Tuesday, June 12, 2012


As student loan debt hits $1 trillion mark, many struggle with payments

When Patrick Dungan finished law school at the University of South Carolina in 2011 he was married with a baby and owed more than $166,000 in student loan debts.

“I kept telling myself ‘it will all be worth it, you can pay it off,'” said the 30-year-old Dungan, a practicing attorney in Fairhope who is still paying off student loans. “I never thought it would be that much.”

Dungan is among thousands of recent college graduates in the U.S. who are grappling with the realities of life after college -- overwhelming student debt and a weak economy that makes it difficult to find high-paying jobs. Overall, student loan debt has surpassed the $1 trillion mark nationally, and student loan debt exceeds credit card debt in U.S. households. A heated battle is under way between Republicans ad Democrats over student loan interest rates.

For Dungan and his wife, the couple lives “from paycheck-to-paycheck.” He pays $430 a month on his student loan, which is only one-fourth of the total debt. The couple is also paying about $200 monthly on his wife’s loan, which was around $20,000.

Dungan said he has multiple outstanding loans covering the $166,000, including federal and private.  “I was a little older, already married and living on two salaries when I decided to go to law school,” said Dungan.  He said they couldn’t survive off his wife’s salary alone, so he got a job waiting tables part time while attending law school.

In February 2012, he found a job as an attorney, but still struggles to pay off his student debt.  “Really, the only way we could live comfortably with this debt is if my income was somewhere around $120,000, which seems impossible to me now with the current status of the legal job market,” said Dungan.

Roughly 93 percent, or $111 billion, of the student loans projected to be made for the 2011-12 academic year are federal student loans, according to the Consumer Bankers Association.

Less than 7 percent -- approximately $7 billion to $8 billion -- of the total is private student loans, the association reported.

“Those federal loans are made without regard to creditworthiness,” said Wade Peterson, vice president of Wells Fargo Education Finance. “Almost anyone can get one.”

Education loans come in three major categories: student loans, Stafford and Perkins loans; parent loans, or PLUS loans; and private student loans, also called alternative student loans, according to FinAid.com, a website that provides information on financial aid.

Peterson said that up until 2010, banks were making federal loans as well as private loans. But a couple of years ago, lenders “were taken out of the picture and the Department of Education started making all federal loans.”

“With regard to private loans we offer, we believe private loans are a vital part of the future student loan market,” said Peterson.

“They offer a choice and option to shop competitively and based on circumstances.”

Peterson said that student loan debt is a “fairly serious” problem in the U.S.

In 2007, Congress cut the student loan interest rates in half, from 6.8 percent to 3.4 percent.

Now, there’s a heated battle between Republicans and Democrats over whether to raise the rate back to 6.8.

“Based on the family’s income level, some lower- and middle-income students currently pay 3.4 percent for federal student loans, while students from families with higher incomes pay 6.8 percent,” said University of South Alabama spokesman Keith Ayers.

“The pending change would move all undergraduate federal Stafford loans to the 6.8 percent rate, which would increase the total payback cost for families who previously benefited from the interest rate reduction subsidized by the government.”

If Congress doesn’t act by July 1, the interest rates on student loans will double to 6.8 percent for more than 7 million undergraduates, records show.

“We all recognize that a dramatic increase in interest rates on new student loans would be devastating to millions of young Americans just entering the work force,” said U.S. Rep. Jo Bonner, R-Mobile.

Bonner said that on April 27, the House passed the Interest Rate Reduction Act to prevent interest rates on new federally subsidized Stafford Loans from increasing next month.

He said that under the House bill, the nearly $6 billion in costs associated with the one-year extension of the student loan rate would come from unused money in the Prevention and Public Health Fund.

“Unfortunately, President Obama has threatened to veto our student loan rate extension because he would rather score political points than solve this pressing problem,” said Bonner.

The White House maintains that “Senate Republicans still have not proven that they’re serious about resolving this problem.”

“For the second time this month (May), they voted to ask millions of students to pay an average of $1,000 each rather than close a loophole that allows the very wealthy to avoid paying their fair share,” according to a statement last week from the White House press secretary’s office. “Now is not the time to re-fight old political battles, and certainly not the time to cut preventive health care measures.”

Ayers said the important message to students and parents “is that federal student loans remain readily available for students who desire to attend college but don’t have the resources.”

“The best advice we can offer is for students and parents to research the loan options available to them during school and the payback options available after graduation to make the very best decision for their personal circumstance,” said the USA spokesman.

Matt Mathis, who works for an insurance company, has been out of college a decade, and says he “can’t even make a dent into paying” his loan debt.

“It was way too easy to get the student loan and as an 18-year-old I had no idea the amount of stress these loans would cause me,” said Mathis, who is 33.  He graduated from the University of Alabama in 2004 and is still paying on the loan, which now amounts to $22,434.

Even when Mathis went to take out a loan to buy a house and a car, he said his student loan debt was an issue.  “It affects everything,” said Mathis. 

SOURCE





More pseudo-universities for Britain

Look forward to the University of Basket Weaving

Small specialist colleges will be given new powers to become universities in the biggest expansion of higher education in 20 years, it was revealed today.

