Saturday, May 12, 2012

Taxpayers On Hook For $850 Billion In Student Loans                                               

With a possible higher-education bubble looming, taxpayers are on the hook for about $850 billion in student loan debt.

Exactly how much of that the federal government would have to bail out if the bubble bursts is unknown, but with delinquency and default rates rising, it could be substantial. Yet Congress may exacerbate the problem with current efforts to maintain lower interest rates on student loans.

The amount of outstanding student loan debt has skyrocketed from about $440 billion in late 2008 to about $1 trillion today.

Of that, $500 billion is owned directly by the Education Department, according to Sallie Mae data. Another $350 billion was originated by private lenders with a government guarantee under the now-defunct Federal Family Education Loan Program. Sallie Mae estimates that the DOE will originate $113 billion in student loans this year vs. just $7 billion from the private sector.

"I think this data — $1 trillion in outstanding debt and a lot of it held by the federal government — is fairly persuasive evidence of a bubble," said Jonathan Robe, a research and administrative associate at the Center for College Affordability and Productivity.

Have Debt, Need Job

Robe points to a recent AP analysis that found 53% of bachelor's degree holders under age 25 were either unemployed or underemployed.

"That may be another sign of a bubble in that more people may have a harder time paying back their loans," he said. "That could end up putting a bigger burden on taxpayers."

Debt loads are rising. Average student debt for new graduates rose 24% after inflation from 2000-2010 to $16,932, according to the liberal Progressive Policy Institute. The average for all borrowers is $23,300 , the New York Federal Reserve says.

Adding to the problem are higher delinquency and default rates.

About $85 billion in student loans are delinquent, the New York Fed said. That's about 14% of borrowers. However, that understates because many borrowers, such as those who are still students or have just graduated, don't have to make loan payments. Among borrowers required to pay back their loans, about 27% are delinquent.

The rate of default — those borrowers who haven't made any payments in at least nine months — is also on the rise. The DOE reports that the default rate rose to 8.8% in 2009 from 7% in 2008.

But the DOE figures only look at defaults over a two-year span. Data examined by the Chronicle of Higher Education showed that 20% of government loans that went into repayment starting in 1995 were in default. The rate was 31% for those at a two-year college and 40% for those attending a for-profit college.

Loans Are Part Of Problem

Part of the problem is rising college tuition, which has skyrocketed nearly 32% after inflation from 2000-2010. Average annual tuition is now about $17,464 based on data from the National Center for Education Statistics.

But Robe says that is at least partly a function of easier access to student loans.

"Cheap and readily available subsidized student loans have contributed to the tuition explosion ," said Robe. "Those loans make students far less price conscious and it enables the schools to raise tuition because they know if the student can't pay the tuition, they can pass the buck on to the taxpayers."

But both President Obama and GOP presumptive nominee Mitt Romney favor extending the 3.4% rate on federal Stafford Loans, set to rise to 6.8% in July.

The dispute is over how to pay for the $6 billion cost. The GOP-led House voted to cut preventative health fund in ObamaCare. That won't fly in the Democrat-led Senate. But Republican senators blocked that chamber's version, which would hike payroll taxes on small business.

In the end, a lower rate will only encourage more prospective college students to take out loans.

Sen. Dick Durbin, D-Ill., wants to let people discharge student loan debt in bankruptcy. The bill would only apply to private loans not backed by the U.S. gov ernment. However, "That would probably increase the pressure to be able to do the same with federal loans," said Robe.


More British madness:  Schools are deliberately failing to correct spelling mistakes to avoid 'damaging pupils' self esteem'

Teachers are being told not to  correct more than three spelling errors at a time to avoid damaging pupils’ self-confidence, an MP revealed yesterday.  Andrew Selous highlighted the practice at a secondary school in his South West Bedfordshire constituency but fears it is widespread across the country.

The Tory MP condemned not correcting all errors in a piece of work as a ‘false kindness’ which denies pupils ‘fundamental’ skills needed in the job market.  Mr Selous said he had been alerted by a worried mother but had decided not to name the school behind the policy.

