I listened to Wolff's Economic Update today, all about how our economic system
fails a majority of people. Looking back through history, haven't the majority
of people always been poor, always been screwed by a greedy minority? But now,
there are more powerful ways for them to do it. And I recently read a suspense
novel called The Escape Room. Four people who are members of a team employed by
an investment firm, a company like Goldman Sacks or Morgan Stanley, are trapped
in an elevator. If you'd like to feel the satisfaction of revenge against some
really selfish bastards, read this book.
Miriam
-----Original Message-----
From: blind-democracy-bounce@xxxxxxxxxxxxx
<blind-democracy-bounce@xxxxxxxxxxxxx> On Behalf Of Carl Jarvis
Sent: Friday, February 26, 2021 2:25 PM
To: blind-democracy@xxxxxxxxxxxxx
Subject: [blind-democracy] Re: Student Loan Horror: When You Think You Qualify
For Debt Relief, Check Again. And Again
On 2/26/21, Miriam Vieni <miriamvieni@xxxxxxxxxxxxx> wrote:
Student Loan Horror: When You Think You Qualify For Debt Relief, CheckSubject headings like this one simply drive me nuts. Once I finish frothing at
Again. And Again A pair of married science teachers were sure they
qualified for student debt forgiveness. They discovered what many
borrowers learned in the 2010s: not qualifying for aid is the norm
Matt Taibbi
Feb 26
The romance of Robin and Kevin sounds like the stuff of old ballads.
She was quiet and an introvert, he was the extrovert with an elaborate
social life, and on the tree-covered campus of Columbia Community
College near Sonora, California, they fell in love, while barely young
enough to drive.
"Our first date was a walk with friends through the forest behind our
dorms," recalls Kevin. "Our album to sit and listen to was Van
Morrison's Moondance. Robin was my very own Brown Eyed Girl."
"He knew my weird sense of humor that nobody else would ever get,
especially from someone who's quiet," recalls Robin, who was seventeen
when they met.
"And I'd come up with something off the wall and think, 'Okay that
didn't fly.' But it would. And it was like, 'Oh, you understand me.'"
The couple met in 1990, and married four years later. They were not
rich people. Robin's father, a contractor who'd had ups and downs
financially, died when she was young. She was raised thereafter by a
single mother who'd had to go back to school herself, and was wary of
student debt thanks to her own experiences. "She was dead set against
it," Robin remembers.
They were at least debt-free in the early years, however, getting by
with minimum-wage or seasonal jobs. Kevin worked as a ski instructor
in the winter, and as a raft guide in the summer. They made a plan to
get bachelors' degrees together at Humboldt State University.
"We moved in together," Robin remembers. "And surprise, I got pregnant."
With a child on the way, they took out a series of federal loans, in
part on the advice of Robin's mother. "She said, 'If you're going to
take out loans, make sure that it's not a private loan, but a
subsidized federal loan,'"
Robin recalls. They did so and were soon on schedule to graduate and
start the next stage after what Robin laughingly describes as their
"hippies and Humboldt" years. They were happy, having merely switched
one California vista for another.
"We spent those early years on walks in the forests of Northern
California, in Columbia," says Kevin. "Then it was through the
redwoods of Redwood Park in the Arcata Community Forest with our newborn son,
Gage."
Life however has more twists and turns than straight lines, a fact
that the current student loan system - premised upon timely graduation
and immediate gainful employment - does not anticipate.
When the young couple was just a semester away from graduation at
Humboldt, Kevin's father, who ran a small auction house in Sacramento
- "antiques, estates, and other stuff," says Robin - fell ill with
cancer. They moved, so Kevin could help maintain the family business
while his father convalesced.
He learned how to auction, but the couple still had hopes of finishing
school.
They took classes at Sacramento State, finished credits for degrees
from Humboldt, and then discovered what a lot of young people in the
eighties and nineties were learning, that the implied bargain of
college - get a degree, get a good job - was less than a concrete
proposition. "It was a wake-up call," Robin says. She remembers an
early job selling muffins.
"The muffin route that I took over, was from a beautiful woman, who
was very charismatic, bubbly, and stunning," she recalls, laughing.