Institutions with just 1,000 students – including 750 taking degree courses – will be able to win the right to full university status under new plans, the Government announced.

Previously, colleges could only apply for the title if they had at least 4,000 students, with 3,000 taking degrees.

The move – outlined by the Department for Business, Innovation and Skills – is expected to lead to the biggest expansion of the sector since the early 90s when the Conservatives converted dozens of polytechnics into full universities.

But the reforms prompted fears that ministers may be diluting the university brand.

Prof Michael Farthing, vice-chancellor of Sussex University and chairman of the 1994 Group, which represents research universities, said: “There should of course be scope for new and emerging institutions to gain the title of university, but we should resist moves to devalue the title through indiscriminate use.

“Not only would this let down institutions that work hard to develop the research and teaching traditionally associated with university status, it could damage the global reputation of UK higher education as a whole. “

The plans were confirmed in the Government’s formal response to the Higher Education White Paper, which was published last summer.

Ministers insisted that tight controls would be imposed to ensure that the new title only applied to specialist institutions with a strong track record of good teaching.

It is believed the university name would only apply to a small number of colleges, some of which specialise in areas such as agriculture, teacher training and the arts.

Institutions given new powers to apply include Norwich University College of the Arts, the Arts University College Bournemouth, University College Falmouth, Newman University College in Birmingham, Harper Adams University College in Shropshire and the Royal Agricultural College in Gloucestershire.

The move comes just months before tuition fees are due to almost triple to a maximum of £9,000 a year.

Ministers are keen to create a more diverse higher education sector to coincide with the change – giving more people access to institutions with the full university title.

David Willetts, Universities Minister, said: "It is right to remove the red tape stopping good quality, smaller higher education providers calling themselves a university."

Andy Westwood, chief executive of GuildHE, which represents a number of smaller specialist institutions said: "The Government's reduction in the qualifying threshold for university title represents the correction of a long-held anomaly.

"Smaller institutions have long offered greater agility, smaller classes, stronger graduate employment and better retention rates.”

The document also confirms that plans for further education colleges and private institutions to be subject to tight controls on the number of students – funded through Government-backed loans – that each one can recruit.

SOURCE




Australia: Not much multiculturalism in Sydney's elite schools

FEW children of recent migrants are entering Sydney's high-fee private schools, which remain the preserve of Australians from English-speaking backgrounds.

At many of the city's high-fee independent schools less than 10 per cent of students have a parent who speaks a language other than English. Trinity, MLC and Meriden - all in the inner west - are the only high-fee privates where more than half the student body comes from non-English-speaking backgrounds.

Nearly half the private high schools in Sydney enrol more than 80 per cent of their students from English-speaking backgrounds, according to an analysis of figures published on the federal government's My School website.

Monte Sant' Angelo, Wenona, Kambala, St Ignatius, Queenwood, Redlands and Ravenswood are among those schools where fewer than 10 per cent of students state that they or their parents speak a language other than English.

A number of private schools, catering for specific religious, ethnic or cultural groups, are almost exclusively attended by students from language backgrounds other than English.

In stark contrast to the elite private schools, public selective high schools are dominated by children of recent migrants. James Ruse, regarded as the highest-achieving school in Australia, draws 96 per cent of enrolments from other language backgrounds [mostly Chinese]. Only Auburn Girls, with 98 per cent, attracts more students from other language groups.

The map of school ethnic diversity parallels much of Sydney's cultural complexion. Although government high schools educate far more of the students from other cultures, public schools on the city's fringes, the north shore and southern suburbs also enrol few students from non-English speaking backgrounds.

Helen Proctor, a lecturer in the faculty of education and social work at the University of Sydney, said it was not clear whether the ethnic mix of private schools was the result of enrolment policies, geography or parental choice.

"Parents are broadly in favour of multiculturalism but alarmed about any concentrations of ethnicity, other than Anglo ethnicity, in a school," said Dr Proctor, a co-author of a book on school choice.

Schools such as Monte give direct preference to children of former students, while other private schools require students to be enrolled within the year of their birth to guarantee entry.

But Vicki Steer, the principal of Ravenswood, which has 9 per cent of students from other language backgrounds, acknowledged independent schools faced a challenge to win favour from migrant communities, most particularly those from Asia.

"For many families, having a child accepted at a school such as James Ruse is something they would perceive as a higher honour than an academic scholarship to Ravenswood," she said.  Ravenswood has introduced Chinese into its language offerings in part to make the school more attractive to Chinese Australians.

"We are committed to a multicultural society and promoting an understanding of other cultures and ways of life," Ms Steer said.   "We are very conscious of the fact that our girls live on the upper north shore, that for many of them their experiences can be limited and we have to try and create experiences for them."

Dr Paul Burgis, the principal of PLC Sydney, where 34 per cent of students are from other cultural backgrounds, said there was a huge level of exposure to, and acceptance of, other cultures at the school.

"It would almost be offensive if I, as a principal, was to talk about it: 'Why do you have to raise it as an issue? We're past that now, we're just friends'," he said.  "At a school like PLC it's almost an invisible question."

SOURCE



No comments: