We Don’t Need Another Student Loan Repayment Program
For the past several weeks the massive and ubiquitous student loan debt of American college graduates has been a major news story, along with the attempts by President Obama, Mitt Romney, and the GOP-controlled House of Representatives to make political hay of the issue while ostensibly advancing plans for resolving it. Of the ideas floated, President Obama’s appears the least serious and most political, particularly because his approach would expand the scope of federally subsidized loans — in effect pouring good money after bad.
According to the most recently compiled data, the average college student graduating in 2010 owed an average of $25,250. According to the marketing research division of American Student Assistance (which advises collegians on loans and debts), there are approximately 37 million Americans with some outstanding student loan debt. This spring another 1.7 million will graduate with bachelor’s degrees, as well as 833,000 with associate’s degrees, 696,000 with master’s degrees, 102,000 with professional degrees, and about 74,000 with doctorates (happily, Starbucks should have no problem filling its ranks with the latter). The cumulative student loan debt which right now stands at approximately $870 billion will no doubt increase even more.
The prospects of repaying such crushing student loan burdens look bleak for recent graduates, considering that over half are unemployed and the remainder are “underemployed” — a result, for far too many, of having bought into the Pelosi propaganda that a creative writing, womyns’ studies, or theatre major would work in the Obama economy. In fact, “only three of the 30 occupations with the largest projected number of job openings by 2020 will require a bachelor’s degree or higher to fill the position — teachers, college professors and accountants…[c]ollege graduates who majored in zoology, anthropology, philosophy, art history and humanities were among the least likely to find jobs appropriate to their education level….”
A proper discussion of whether American society wrongly promotes college at the expense of less-costly, more marketable vocational training is beyond the purview here. Instead, I wish to focus on the veritable legion of programs for repaying student loans which already exists — and which are woefully under-reported by the media and our government spokespersons.
The largest and most potentially lucrative loan repayment source is the U.S. military. For certain enlisted jobs, up to $65,000 of student loans can be repaid (the maximum currently authorized by Congress). At this juncture only the active duty Army will allow that $65k maximum (for a three-year enlistment, 1/3 per year), but all the other branches except the Marines have some form of substantial loan repayment available (albeit usually for a four-year hitch): Army Reserves, $20,000; Air Force and Navy active duty and Reserves, $10,000; Air National Guard, $20,000.
Note that the qualifying jobs are generally shortage ones that require extensive training. In the Army, as of last week (when I spoke to a recruiter), the only slots that would pay back $65k in loans were 68A (Biomedical Equipment Specialist) and 68D (Operating Room Assistant). But either of those positions would translate well into a civilian health care job, and the aformentioned zoology majors with poor job prospects would probably find the training amenable. Other Army enlisted jobs that often qualify for substantial loan repayment are 35F (Intelligence Analyst) and 35M (Human Intelligence Collector) — the latter of which usually are sent to Defense Language Institute in Monterey, CA, for extensive foreign language training. Again, as with the zoology major and a medical field job, one would think an unemployed, debt-laden anthropology major would find such a prospect tantalizing, to say the least.
In addition to loan repayment, the Army, Navy, and Air Force offer the opportunity to save money for college or graduate school, via the Montgomery GI Bill, as well as various bonuses for certain jobs and/or possession of college credit. (Caveat: the maximum monetary award to any individual is $65,000, and the GI Bill and loan repayment programs are mutually exclusive.) For example, enlisting with a college degree in any field (even creative writing!) nets you a $5,000 bonus; having 60+ hours of college credit, $4,000; and over 30 hours, $3,000.
Full disclosure, folks (I put this into a revised suthor bio, but PJM used my old one): I went into the Army the first time, enlisted, in the 1980s to get my undergrad student loans paid off; the Army also gave me a bonus, and a huge educational fund, which I used to pay for about half of graduate school (MA and PhD programs). This was courtesy of signing up to be the old 96C (later 97E) MOS–interrogator. AND the Army paid me to learn Arabic. So I know whereof I speak on this issue.