"She knew her route, and gave me the list, saying, 'Do these muffins.'
I shadowed her the first day, and she sold them all! 'Okay,' I
thought. 'I'll do the same thing.' I quickly found that part of the
customer attraction was seeing her.
I came back with half the muffins."
After borrowing a collective $31,000 to get Bachelor's degrees at
Humboldt, the couple realized they needed an additional qualification
to have real security. "I remember looking at a headline in a
newspaper that said, 'California teacher shortage,'" Robin remembers.
They ended up going to Cal-State Chico to get teaching certificates,
moving in with Robin's mother, who had a (very) small house.
"We actually put a tent up in her backyard," she recalls. "We realized
that we'd really hit bottom. I remember, in September of 2001, my
mother came outside one morning and said, 'A plane just crashed into the twin
towers.'
I
remember that clearly because I was sitting in a tent."
At Chico State, they learned about new programs, designed to help
alleviate student debt through public service. They went through some of the
options:
Americorps, a program called "Public Service Loan Forgiveness" for
taking public-sector jobs, and a program called "Teacher Loan
Forgiveness" that canceled up to $17,500 in debt for teachers who
taught special needs, math, or science in low-income school districts.
The catch was, you had to work five years at a low-income "Title 1"
school in order to qualify for the debt cancelation program. Kevin and
Robin were both science teachers. They seemed like natural fits. Then,
they made a mistake.
After graduation, they were offered jobs in, among other places,
Oakland, Los Angeles, and. Maui. All three schools were in low-income
districts.
Although Hawaii is Hawaii, its public school system has many of the
same problems as other states: the state just this past year qualified
for $56 million in federal Title 1 support. They researched the
locations and concluded, erroneously, that the Hawaii school they were
looking at was a Title 1 school. "And we thought, 'That'll work,'"
Robin recalls, and moved to the islands.
They worked for five years before finding out their error. When they
went to apply for Teacher Loan Forgiveness, they were told they were
at one of the only schools in the district that did not qualify for
Title 1, a designation that among other things pertains to schools
where "at least 75% of students qualify for free or reduced-price
meals."
Essentially, Robin and Kevin misunderstood the intricacies of Title 1
designation for the district. A school administrator explained that an
insufficient number of their high school's students took advantage of
the free lunch program.
So far, this sounds like a story that won't arouse much sympathy: a
couple chooses to live in Hawaii instead of Oakland, doesn't get firm
reassurance ahead of time that they qualify for a program, then works
ten collective years before hearing the punchline that their debts
won't be forgiven. The joke's on them, correct?
Not quite. The actual punchline was that even if Kevin and Robin had
chosen correctly, and gone to a bona fide Title 1 school, they likely
still wouldn't have received the benefits.
"During our time at Maui High, No Child Left Behind came into effect,"
Robin
says.
Another requirement for Title 1 benefits is that applicants be "highly
qualified." The Bush-era law changed the definition of "highly qualified"
in
such a way that, Robin and Kevin were told, their California teaching
credentials would not have qualified them for the designation.
Stories like Kevin's and Robin's are not unusual. After programs like
Teacher Loan Forgiveness and especially Public Service Loan
Forgiveness were instituted in the late Bush years, complaints began
to trickle in that people who believed they qualified for debt
forgiveness were being disqualified by idiosyncratic fine-print
exceptions at extraordinary rates.
Was it a coincidence that these complaints began snowballing just as
the Department of Education federalized student lending in 2010?
Within just a few years after the change, the Department of Education
was making $50 billion a year in profit from student loans. Today, the
DOE has a portfolio of well over a trillion dollars in loans, and
would be roughly the fifth-largest bank in the United States, if it were a
bank.
The DOE has always had a powerful incentive to be selective in
awarding relief, particularly with the popular Public Service Loan
Forgiveness
(PSLF)
program, which had been instituted in 2007 and required ten years of
service. When that first ten years passed, how many people would get
to take advantage of the programs?
