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An Education in Financial Aid

20.05.12

President Obama made a politically smart move last week when he announced a three-part procedure to make it easier for people to pay their student loans. The plan includes an income-based cap on monthly payments, loan consolidation, and a consumer upbringing campaign on student financial aid. Obama had nothing to lose and everything to gain in rolling out the changes, which can be executed without the domestics of Congress. He can appeal to the youth voters who helped put him in office and he can beat up lawmakers for doing nothing. But, as my associate Stacy Kaper wrote about the plan, the actual changes are modest. At most, only 8 million out of 36 million borrowers would see their payments variation as a result of debt consolidation or the income-based cap.

Obama's announcement provides fodder for a broader chat about two things--the costs and benefits of higher education and the need for a Personal Resources 101 course for all students.

On higher education, Obama made the obvious indicate. "College isn't just one of the best investments you can make in your future. It's one of the best investments America can come in in our future." It's true that college graduates have higher wages, contribute more to trade growth, and are less likely to be unemployed. But it's also true that the cost of college is way out of proportion with peoples' incomes. At some bring up, the price of college becomes counterproductive.

On personal finance, I can only say this about the Consumer Financial Aegis Bureau's Know Before You Owe financial aid tip sheet for students: Why isn't this standard fare for everyone? The CFPB tip membrane will advise prospective students on their total estimated debt burden, monthly loan payments after graduation, and additional preparation costs. I would submit that all borrowers should have access to that information, at a minimum, before taking out a loan.

Student loans are an distinguished tool to get more kids through college. What else can be done to make sure students have the best gen about their financial aid options? What are the essential components of a Personal Finance 101 direction? Can the escalating costs of college be justified in any way? At what point does a student's debt bond make college no longer worth the price?

Before we engage in a discussion about the value of college and how to pay for it, it’s impressive to remind ourselves that we need a lot more people with postsecondary degrees and credentials. There is overwhelming support that the vast majority of new jobs require advanced skills. That reality makes postsecondary tuition the new gateway to the middle class in America, which means that people will likely be wiped out in the future if they choose not to complete some form of postsecondary education. It’s that easily understood.

That said, the student loan debt issue is very serious and it’s important for us to explore new ways to accost the cost and price of higher education. About one in five adults has student loan debt. This is a challenge with surely national implications. So the President’s initiative is a step in the right direction, and we should give someone a hand that. But it won’t solve the long-term and increasingly onerous increase we’ve seen in rising college prices. The unravelling will only come through a combination of increased individual re...

Before we engage in a discussion about the value of college and how to pay for it, it’s conspicuous to remind ourselves that we need a lot more people with postsecondary degrees and credentials. There is overwhelming manifestation that the vast majority of new jobs require advanced skills. That reality makes postsecondary tutelage the new gateway to the middle class in America, which means that people will likely be inadequate in the future if they choose not to complete some form of postsecondary education. It’s that basic.

That said, the student loan debt issue is very serious and it’s important for us to explore new ways to oration the cost and price of higher education. About one in five adults has student loan debt. This is a challenge with justifiably national implications. So the President’s initiative is a step in the right direction, and we should cheer that. But it won’t solve the long-term and increasingly onerous increase we’ve seen in rising college prices. The settling will only come through a combination of increased individual responsibility and sound public rule.

Students (and their parents) should first seek out all of the information that they can regarding the higher education funding options that are readily obtainable to them. There are plenty of government grants, private scholarships, and work-study programs at one's fingertips, even in these tight economic times. Not everyone faces the dramatically high prices that the top-layer institutions charge, and which garner the majority of media attention. And not all loans are the same. The profits-based repayment options, various deferments, and other strategies available—uncommonly for federal loans—can help individuals reduce their own debt and risks of borrowing.

Beyond these one steps, we must also look at other ways to address the sizeable challenges of college affordability. We shortage to re-think the best financial solutions to delivering higher-quality higher training to a lot more Americans, and those solutions should not include having students take on ever-increasing amounts of indebtedness.

Much more must be done to ensure affordability if we intend to reach our national higher education attainment goals. The President’s bid should be seen as a “down payment” on a much broader college affordability arrangement. There is still a lot of work to be done, by all parties including: colleges and universities, parents and students, states, and the Federal sway. Everyone must take responsibility to make wise decisions when it comes to funding higher tutelage, because the economic, social and civic benefits of a better educated population striking all of us.

President Obama’s decision to implement new income based repayment standards on an expedited bottom is a welcome move for students. Until this announcement, the income-based repayment program has lacked adequate press coverage and servicer support. Only about 450,000 borrowers are taking utility of the option to date, when estimates show 1.6 million borrowers are eligible. The Management and U.S. Department of Education should create broader public awareness of the multiple repayment programs for federal student loans (which most borrowers don’t even understand exist), so as to counter the misinformation that there are no alternatives to default. The government needs to get the communication out that it has built a system that makes the debt manageable so that student debtors don’t have to put off marriage, accommodations or family, or choose a higher-paying job because their monthly federal student loan payment is too dear. Most importantly, they don’t have to default, ruin their credit and pay more in interest and fees.