This changed a bit by the time I enlisted in 2002. They had all 3 programs (enlistment bonus, loan repayment, and GI Bill) but you could only choose 2 of the 3.
TomB,
I mention that in the article–you must have missed it.
The number of ROTC openings are limited and can change. A kid can put two years in and then not make the cut.
Bobba,
Of course–but they still exist, and one a bit of (physical and mental) effort most young people could make the cut. Wouldn’t doing that be better than tons of debt and no/lousy job?
Sorry, folks–I meant “with a bit of….”
I don’t know what actual statistics say, one can only guess. I know for lousy jobs, employers almost prefer a slob they can boss around over someone with military discipline. (Sorry I don’t have answers to problems – just plenty of criticism!)
Most, yes, but far from all. 70% of the military age population is ineligible to serve (though a good portion of these are people whose only disqualification is being too fat, and so they could join if they lost enough weight, which is why I say most are capable of achieving it). However, a substantial minority is simply not eligible to serve (even if previously deemed eligible) due to illness, injury, or chronic health problems. That kid with Type II Diabetes might be able to drop enough weight and get into shape in order to pass the physical fitness test, but he won’t get cleared by medical. Asthma? Forget about it. Autism? They don’t care how high functional you are, the diagnosis is an unwaiverable disqualification. Peanut allergies? Don’t even bother going to the recruiter.
“A proper discussion of whether American society wrongly promotes college at the expense of less-costly, more marketable vocational training is beyond the purview here.”
And that’s EXACTLY the discussion we should be having. These are the articles we should be reading right now, whether or not everybody in this country SHOULD be going to college. You always hear people like Obama and Pelosi whining that everybody should be going to college? But why? Obama and Pelosi only do it to keep the whole higher education business IN business, not because everybody needs to go to college. That is simply a lie, and the liberals that keep spreading that lie should be ashamed of themselves for convincing kids in schools that some worthless liberal arts degree actually means something these days.
We need a lot more trade or vocational schools and a lot fewer liberal arts colleges. We need a lot more plumbers, electricians, tailors, chefs, and master carpenters and a lot fewer people majoring in dead 18th Century lesbian poets. I cringe when I hear kids say to me that they are majoring in philosophy, anthropoligy, theater arts (whatever that is), history, and even English. They are usually the first ones on the unemployment line. And to make matters worse, they were sold a bill of goods by the colleges and the Democrats. They have been told all their lives that if they graduated from college, it would automatically increase their chances of getting a high-paying job. That simply is not true. The market out there only takes graduates with skills they can use, not with obscure majors that are nice to talk about but rarely give you a decent job. So before you decide to major in art or journalism (good luck with that one), make sure your major has at least something to do with what the job market actually needs. Those jobs may not be glamorous, but at least you’ll eat and have a roof over your head.
Libertyship46,
I totally agree. But that’s an entire column in and of itself and I thought it important to address tactics before strategy.
I concur with your sentiments, but it does give me pause to recommend that anyone conclude their formal liberal education at the high school level. Today it takes a BA to signify the same educational attainment that a high school diploma once denoted. So I believe the problem is connected with the dilution of educational credentials generally, and with cost.
It wouldn’t be such a problem if the educrats hadn’t seen a great opportunity to grow their empires in the federal student loan program. If costs had remained somewhere on the reasonable side a good student might profit from a BA even if it didn’t add much to their employment prospects.
Unfortunately, the term “non-profit” simply refers to the form of the enterprise and not to the objectives of its managers.
Of course, we can’t simply amend bankruptcy law to let students just file for bankruptcy if they find they cannot pay off their loans. That would be too easy and market-oriented since it would make the primary sufferers of the transaction be the buyer and seller.
Plus, it would be too easy on folks who incurred the debt, sending the wrong message. I think some sort of service–preferably military, but as I pointed out, perhaps Peace Corps or Americorps or the like–would help alleviate the problem while also making folks responsible for their own debt.
Why? Every other debt can be “eliminated” through bankruptcy. Bankruptcy has it’s own set of punishments for the borrower as well for up to 7 years. Having some soulless entity drain your bank account and put an arbitrary value on your belongings so they can be sold is hardly “too easy”.