In a letter, she told him: ‘I have spent hours of frustration letter-writing but  no one is able to help or offer support.  ‘My children are hard-working but they need to be given the basic building blocks of English.’

The school’s marking policy states: ‘Teaching staff are not to highlight any more than three incorrect spellings on any piece of work. This is in order that the children’s self-confidence is not damaged.’

Mr Selous said: ‘We are not kind to children if we do not correct their use of language because it is one of the most fundamental blocks of any civilised society.  ‘There are probably thousands of schools  that have got this policy but it’s a false kindness and we are letting our children down.’

Earlier in the Commons, Mr Selous called for a debate on the issue. He told MPs that the Coalition would ‘not be keen’ to continue the leniency. Commons Leader Sir George Young replied: ‘It does sound like political correctness taken to excess. I am sure it is in the child’s interests for any spelling mistake to be put right at an early stage.’  He said he hoped the policy of giving more autonomy to head teachers would stop problems with spelling ‘festering’.

Mr Selous was backed by comments on the Mumsnet website. One mother told how her children’s primary school limits corrections because ‘too much red pen is discouraging’.  She said: ‘Surely it would be better to focus on encouraging them to spell correctly and making them feel proud of their work. Copying out a spelling mistake three times was how I improved.’

Coalition reforms will mean stricter marking on spelling and grammar in GCSEs and a new test for 11-year-olds.


Australia: Leftist ideas about school discipline reap their inevitable reward

TEACHERS and principals have stepped up calls for help to deal with rising child mental health and behavioural issues as student violence continues to cause problems across the state.

It comes as bus companies in southeast Queensland consider banning students because of wild behaviour accusations.

At Caboolture, a school community is still in shock after a 14-year-old girl was stabbed multiple times, allegedly by a 16-year-old fellow pupil this week - the third Queensland schoolyard stabbing in a little over two years.

Figures show about 20,000 suspensions were handed out last year for physical misconduct in state schools alone, with about 62,000 suspensions issued overall.  That's about 300 suspensions for every school day.  Exclusions have gone up with more than 1000 state school students expelled or excluded last year.

Last year The Courier-Mail revealed some principals complained their days were consumed with dealing with child behavioural and mental health issues and had called for every school to have access to a professional who co-ordinated issues involving child social and emotional wellbeing.

Yesterday, Queensland Association of State School Principals president Hilary Backus said schools were a reflection of society and they had seen an increase in the mental and emotional needs of students, along with those diagnosed with verified disabilities such as autism spectrum disorder.  "We have seen a rise in students displaying anxiety and depression from quite an early age," she said.

Schools were now dealing with these issues "on a daily basis" and she renewed her call for stand-alone professionals.

Queensland Teachers Union president Kevin Bates said its policy was for every school to have access to a guidance officer. But he said the number of guidance officers simply hadn't "kept pace with the needs of schools as these sorts of issues have expanded" and were "spread thin" across the system.

Queensland Secondary Principals Association president Norm Fuller said they had also called for extra support, while behaviour issues in schools were a reflection of what was happening in society.

But last night Education Minister John Paul-Langbroek crushed the idea of providing more guidance officers, saying the Labor government legacy meant there was not enough money in the kitty and chaplains would do instead.

"The mental health of Queensland school kids is of paramount importance," he said.  "Unfortunately, due to Labor's debt legacy, we just simply do not have the money to have a guidance counsellor in every school."

He said 80 per cent of state high schools and more than 40 per cent of state primaries had a chaplain and the LNP had committed a further $1 million to fund them.

Education Queensland assistant director-general Tom Barlow said there were 477 guidance officers in about 1250 state schools.

It is understood there are a further 1271 specialist staff including chaplains, nurses, therapists and teacher aides.

Queensland Catholic Education Commission executive director Mike Byrne said student behaviour and mental health were growing issues and his schools had structures in place to deal with it.

He said it would be up to the individual 22 Catholic school authorities on whether they placed a blanket ban on knives, suggested by the Queensland Schools Alliance Against Violence (QSAAV).

Yesterday he sent QSAAV materials to Diocesan leaders and school principals.


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