Friday, December 7, 2012

The Student Loan Road to Serfdom

Dick Durbin shared some stories of debt, yesterday, on the floor of Congress. This time, the debt is individual:

One constituent recently contacted my office about his experience at a for-profit college. He attended the International Academy of Design and Technology, a for-profit college in Chicago owned by the Career Education Corporation, one of the major league for-profit colleges. 
His parents did not have the means to pay for his education but helped him out by cosigning his loans. Now the student and the parents have $103,000 in student loan debt. One of the loans has a 13-percent interest rate and his balance continues to rise.
This young man--young man--would like to finish his degree, but he cannot afford to. He cannot borrow any more money. He is too deeply in debt. How about that for a dilemma? Madam President, $103,000 in debt, no degree, he cannot borrow the money to get a degree.
 Here's another story:

Ana McNamara is another borrower who contacted my office when she started to feel hopeless about her student loans. Ana is nearly 45 years old and owes more than $200,000 in student loans. How about that? She did what you are suppose to do. She went to college. She worked her way through school. She had to take out some loans to help pay the cost.
  After graduating, she said: I need to go to law school. She took out some more loans. When she graduated, her total loan balance was $90,000. That is pretty tough. She thought it was manageable though. With interest rates up to 9 percent, though, her balance kept growing faster than she could pay off the loan. 
  Now she says she does not have anything on the Earth but student loans. She says she will never have anything to call her own because her credit is ruined, ruined because she went to college and law school, borrowing too much money to do it. She cannot even qualify for a car loan she is so deeply in debt. She believes no matter how hard she works she will never be able to pay off her loans.
Ana McNamara does not think now that she should have even gone to college. She says it was a big mistake that destroyed her life.
Now, what Durbin does not tell us is that Ana McNamara is actually the victim the distortions government largesse can cause. She took loans from the government -- loans she might not never would have been able to get had the Pell Grant program never been invented. She probably went to one of those schools you see advertised on cable tv, which make a profit off grants and loans for the government from students like McNamara. As even a bleeding heart like Durbin notices, the result of government program has been the creation of a:
for-profit college industry [that] is a national disgrace--to think that they siphon off $30 billion a year in student assistance. If it were a Federal agency, the for-profit schools in America would be the ninth largest Federal agency, they take in that much money from the Federal Government. They use our money, taxpayers' money, to advertise their worthless schools and worthless diplomas. Everywhere you turn you see their advertising.
Durbin, of course, has his suggestions for the problem, which sound like restricitions on for-profit schools. Some are sensible -- such as restoration of the right to discharge these loans in bankruptcy. He mimics Glenn Reynolds in suggesting:

We need to put some skin in the game so if these kids cannot get a job after they get out of the college, the schools themselves bear some responsibility for the debt that is left behind.
 But, mostly, in this speech, he demonstrates the need for Liberals. Sometimes, government does have to act to better lives of individuals, and Conservatives are often uncomfortable about making those sorts of arguments. Most of the time, that action required involves undoing what prior Liberals have done. But it's good to have someone caring about people on the wrong end of society.

UPDATE: Bgates over at Just One Minute has found Ana McNamara. She's not a graduate of a for profit. Indeed, her law office has a website, and I can't imagine being the poster child for endless debt is going to help the practice. Yikes!


1 comment:

  1. If indeed there is some need for some liberals, I submit that Sen Durbin represents the very worst of that need.

    "Durbin Compares U.S. Troops to Nazi's, Soviets, & Pol Pot"