Good point, but two contrary reasons: 1) it would sever the link between actions and responsibility, in my opinion; and 2) it would ruin the credit of folks awfully young. Why not enlist in the military or Peace Corps instead?
Bankruptcy only ruins your credit temporarily. The moment your bankruptcy is complete you can get a credit card, as banks are well aware that you would not be able to skip out on that debt for at least seven years.
After seven years your bankruptcy has little on your credit rating and many banks will feel comfortable lending to you again, provided your credit history has been stellar during that time.
A few counterpoints…
1) The current law severs the consequences of giving an English/Sociology/Queer Studies major $100k in student loans on the banks’ side.
2) The students will directly suffer the consequences (contra to #1) in the form of having their credit annihilated for at least 7 years. However, most students would gladly accept this to the alternative of having to work within the current predatory lending environment.
3) Your point #2 is a feature. It not only punishes the current batch of students but makes them object lessons for the next batch of students.
4) We don’t require national services to get out of a bad business loan, car loan, home loan, etc. Why should student loans be special? Why aren’t we sending mom and pop to prison for defaulting on a mortgage even as the federal government is starting to arrest people who are delinquent on federal student loans? What’s good for federal student loans should be good for FHA loans, right?…
That would mean getting the federal government out of the loan business. We cannot manage to get them out of the bunny inspecting business so I don’t see them getting out of the loan business.
Actually, allowing student loan debt to be discharged in bankruptcy will have the effect of eliminating the need for most student loans in the first place. Banks would be forced to eat the loss of discharged loans and the universities are no longer awash in billions of dollars in free money, granted to anyone who can successfully fog a mirror.
Universities, desperate to stay solvent, will lower tuition costs, and either eliminate or severely curtail study programs that banks will not lend money for. Banks will still lend to people who go into lucrative majors (medicine, technology, engineering, etc.) and would actually start using underwriting techniques to identify students who are most likely to pay back the loans.
Universities in turn start pricing their products based on how much a student can stand to earn. Sociology degree? If you’re willing to flip burgers and not expect to earn more than $40,000 a year, you can put yourself through college without too much trouble, and certainly would not need to put yourself into debt slavery for thirty years. Medical school? Show some aptitude and funds (student loans if necessary), and you’re in. You’ll pay a higher rate, but you stand to make much more.
A man much smarter than myself said it best. If you want your tuition to come down, then make the government stop subsidizing $100,000 women’s studies degrees.
Of course, I should also mention that this will never happen. This simple yet elegant solution would force banks to be honest and universities to cut hundreds of useless faculty, and return to actually educating people (as opposed to the massive circle jerks they are now).
Our “educated” idiots in Congress are too beholden to the banks and a product of those same universities to ever allow that to happen.
Monarch,
I agree with much of what you say, as a recovering college professor myself (and one who was turned down for a least one job by the open-minded liberal search committee for being “too conservative”). But the facility of womyn’s studies, while I took my shots at such, is not the primary issue here. And I am well aware that bankruptcy only last seven years; that doesn’t make it any desirable for a 20-something to spend his/her entire decade before 30, say, sans credit, however.
Likewise, it is not desirable for the federal government to turn the military or Peacecorps into welfare programs when bankruptcy is sufficient.
I had a National Defense Education Act Loan but went to work for the Navy (42 years) as an aircraft weapons systems test engineer. Seems National Defense work didn’t get any part of my loan forgiven. Plus I turned out to be one of those idiots who paid all his principal and interest payments on time.
The military is in the process of digging up $500-billion in cuts – the only department in the Obama administration which has been directed to do so. Are they really recruiting college grads with debt issues in any significant numbers? I don’t see the Occupy crowd going down this route in any case. Wanna bet on the percent of ‘conscientious objectors’ in that gang?
But thanks for the reminder about the non-military volunteer & debt repayment programs. I’d forgotten how ticked off I was at their passage, and how blatantly it pandered to student loan repayment. But the programs are there; the public needs to be reminded of them, if for no other reason than to keep the leftist hypocrisy on full public display.
