable way in order to make people hate the Bill. This is one of these bi-partisan moves, where they incorporated the Republican's poison pill, a bad mistake. Same is true for the "Cadilac Tax". It is designed to annoy. Had this simply been assigned to the General Fund and paid for by an accross the board rise, it would have been much fairer and much less punitive.
If we are ever to get to Single Payer we must face the fact that it will cost the US Government almost as much as We, the People are already spending OUTSIDE of government, in other words, what we now spend on private healthcare and out of pocket health costs, we will have to pay in additional taxes. Maybe a little less, I doubt it will be much less.
But it would mean that we don't spend our own, after-tax money on HealthCare and it would mean that everyone is covered. To my mind, that's worth a tax hike.
I'd love to see College education freely available to anyone that can benefit from it.
At the same time, I'd like to see a return of the kinds of jobs that college education doesn't cover, where experience and skill are developed on the job. Manufacturing, skilled labor jobs. What little job market there is today is highly stratified between low level service jobs and high-end whitecollar jobs. Most of the work in the middle has been offshored. There is no path to a decent middle-class life in fields that don't require a BA as an opening ante.
The problem we face is, that the American people want it all, but refuse to pay for any of it. And the American people are only now coming to terms with the fact that all seven of their credit cards are maxed out, and the payday loan sharks have them extended out seven weeks or so. Gee, guess it's time to sell some of the wifes jewelry and break open the kids piggy banks. At least we'll be able to put a couple of bucks in the 4X4 and buy a thirty pack for the basketball games this weekend. Maybe we can hock the kids X-Box?
"There is something wrong with this logic. If this is single payer, then students should be getting more in grants, not loans. I don't see any victory here."
I agree to an extent, Stanley. Like the health care bill, it's a just small win for the people. I think that we should have universal single-payer education in the U.S. as well as universal single-payer health care. The banks should all be nationalized, and all domestic as well as foreign debt should be forgiven. Jobs at a decent wage should be a right.
As with USP health care, people could still choose what colleges they go to. None of our existing universities would have to fold. The money's all there if we enacted proper taxation and ended wars and corporate bailouts.
I managed to pay off my student loans but found myself in other kinds of debt.
z1-The problem is that the gov't doesn't want to pay for it all. They do however seem to find money for wars and corporate welfare though. You only hear "we can't afford it" when the subject of social services comes up.
Oh goody, I am so happy, we won. The crooked politicians threw us a tiny scrap after guaranteeing the vampire insurance companies tens of billions in extra and free taxppayer money.
Now students can pay a reasonable amount of interest on their 100,000 loan to get a bachelor degree.
UC costs 10,500 per year for tuition alone; the average students takes at least 5 years to obtain a BA/BS that is over $50 thousand just for tuition, add in all other costs and whamo! And that is a "public" university.
Now for the super-duper wealthy (filthy rich), they can go to Stanford (or any other Ivy League or private university) where tuition is around $35 thousand per year.
Education Inc. is a privelege reserved for only for the wealthy, just like heatlh care.
And those "spoiled" European kids complain about 500 euros a year tuition.
College is a racket.
Half the jobs that require a degree make no contribution to the human condition.
If we paid people not to work, and thus not commute, there would be less pollution and they could spend more time on the internet learning to be good citizens.
-30-
Indeed. Score one for Big Academia. Another scam.
Hey, does anyone know what possibilities there are of refinancing existing student debt this way?
OleManRiver-College is a racket. You are right. It depends on what you major in though. I didn't finish because I couldn't afford it. I'd likely still be in the same boat I'm in now regardless.
I don't know about paying people not to work though. Stuff needs done.
moonpie-Yes, Big Academia. Still though, like the flawed, corrupt Health Reform Bill, it will help people somewhat. It's not a total wash for the people but isn't enough either.
Keep pushing.
A loan is not a high technology product. Loans go back to "The Merchant of Venice" and so does the repo man.
As a rule, fast-moving small private groups are well-equipped to handle the prototyping and development of new technologies, but the government should handle well-established technologies for the ultimate profit of the citizens. This rule doesn't leave any work whatsoever for the rapacious dinosaurs of the earth.