Not many, as it turned out. In July of 2019, the American Federation
of Teachers filed a lawsuit against Betsy Devos and the Department of
Education, alleging among other things that of the roughly one million
people who filled out paperwork to take advantage of the Public
Service Forgiveness Program since its inception in the late 2000s, the
overwhelming majority were disqualified. The suit, citing the
Department of Education's own statistics, explained:
According to the latest available data, as of March 2019, 73,554
unique borrowers had submitted 86,006 applications for PSLF, and only
864 applications had been approved for forgiveness. Only 518
borrowers-fewer than 1% of unique borrowers submitting
applications-have had their loans forgiven.
A 99% claims rejection rate - later statistics would put the number
closer to 98% - would make even health insurance companies drool. The
lawsuit cited absurd disqualifications. One plaintiff made a required
120 payments, but was consistently told she was short the full amount,
apparently because she made some payments in a forbearance period. In
another case, the Education Department credited an applicant with one
year of employment instead of ten, then recorded 66 payments instead
of 120, then rejected a claim because a form from a servicer lacked an
Employee Identification Number - and so on.
To this day, the National Student Legal Defense Network that helped
bring that lawsuit is fighting a pitched battle just to secure simple
reforms like a right to a written explanation for denials. Student
loan holders currently can't expect even this baseline minimum, as
NSLDN's president, Aaron Ament, explains.
"It's like calling a call center at Verizon," he says. "Very hard to
get an answer."
In another bizarre case from 2019, American Bar Association v.
Department of Education, student borrowers described being told
repeatedly during their initial ten-year period of public-sector
employment that they qualified for relief under the PSLF, only to be
told later on that, sorry, you don't qualify.
In one instance, a lawyer who worked for the Vietnam Veterans of
America was repeatedly told in writing that he qualified for PSLF
funds, but after making more than 30 payments, he received a letter
from his servicer saying that after "further research and after
consulting with the Department," the servicer had "reversed [his]
previously approved employment period,"
because
they now believed VVA "does not provide a qualifying service."
The pattern, of the Department of Education promising various relief
programs only to bounce people thanks to technicalities or outright
obstinacy, has continued through the pandemic. Last March, the
Department of Education announced that as part of its Covid-19 relief
efforts, they'd begun implementing the following programs: "suspension
of loan payments, stopped collections on defaulted loans, and a 0%
interest rate."
The "pause" was full of loopholes. In a surprising number of cases,
wages continued to be garnished in defiance of government promises,
prompting another suit. Others who felt sure they qualified for relief
discovered that they did not, thanks to an array of technicalities. An
estimated six million holders of Federal Family Education Loans
(FFELs) serviced by private carriers "will not receive any help with
their student loans at all, despite having used a federal borrowing
program," as one student advocate put it.
The FFELs in question were mostly issued before 2010, and included
Subsidized Federal Stafford Loans, Unsubsidized Federal Stafford
Loans, FFEL PLUS Loans, and Consolidated Loans. As holders of exactly
these sorts of loans from the before-time of pre-2010, Robin and Kevin
didn't qualify.
"The COVID pause on payments and interest wasn't happening on our loans,"
Robin explains. "Because we had Federal Loans, we wondered, 'Why is
this not occurring? And when we looked at it, we realized, 'Oh, no,
we've got the wrong code on our loans."
What started out as a $31,000 commitment for a Bachelor's degree
ballooned over the years, thanks in large part to interest and the
high cost of living, especially with (now) two children. The couple
insists they have never missed a payment, though they have
occasionally taken advantage of forbearance programs. As of today, their debt
sits at $126,000.
Borrowers often spend their youth fighting to get clear of the whole debt.
As they move closer to middle age, and the balance either stays static
or moves in the wrong direction, strategies change. Instead of trying
to pay as much as possible over the long haul, they try to pay as
little as possible each month. Programs like Income-Based Repayment
incentivize people in particularly hopeless situations to work less
rather than more.
The interest payments become so ingrained that "growing old together"
becomes a promise that couples make not only to each other, but to the
implied new third member of their "Til Death Do Us Part" compact,
their non-dischargeable loans. For this reason, many borrowers can
pinpoint the exact moment when they first gave up hope of repayment.
"It was kind of a psychological thing when it tipped over from $99,000
to $100,000," Robin says. "It became, 'We're never going to pay this off.'"
They gave up hope, and maybe that's the point.