The military does attempt to recruit college grads. Thanks to our good friends on the left the majority of college grads have no clue what military service entails. Unless of course they’ve served before attending college.
I thought the Montgomery GI Bill was replaced by the Post 9/11 GI Bill. Is Montgomery still an option for people enlisting (or being discharged) now? The new bill lets veterans assign their GI Bill benefits to a spouse or children, which is a good deal for older veterans who’ve already completed their education.
I was in the Corps when the Montgomery GI Bill went into effect. For my sin of having enlisted “too early” I was not grandfathered into the Montgomery GI Bill and stuck with the steaming POS known as VEAP. I would suspect the same is true here. What benefits you get depend on when you enlisted.
Bbbbut, then I might have to work!
Why can’t I just hang out with other students until I get a teaching assistant position, and then maybe get an assistant professoriate position, and then, you know maybe become a professor, and really have a sweet gig?
Work? I’d rather be an OWS activist!
I know of someone who got a government grant re nursing care, couldn’t complete course, got hit with treble damages on the grant and was offered payout at $500 a month — to realize, after paying out thousands of dollars, that the payment terms were a prescription to perpetual indebtedness — the $500 not reducing a penny of principal, indeed not even covering full interest. Guess this is how government treats people not on the Too Big to Fail list.
Having assisted 4 through undergrad/community college, the costs have greatly increased since the days when signing the ROTC contract gave you the princely sum of $125/month and tuition was under $90/semester. I’m not sure where we got the hard and fast rule that everyone has to go straight through for 4-5 years for an undergraduate degree. If you want the degree, you can take longer and work. Two of my kids did that, largely because their evil dad wouldn’t spring for an apartment when the schools were in the town we lived in. You absolutely do not have to go deep in debt to go to school.
Also, a lot of these kids are getting degrees that have no use and gets them only in debt with zero job prospects above what they had coming out of high school. Why do we keep pushing going into debt for that and why do I have to support it?
I agree completely with the sentiments expressed in this post and comments. Should everyone go to college? Heck no! The only people who should go to post-secondary education are those who a) can afford it or b) are willing to join the military i.e. meld our education system with the military. Its only a pity that Obama hates the military and ignores the needs of our vets. We need more labor to compete with the Chinese and who better to provide that low cost labor than the uneducated masses. And this lefty argument that the underemployed should receive “food stamps” is absurd. Let them find their own way – hunger and deprivation are powerful motivators. Just think how many of them can get jobs building fences, installing concertina wire and manning guard stations to keep the rest of us safe. This is a fight for freedom and liberty, lest we forget!
The article provides good suggestions to deal with student debt. However, there are horror stories out here concerning student loan debt that is sold and re-sold when the payer gets behind and a former student can find his or her loan packaged with late fees and interest and jump from affordable to never paid off. Bankruptcy should be an option for these loans just like any other debt. Why should there be sweetheart deals for lenders? Read recently that about 15% of the overdue loans belong to adults in their sixties who went back to school a decade or so ago. Because there is no way to clear the debts, their social security checks will eventually be garnished. Is this what we really want?
The federal government, having assumed the burdens of banks who lent too imprudently to students, has a wonderful solution for too much student debt. Not forgiveness programs, but repayment programs. Designed to keep people indebted even longer, sometimes for life. Which is, of course, what governments want out of their citizens…dependency.
And the worst part is, they are now doing the same with distressed mortgages. Keeping people permanently indebted and unable to walk away from a house they paid too much for.
It reminds me of the AIDS treatments currently available. No cures, but they can allow you to live with it, albeit with a lot of pain and side effects.
Monarch,
The problem with your assessment is that these military loan repayment programs were started decades ago, with the primary reason (so it would seem) of recruiting more educated folks into the enlisted ranks. The program existed when I joined up in 1983, under Ronaldus Magnus–so that rather undercuts your argument.
I was mainly speaking to new proposals for non-military student programs, but why play these games in the first place? Pay skilled people a higher wage to work for the military and they will come.
While the military would hardly be able to match private sector pay for more skilled workers, some people will be attracted to the stability of government work as well as the lifestyle.