Additionally, resources and guidan...

President Obama’s firmness to implement new income based repayment standards on an expedited basis is a well-received move for students. Until this announcement, the income-based repayment program has lacked adequate press coverage and servicer support. Only about 450,000 borrowers are taking upper hand of the option to date, when estimates show 1.6 million borrowers are eligible. The Delivery and U.S. Department of Education should create broader public awareness of the multiple repayment programs for federal student loans (which most borrowers don’t even see exist), so as to counter the misinformation that there are no alternatives to default. The government needs to get the report out that it has built a system that makes the debt manageable so that student debtors don’t have to put off marriage, territory or family, or choose a higher-paying job because their monthly federal student loan payment is too serious. Most importantly, they don’t have to default, ruin their credit and pay more in interest and fees.

Additionally, resources and counsel should be extended to student borrowers to help them navigate these complicated programs.

More should also be done to integrate “in the flesh finance 101” into offerings for college students and alumni. The full student loan process, from knowing before you owe to making smarter repayment decisions, can be used as a Montessori wisdom-by-doing model to build a good foundation for future financial robustness. This type of financial education that combines the abstract with the tangible can not only instruct but in point of fact change behavior.

For decades, our nation has spent money we don't have to finance things we insufficiency. Republicans have done it to finance tax breaks and military spending; Democrats to pay for discretionary spending and entitlements. The denouement is reckless deficit spending that is slowly bringing us to a very dangerous pass.

President Obama came to intercession pledging that we were done "kicking the can down the road" on this stuff. Well, not so much. His latest ploy is a student lending custom that teaches a new generation of college-goers that government is there to provide free claptrap. It used to be that, if you took federal loans, the expectation was that you'd paid them back. (The precision of "loan," after all, entails this whole notion of borrowing and repayment). A couple years ago, the Obama superintendence decided this was old-fashioned. Now, via income-based repayment (IBR), students could instead limit the loan amount they have to return the favour Uncle Sam to 15% of their "discretionary" income for 25 years. After that, any unconsumed...

Source: National Journal (blog)

Editorial Roundup: Excerpts From Recent Editorials

20.05.12

Nov. 23

The Australian, Sydney, on Spanish elections:

Having entranced Spain from boom to bust in seven years, the country's Socialist Workers Fete government was always likely to get a hammering in the general election. Voters have delivered an forceful victory to Mariano Rajoy's centre-right People's Party, and he must urgently get Spain out of the the waters hole dug by the Socialists.

With unemployment at 22 percent (the eurozone's highest), a million people at risk of losing their homes to banks, lump halted, 10-year bond rates close to the 7 percent honest that forced Ireland, Portugal and Greece to seek punitive bailouts, crushing ministry debt and a budget deficit of 7 percent of GDP, the task can hardly be overstated. In 2004, when the Socialists, led by Jose Luis Zapatero, won ministry, Spain was enjoying a construction-led boom, large-scale infrastructure maturation and widespread prosperity. By contrast, the situation now is one of looming recession, unfinished box developments, empty airports and under-used highways.

Unfortunately, despite the People's Celebration domination of the new parliament — holding 186 of the 350 seats after giving the Socialists their worst drubbing since Communal Francisco Franco's death in 1975 — Rajoy is showing few signs of the necessity needed to deal with the crisis ... He has a clear mandate to act, and is uniquely positioned to legislate important reforms. The sooner he gets cracking on them the better — because many believe this solvent challenge is Spain's most daunting national crisis since the Civil War.

Online:

http://www.theaustralian.com.au

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Nov. 21

The Telegraph, London, on Turkey and the Muslim over the moon marvellous:

... At a time when so many Arab states are experiencing severe political unrest, Turkey's aptitude to act as a force for stability in the region should not be underestimated.

While it has experienced political turbulence of its own in the recent — the country's military staging a coup d'etat in 1980 — in up to date years Turkey has made giant strides toward becoming a modern democratic state. Its ruling The law and Development Party has sought to strike the right balance between the competing claims of its proud Islamic inheritance and the desire of its youthful, secular-minded population to achieve social and budgetary progress. There has also been a dramatic turnaround in Turkey's economic fortunes, with the country experiencing a flowering rate of nearly 7 percent so far this year, far higher than any of its neighbors in Europe. Some analysts foresee it will be one of the world's top 10 economies by 2050. The success of this moderate Islamic official in achieving rapid economic growth, and in proving the compatibility of Islam with democracy, should certainly offer as a model for pro-democracy campaigners elsewhere in the Muslim world.

These achievements undoubtedly innervate the case for Turkey's membership of the European Union... Although Gul first submitted Turkey's EU membership assiduity in 2005, it has stalled in the face of strong opposition from France and Germany, which altercate that admitting such a large country of 79 million people would upset the Accord's balance.

Even though there is unlikely to be further serious discussion of accession until the crisis in the eurozone has been resolved, it is very much in the West's interests to brace Turkey that it remains a highly valued ally. It was not so long ago that, frustrated by Western apathy, the Turks appeared to be strengthening their ties with the virulently anti-Western regimes in power in neighboring Iran and Syria. ...

Online:

http://www.telegraph.co.uk

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Nov. 23

The Ball and Mail, Toronto, Ottawa Sun, Ontario, on pipeline politics:

A small series of U.S. legislators should be announcing a plan to clean up their country's fiscal mess. Preferably, the Joint Select Committee on Deficit Reduction (the "Supercommittee") gave up, two days early. Its decay to agree on how to cut $1.2-trillion from the deficit over 10 years triggers unavoidable and deep spending cuts as part of an earlier deal to raise the country's in financial difficulty ceiling — unless Congress unites to reverse those triggers.

But Congress should lie in the bed it made. The U.S. civic class needs to stem the public's hemorrhaging mistrust. The U.S.'s public finances desperate straits to be put on a sustainable footing.

The supercommittee itself was a product of political failure, of long-prominence fiscal problems, made worse by the recession, and record levels of political brinkmanship.

But distinct from other commissions to reduce the deficit, the supercommittee of six Democrats and six Republicans had tremendous scholar. And for a time, it showed promise. Some Republicans were open to tax increases and the elimination of tax deductions, a allowance that most non-partisan observers (and many moderate Republicans outside Congress) agree is sure to eliminate the deficit. Democrats consistently demonstrated their openness to the kinds of cuts that alarm their core constituencies. Yet agreement among 12 members of Congress was no easier to attain than agreement among 535. ...

It would be better, though, to actually look into the abyss. And if it really is that scary, it ought to fasten Congress to do something positive — reconvening something like the supercommittee; or taking a aid look at the sound recommendations of another bipartisan committee, the Simpson-Bowles Commission. Last analysis, in a crisis, public confidence is restored when politicians try, not when they give up the fight.

Online:

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Nov. 18

Arab Word, Jeddah, Saudi Arabia, on Obama's Asia Pacific region dance:

In his speech to the Australian Parliament, President Barack Obama said that his top primacy is the Asia Pacific region.

Really? The Asia Pacific region is more top-level than the Middle East with all its crises? More important than solving the Palestinian-Israeli affair? More important than famine and political instability in the Horn of Africa and the dangers of it becoming a hub of intercontinental terrorism? More important than the nuclear ambitions that the U.S. is convinced Iran harbors?

At least it explains why the U.S. has stated up all pretense of working for peace in the Middle East. It explains why the U.S. is doing nothing about the fierce repression in Syria. It also explains why the White House so cravenly bowed to threats from Republicans in Congress over U.S. involvement in Libya and pulled U.S. planes out of the struggle, leaving the action to the French, the British and other Europeans. It was not that important to Obama. Not that it would have been that awkward to get Congress' support. But it was not a priority.

The Asia Pacific region is. What does that miserly? Does it mean that the U.S. is now wholly focused on problems in the region? Compared to the Bull's-eye East, there are none, apart from North Korea and its blackmailing regime. The only issue that binds the Asia Pacific locality, other than concern about possible tsunamis, is trade. The U.S. has some major allies in the region — distinctly Japan, South Korea and the Philippines, also Australia and New Zealand — but China is purely a proprietorship partner. In everything else, politically, militarily and even economically it is America's rival. So too is Russia, the other grave power in the region. ...

It remains to be seen if Obama's speech in Australia is the Collaborative States' "East of Suez" moment. But for a nation that still is the most militarily powerful in the happy yet now seems so unsure about wielding that power, it looks that might be the case.

Online:

http://www.arabnews.com

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Nov. 23

Chicago Sun-Times on deporting criminal immigrants:

When gridlock keeps you from moving forward, be careful not to slip back.

The Obama administering acknowledged that reality recently when officials began training immigration agents in a new tactics to stop deporting as many illegal immigrants who have no criminal records.

The philosophy behind President Barack Obama's earlier ramping up of deportations was to exhibit that current laws are being enforced, creating a climate leading to reform of immigration laws. The provision has deported nearly 400,000 people each year for the past three years.

But have you heard about much advancement on comprehensive immigration reform in Washington? Neither have we.

Congress hasn't even been able to old-fashioned the Dream Act, which would give legal status to young people who have lived in the country for years if they coincide with the military or go to college.

So why are we tearing apart families to deport individuals who have demolished no laws other than the immigration regulations themselves? Why are thousands of people being held in prisonlike conditions, awaiting deportation hearings in a system that has a backlog of 300,000 cases? Why not bequeath a system that encourages legal instead of illegal immigration? ...

Online:

http://www.suntimes.com

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Nov. 22

Los Angeles Times on spatter-spraying protesters:

Watching University of California-Davis campus regulate pepper-spraying a line of seated student protesters, the immediate and valid counterbalance is: What part of nonviolent do these officers not understand? Even if the last major waves of campus protests were a one of decades ago, quelling student demonstrations without harm and with a minimum of residual outrage should be at the top of university training programs for policemen staff. ...

Statements afterward by the police chief, who was placed on leave, and Chancellor Linda Katehi only fueled the enrage by appearing to defend the two officers known to have been involved and who previously were placed on off.

Source: NECN