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Student Debt: Till Death Do Us Part – Why Student Loans are Never Forgiven

Two years after my father earned his law degree, he was in a car accident that left him entirely disabled, both mentally and physically. Besides the emotional impact this had on my family, it also thrusted us into a nearly impossible financial situation. He had been working freelance on wills and estates, but luckily had held a full-time job for a month before the accident, so the emergency medical costs were covered by his health insurance policy. Our immediate costs, such as the mortgage on the house where my parents and seven of my younger siblings still live, groceries for said siblings, and utilities, were picked up by my extended family and charitable friends.

As my father’s condition stabilized, he was able to move home with a roomful of medical equipment, a wheelchair, a handicap van, and a daily cocktail of prescriptions. Naturally, the bill collectors from the hospitals, the pharmacies, and insurance agencies began calling. Worst of all were those seeking payment on student loans.

They could not let a comatose man, completely unable to work and with seven children to support, leave off his debt. The loans were at first defaulted, which has an effect on one’s credit score similar to filing bankruptcy, and are now being processed in court.

What does that mean for those with no dependents, of able body, but who are no less scared of the detriment of student debt?

According to the Project on Student Debt, 53% of college graduates are facing unemployment, and 1 in every 5 graduates is forced to default on their loans, resulting in major financial detriment. Repayment on student loans have recently outstripped the costs of car ownership, home ownership, and — perhaps most shockingly — credit card debt.

And it isn’t just a pain for individual borrowers. With what Occupy Student Debt reports as 36 million Americans needing to borrow money to go to school, with a total of more than $1 trillion already in borrowed money, student debt is a major obstacle for our already limping economy. According to the Project on Student Debt, most students from St. Peter’s will owe upwards of $25,000 by the time they graduate. More than 2 million Americans over the age of 60 are still paying back student loans, and a third of those who hold student loans are, like my father, older than 40.

Because of the impact on the economy, the federal government is trying to pull the brakes on what is otherwise certain to become a trainwreck. When the housing bubble burst, resulting in the present recession, housing costs had increased at a rate 50 times as high as inflation since the year 1978. In that time, college tuition has risen at a rate 650 times that of inflation. A bust in college loans could completely dismantle the American economy.

According to the US Department of Education, federal loans can be forgiven for teachers, public service workers, and those who are permanently disabled, but private loans are not. Even when taken to court, less than 1% of all student loans are discharged, and they can’t be appealed once a decision has been made. My family will be very fortunate if they decide to let my father’s loans be discharged.
Neither federal nor private student loans can be discharged in bankruptcy, which is supposed to be the last resort for those in financial crisis. Researching student debt is not only depressing and anxiety-inducing, it’s downright morbid — the only situation in which student debt is entirely discharged is death.

College is supposed to enable us to become adults and full participants in the economy. Anyone who reads job listings regularly (as most college graduates do) will see that a bachelor’s degree is a prerequisite for even entry-level positions. We’re meant to graduate and get careers, houses, and cars; this used to be the American dream. Now it’s almost impossible to make rent in one of the few cities in our country with job openings.

We have to go to college to get a job, and if we’re fortunate enough to find one when we graduate, then we will spend all the money we make there paying our loans back. If that job is lost, or we become unable to perform it any longer, the only word that can be used to describe our situation is one that’s entirely inappropriate to print in a newspaper.

I suppose we could always take presidential candidate Mitt Romney’s advice and borrow money from our parents to go to college; that is, if our parents aren’t unemployed, disabled, or just — for some crazy reason — can’t scrape up the half million we need to earn our degrees.

If a college degree is necessary to become a full participant in our country’s economy, they should be making a stronger effort to provide one. The entire system needs to be reworked: tuition should be made reasonable, degrees should not be seen as more necessary than training school certificates.

The student debt problem, though a huge one for our economy, should also be seen as the moral issue it really is. Both federal and private attempts to collect money from the disabled and unemployed, at massive interest, read like villainous episodes from the novels of Charles Dickens.

The story of my family’s present struggle might be unique in plot but not in theme: no one can pay for all the things they need any more. Education is a human right and a necessity for a working population as well as a thriving economy. It is a tenet of American society and should be upheld. It is not a luxury that we should have to spend the rest of our lives paying for.

 

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