Wash. DC, Feb. 19 -- President Obama announced a $75 billion assistance package to address home foreclosures yesterday. He also promised a $200 billion infusion into Freddie Mac and Fannie Mae, the nation's underlying lenders. That's exactly $275 billion more dollars than the previous administration committed to citizens to help ease their very human crises surrounding foreclosure.
Is this enough to stem the tide for those losing their homes? Will those "who have played by the rules," as Obama calls them, be salvaged the indignities and financial oblivion that begin in earnest if they're thrown onto the street? Or will those who broke all the rules profit immeasurably?
There's a rational, reasonably immediate solution to a good part of the economic disaster. The banks won't like it but you will. But first the sad facts.
(Wash. DC) We're being blackmailed into accepting the responsibility and debt for the worst managed financial institutions in the history of this country. The starting price, our debt, is $700 billion dollars.
What's really about to happen is that the failed financial institutions will be rewarded for their bad behavior. As a result, they and others will be encouraged to do it again. It's just a matter of time.
When I was 16, my mom told me that she and my dad wouldn't be able to help me go to college. I knew very well there was no money to spare in our home, in the economically depressed rural South in the 1980s. I had a younger brother just getting to high school and two sisters still in elementary school. Both my parents worked, but in today's politically-correct language, we would be considered "working poor." Despite their long hours at a job that was decidedly low-skill, we got public assistance. And college was out of our league anyway; no one on either side of my family held a college degree. But from my earliest memories, my grandmother pushed me to do well in school, study hard, "get my lessons," and go to college. I did everything she told me to do, up to that conversation at the kitchen table with my mom when I was 16. Read More »
Maybe you've already heard about this: A 23-year-old Chicago bartender named Stephanie wanted to return to college for a biology degree but couldn't afford rent and tuition, even though she works two jobs. Stephanie's story illustrates a point I've been making for a few weeks now: One of the least-covered crises dragging down the nation's economy is the strain that college debt has placed on graduates and their families, and the obstacles that potential debt places in the paths of young people who want to earn college degrees. Read More »
I continue to scan blogs for personal stories of coping with college debt, and to scan the internet for mainstream coverage of this critical economic issue. Suffice to say, there's more of the former than the latter.
One of the commenters on yesterday's note pointed out that another Massachusetts agency had stopped writing college loans, and I found the story online. This decision takes another $500 million in education loans for 40,000 students off the table, leaving them to look for that much more from private lenders. Read More »
For almost three weeks I've been digging into the mainstream media for coverage of an issue I think affects many millions more people than held shares in Bear Stearns, or kept their money in Indymac Bank: College debt, a punishment that keeps on punishing long after the value of a college degree has peaked in raw salary.
I've found a good number of articles in local and regional papers, and a few good ones in the New York Times and the Chronicle of Higher Education, but nothing like the coverage that Bear Stearns got when the administration turned on a dime in April to bail out the bankrupt brokerage. And nothing like the foreclosure crisis has gotten. Read More »
There's not a lot of good news to report in today's note. I'm continuing to look for coverage of one of the broadest economic issues that isn't making the major-media's radar screen -- college debt, and the impact it has on our economy -- and finding out a lot of unfortunate twists and turns about the matter. Read More »
A couple of weeks ago, as part of my series of stories on the economic stress of college debt, I wonder if readers knew about the college loan status of our elected leaders. This weekend, I poked around on the internet and found one blogger who has written a little bit about Barack and Michelle Obama's college loans. But while I didn't find any real information on John or Cindy McCain's college situations (including the college arrangements of their children), I did find a number of strange and disconcerting items about McCain's college affordability proposals (and lack thereof). Read More »
It may be a long while before college students and parents in America see any relief to make a college education more affordable, but at least Governor David Paterson of New York understands the problem and is working toward finding solutions. During the past two weeks, I've continued to look for media coverage of the issue -- and found some occasional coverage in pockets of the nation, but nothing to compare with coverage of other economic crises -- and yesterday, I found a great item in the New York Times. Read More »
A few readers who have left responses to my notes on college debt have mentioned the role that colleges and universities play, and several of the news articles I've mentioned have made passing reference to their role, too. So I wanted to spend at least one day looking at what's happening right now in college tuition increases. The problem is, there are thousands of colleges and universities across the nation, so I picked one area in the middle of the country -- St. Louis, Missouri -- and started first by searching Google for blogs and news outlets there. It turns out, there are plenty, and they cover the issue well. Read More »
I am convinced that the issue of college debt affects many more people, under the radar of the economy, than have already commented on it here and elsewhere. And I'm convinced that it should be given equal footing with the home mortgage foreclosure crisis, the credit crisis and the other ills weighing down our economy, because this issue specifically affects Americans as soon as they enter the workforce and begin making the life choices that reinforce an economy's foundations. Read More »
An item in the San Francisco Chronicle from October, 2006, offers yet another illustration of the point I've been making about the need to regain some sanity in making college more accessible to more kids, and more affordable to more families, so there's less debt burdening graduates and weighing down the economy. It tells the story of Ethan Winsby, a college-educated cook in his late 20s, and Beccie and Carl Smalls, whose son attended college in California too. In both cases, debt became a large part of the story. Read More »
In a comment on the note I posted Friday, EdlinUser mentioned an article describing culinary schools that profit from tuition derived from high interest loans. The article, he said, "reported that far more chefs are being graduated than jobs available. Many new chefs are $20,000 or more in debt and forced to take cooking jobs that pay $10.00/hr." I searched through Google for that item and didn't find it but found several others just as applicable to the topic. Read More »
I've been grateful that as I've written this week about the burden that middle-class families are suffering from college debt -- their own, and their children's -- several Kossacks have read my notes and written about their own struggles and perspectives on the problem.
I'm making what I think is a simple point: Read More »
I appreciate that more readers are willing to tell their own stories. It's only through bringing this issue out into the open that we can begin to force lawmakers to address it. So far, the solutions offered by Congress have been to push students and their families toward more and more college loans, rather than making more federal grant aid available. And for parents already burdened with debt, and students who can't stomach the uncertainty of balancing great debt with the possibility of no good jobs, those solutions are insufficient. Read More »
I've continued to look for mainstream media coverage of the college affordability/college debt issue and found an item from January published in Iowa. It says that high student debt is one of the top two reasons college graduates leave Iowa, and the other is low wages. The "Generation Iowa Commission" calls it a "brain drain." Read More »
I wrote yesterday about the situation that a lot of middle-class American are facing -- at least a lot of the ones that I talk to regularly -- in juggling the college debts of their own or their kids, or both, and I was a little surprised at the low response. Maybe I posted at a wrong time of day; I know there's a cycle of some sort that helps some diaries get seen more than others. Or maybe I wrote on a bad day of the week. Anyway, I wondered if maybe the problem wasn't as widespread as I thought it was, and whether it just happened to hit one geographic region worse than another.
The media spends a lot of time covering the rising price of energy, the rising price of food, the home-foreclosure crisis and the federal bailout of Wall Street heavyweights, all of which are massive strains on our economy. So it's appropriate that the media covers them.
But I suggest there's another crisis that needs just as much coverage: The specter of unsurmountable debt is preventing a lot of our high school graduates from going to college, and the loan debt that college students are collecting today is an uncalculated drain on our economy over the next decade or more, since those graduates can't or don't make other life choices until they resolve that debt. Read More »
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