Teachers and Others Being Strangled by Federal Student Loans
By Thomas Hansen, Ph.D.
Educators at all levels are struggling right now to pay their federal student loans because of school staffing cutbacks, cancellations in college majors, the generally bad economy, higher prices for products and services, higher rent payments, and now the difficulties and greater expenses brought on by the COVID-19 virus.
Just how big is the student loan debt currently? Zack Friedman tells us in Forbes Magazine that “Student loan debt in 2020 is now about $1.56 trillion.” He also states these figures: “There are 45 million borrowers who collectively owe nearly $1.6 trillion in student loan debt in the U.S. Student loan debt is now the second highest consumer debt category - behind only mortgage debt… He goes on to say that “The average student loan debt for members of the Class of 2018 is $29,200” (https://www.forbes.com/sites/zackfriedman/2020/02/03/student-loan-debt-statistics/#4b0341ed281f).
Because the federal loans cannot be discharged easily in a bankruptcy (car loans, Sears card balances, and doctor bills) there is a huge problem facing teachers and others who want to keep paying on their students but are fighting hard to do so. In some cases, they simply can no longer pay. In other cases, the borrower can request deferment status or forbearance status—these being slightly different and each having their own rules (https://www.navient.com/in-repayment/forms).
The reality of the loans is that they must usually be paid, eventually. It is very difficult—and uncommon—for a borrower to convince a judge to grant discharge of the federal student loan. Even though it is possible, it seems to be extremely rare (https://www.forbes.com/sites/zackfriedman/2019/01/09/student-loans-bankruptcy-discharge/#305c22346d56).
In other words, if you owe money to the US Department of Education, you will almost certainly have to pay it back. If you don’t, they can take your salary and your tax refunds. Many jobs in education demand that you sign a statement saying you are not in default of paying on a student loan. If you work full-time, you must start paying. For example, if you work full-time for 60 days, you must pay two months’ worth of payments.
Some educators right now are working several different part-time gigs in addition to their substitute teaching assignments. Their small paychecks coming from several different employers still do not add up to enough money to take on loan payments. They know they have those loans hanging over their heads… but unless they get the perfect job from Heaven—or win the lottery—they do not know when they will ever start paying on the loan.
Jessica--not her real name—is a friend of mine who finished her Master in Education (Curriculum) degree two years ago. She made the mistake of working a couple years and then contacting lenders to pay on her loan. Big mistake… she owed all of the two years’ worth of payments immediately. “I thought I could save up some money, get on my feet, and then start paying on the loan,” she said. Luckily, she had been saving that money to pay for a variety of expenses and was able to send the full amount that was due for the student loan. However, the representative at the Department of Education was not happy when he contacted her. “The guy I talked to set up my payments was furious,” she said. “He gave me a lecture about paying my bills!”
Once you are working full-time, you must start paying. And in order for your payments to be deferred, you must be actively looking for a position, be signed up with a bona fide placement agency or college department offering such services, and then both apply – and receive -- official approval of deferment.
Some educators and other professionals with high student loans must ignore some job advertisements. Ron (one of my best friends, not his real name) says he cannot apply for a job like Assistant Professor anymore because it will not pay enough for him to pay both his loan payments and rent. He can only apply for jobs in Administration in high schools or colleges. These jobs are scarcer these days given the topsy-turvy economy we are trying to function in, and even harder to find with more and more K-12 and higher education students studying at home, online. There just is not as great a need for many directors and deans if most of the buildings are empty.
Scarcity of jobs or tightness of budgets notwithstanding, Secretary of Education Betsy DeVos wants students to pay their student loans back. DeVos is trying to change the rules regarding erasing and forgiving student loans. DeVos is not making it easier for borrowers to pay their loans, get them forgiven, or get them reduced.
DeVos is instead proposing changes that would make it almost impossible for students to get their loans forgiven. As a representative of President Trump and the political party supporting him, DeVos has shown herself to be very interested in collecting the loan payments and not interested in listening to many reasons students should be allowed off the hook. States do not agree, however, and 23 of them have sued her for pushing this agenda meant to make students pay their loans off—no matter the hardships this causes. (https://news.yahoo.com/23-ags-sue-devos-over-195642902.html).
DeVos almost seems also to be an advocate for the for-profit colleges—including failed ones. In proposing students must still pay for their education—even though the education does not produce a high number of employed graduates—DeVos is seemingly protecting the corrupt for-profit colleges… or at least acting as though they are viable sources of education. Some have been closed. Students with schlocky degrees from these schools went as far as suing the Department of Education for garnisheeing their wages and taking students’ federal income tax refunds away.
A federal judge told DeVos to stop doing this to students (https://www.marketwatch.com/story/judge-orders-betsy-devos-to-cancel-7200-scammed-borrowers-student-loans-2020-06-29). But DeVos went back to work, and all these infractions simply continued. Later, the judge called DeVos back and asked why this was still happening.
Apparently 10,000 more students had this happen to them, to the judge’s dismay. The judge asked DeVos for an explanation, but the Secretary smiled a lot (as always) and could not really offer any explanation as to why the judge’s decision had been ignored. DeVos was told to go back and fix whatever the problem was and get things turned around.
DeVos is being sued for other issues, currently, such as the threat that schools refusing to open (despite the pandemic) will lose their funding to other schools—namely private ones. Her argument is that parents want their students in school and learning something. Other people see some other possible motivation in her threat to take funds away and put them elsewhere (e.g., https://abcnews.go.com/US/naacp-sues-betsy-devos-covid-19-aid-rule/story?id=71883022).
Politics, as always, is a big topic weaved into the education rug in very complex ways. Depending on who wins the election this fall, there could be two very different realities. One, if Donald Trump wins the election, there might be more of DeVos and her plans to tighten the noose around the neck of borrowers, not following many rules, and doing pretty much whatever she wants—despite what the courts may tell her what to do.
If Joe Biden wins the election, there might be some major changes, with Bernie Sanders and others helping to guide the direction of student loan forgiveness and reduction. In some cases, the loans might be wiped clean, leaving borrowers free to work and to earn and to pay their other bills. Biden has already been trying to figure out what he should do about the student loan crisis
For the time being, educators are fighting very hard to pay their federal student loans for many reasons. Cutbacks, school closings, and high prices of goods and services threaten those of us who in our careers have made a sacrifice and become teachers, maybe gotten a graduate degree and taken out loans to get there—only to realize they cannot pay their bills anymore.
For many teachers, they too have become part of the growing split in status found in our great nation: one group is working full-time and paying their student loans. The second group is working part-time and not able to pay their student loans. We will see if November brings any solutions.
And the interest on the loan keeps piling up during deferments!
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