The New York Times launched a new distraction in its two and a half page expose of the student loan racket entitled A Generation Hobbled by the Soaring Cost of College. The Times deplores that college students and their parents have been duped into taking on debt like naïve home buyers, that tightfisted Republican legislatures are to blame, and that we could have avoided the problem with another stimulus. The Times does not mention that student loans are not protected by personal bankruptcy and that the federal government can garnish 15% of scofflaw wages. The real villain is Uncle Sam!
In typical Times fashion, the story begins with a victim, who has been taken the the cleaners:
Kelsey
Griffith graduates on Sunday from Ohio
Northern University.
To start paying off her $120,000 in student debt, she is already working two
restaurant jobs and will soon give up her apartment here to live with her
parents. Her mother, who co-signed on the loans, is taking
out a life insurance policy on her daughter.
“If anything ever happened, God forbid, that is my debt also,” said Ms.
Griffith’s mother, Marlene Griffith. “As an
18-year-old, it sounded like a good fit to me, and the school really sold it,”
said Ms. Griffith, a marketing major. “I knew a private school would cost a lot
of money. But when I graduate, I’m going to owe like $900 a month. No one told
me that.”
Who are the villains who duped the
helpless Griffith, her parents, and others like her into taking on this unreasonable
debt burden? For-profit schools, private schools with slick brochures promising
ready-made financing, anti-tax republicans, and rising tuition in state
schools, where Republican legislatures have cut back on higher education
funding:
There is an ideological and political tug of war as well.
State Representative John Patrick Carney, a Democrat, said if legislators were
serious about financing higher education they could find a way, like
eliminating tax breaks for corporations. He noted that even as funds for higher
education were being reduced, Mr. Kasich and the Republican-controlled Legislature
eliminated the state’s estate tax, which will cost the state an estimated $72 million a
year.
The
subliminal message: If only Obama had gotten a second stimulus, the states
would be awash in money.
The Times let
slip that “federal mandates and court orders have compelled lawmakers to spend
more money on Medicaid and primary education, too.”
Never one to bad
mouth a federal handout program, the Times rushes to assure its readers that a
wholesale default “would be unlikely to ripple through the economy with the
same devastating impact as the mortgage crash. Though now larger than credit
card and other consumer debt, the student loan balance remains smaller than the
mortgage market, and most student loans are issued by the federal government,
meaning banks wouldn’t be affected as much.”
In other words:
If students don’t repay, the taxpayer will, but who worries about the taxpayer?
The Times fails
to identify the real Simon Legree of the student loan program – the federal
government itself. According to the Debt
Collection Improvement Act (passed under Bill Clinton):
The US Department of Education (ED) is authorized to garnish
15 % percent of the erstwhile student's disposable income in lieu of unpaid
student loans. The organization, that employs the student after
graduating/dropping out of school, is expected to comply with rules regarding
garnishment even in the event of filing bankruptcy.
As Congress
debates how to pay for continued subsidization of interest rates on college
loans, the Feds’ power to take 15 percent goes unnoticed.
Dr. Gregory's latest book can be found at Amazon.com.
Dr. Gregory's latest book can be found at Amazon.com.
