More Thoughts About Student Debt: The Horror Stories
After the recently passed House bill that extends the reduced interest rate on Stafford loans for a year—and pays for it by taking money from Obama’s healthcare program—student-loan debt is likely to be in the limelight, I think, for the duration of the presidential campaign. So I want to touch on this topic from as many angles as possible. First, the tragic. My friend Martin Kich, a professor at Wright State University in Ohio, forwarded me a letter from the family of Ryan Bryski, whose brother, Christopher, died after an accident in 2006. The letter details a policy of unimaginable cruelty. While major student lenders such as Sallie Mae, Wells Fargo, and Citibank, routinely forgive the loans of deceased students, Christopher Bryski’s lender, KeyBank was still trying to collect $50,000 of his student debt. His father had been forced to come out of retirement to make the monthly payments. The letter simply asks Professor Kich to sign a petition requesting KeyBank to forgive Bryski’s debt, but the whole scenario is utterly inhumane. KeyBank eventually decided to forgive the loan after the online petition received more than 78,000 signatures.
That is, as far as I know, a one of a kind incident, but a broader and nearly as troubling trend has recently been documented by the Washington Post. An article published on April 1 by Ylan Q. Mui, discloses some remarkable information. We all know the magic number when it comes to student-loan debt: $1-trillion nationwide. But Mui notes that “new research from the Federal Reserve Bank of New York shows that Americans 60 and older still owe about $36-billion in student loans, providing a rare window into the dynamics of student debt. More than 10 percent of those loans are delinquent. As a result, consumer advocates say, it is not uncommon for Social Security checks to be garnished or for debt collectors to harass borrowers in their 80s over student loans that are decades old.”
Both of these reports are obviously appalling, as are other trends. I’ll review the information on the percentage of loans that are, in effect, in default, in forbearance, or delinquent—though finding accurate data on that subject is maddeningly difficult. And there’s also a commonly practiced unofficial means of getting forbearance: students not in college have a six-month grace period before their loans come due. Many simply re-enroll, regardless of whether they want to pursue a degree, because being enrolled puts off the date at which they must begin to repay their loans. This data, needless to say, is impossible to find, but it hardly furthers the genuine purpose of higher education. If a student is in college only to stay one step ahead of debt collection and garnishment, how does that advance America’s position in the global education competition that both candidates talk about?