The Student Debt Crisis

By: Jon Haag

Student loan debt is crippling an entire generation. Millennials are spending their young adult lives studying and budgeting their way to a degree that won’t get them the job they worked for, only to spend the next 20 to 30 years paying it back. Over 40 million Americans find themselves facing the same situation. It’s a financial dilemma unlike any other; it can’t be sold like a house; it can’t be wiped away with bankruptcy like a mountain of credit card debt, and private lenders are preying on young adults looking for a way to finance their dream. If it sounds eerily similar to the subprime mortgage crisis of 2008, that’s because it is. The predatory practices of student loan servicers echo those of the subprime mortgage crisis that severely affected credit and kicked off a global recession.

Not only are recent graduates attempting to push their way into a highly competitive job market, they are also beginning to pay back four years of tuition fees while balancing all of the responsibilities that come with being an adult. Student loans are a large burden for most people entering the workforce. Entry-level wages, high unemployment rates, and a lack of real world experience are obstacles every recent graduate must face. With mounting global competition and a ‘college-equals-success’ philosophy, more and more people are turning towards education to gain entry into their career field of choice.

Borrowers are coming out of their education with debt which directly affects their ability to own a car, own a house, sign up for a loan, use a credit card, or even rent an apartment. With an entire generation of consumers on a budget, they will be more reluctant to put their own money back into the economy at large.

The average student graduates with $33,000 of debt, according to a study done by Edvisors, a newsletter committed to helping borrowers finance their education responsibly. That’s more than twice what students accrued 20 years ago. With an average monthly payment of $242 and a 4.66% interest rate, it will take a student more than 16 years to repay the debt they accumulated over just four years. It’s a disturbing trend that sees borrowers willing to bury themselves in debt for a shot at their dream job.

The Student Delinquency Rate accounts for students that have missed the 90 day delinquency period in payment are rising. The rate has now reached 11.3%. This is in stark contrast to the delinquency rates for credit cards, automobiles, and mortgage rates that have seen a dip in recent years with the economy in recovery.

There are a variety of ways to cut down on student debt before the loans begin to pile up. Arguably the most important step to paying off debt is to avoid accumulating it wherever possible. It’s easy to enjoy a refund check in college until the post-graduation grace period is over.

The first step to relieving the financial burden of college is to fill out a Free Application for Student Aid (FAFSA) form. After a series of financial questions, an assessment of the student’s need for Federal Aid is given. This includes Stafford Loans, Perkins Loans, and PELL grants. Stafford loans are available in subsidized or unsubsidized form. PELL grants are awarded on a case-by-case basis, meaning that students from low-income households are given priority. State Grants are another helpful tool for students. In order to apply, the borrower must have filled out that year’s FAFSA. Funds are limited so the deadlines for applying are stricter than their federal counterparts. The amount of funds may vary by state. There are tax breaks offered for students and for families of students. The most important one is the American Opportunity Tax Credit. The AOTC was enacted in 2009 as an economic recovery package but has since been extended through 2017 with talks ongoing to make it permanent while other options for aiding borrowers are researched. However, the total yearly tax credit does not exceed $2,500.

Alex Zappia, a recent graduate from the Community College of Beaver County, recently joined the Air Force to reap the benefits provided by its various college programs. Even though he lives at home, he claims he would still have difficulties making payments on his federal and private loans.

“I am joining the Air Force because I need to repay those loans and also to continue my education through some of the benefits that they offer,” says Zappia. “Starting your adult life with 60-100k in debt is a huge hole to start in and will absolutely hurt the amount of money that can be put back into the market.”

The initiatives to forgive a borrower’s debt are few and far between. One of those is the Public Service Loan Forgiveness Program, which requires the borrower to work under an IRS approved entity.

“The student has to be able to make 120 payments on time, which most cannot,” said Chelsea Taylor, a licensed practical nurse returning to school to finish with a registered nurse certification.

With tuition on the rise, students are borrowing more and more money ever year. Cumulative student loan debt in the US has reached a staggering $1.6 trillion, eclipsing total credit card debt in 2010. This makes it one of the three biggest debts in the United States, right up there with mortgages and car loans. Experts have already found parallels between the student debt bubble and the subprime mortgage crisis. Robo signing, a shady practice that involves investors selling off a student’s debt to another collector without actually verifying the identity of the buyer, is giving borrowers trouble when they attempt to consolidate their student loan payments.

“The burden of student debt is jeopardizing the ability of young Americans to buy homes, start small businesses, and save for the future,” said Richard Cordray, director of the Consumer Financial Protection Bureau said. Cordray also went on to compare the student loan crisis to the mortgage crisis of 2008 which ultimately led to the biggest recession since the infamous stock market crash of 1929.

Unfortunately, even bankruptcy rarely helps with the mountain of debt accumulated over four or five years of studying, and with federal loans comes the ability to make a student pay in a way that private institutions cannot. After 270 days of delinquency, a loan will default. When the loan defaults, a student is obligated to pay back the entire balance immediately, and when that doesn’t happen, the federal government can take other actions. It can garnish wages and withhold tax refunds. This will adversely affect credit score, preventing borrowers from getting a mortgage or buying a car.

There is hope on the horizon, however. President Barack Obama recently proposed a plan to make community college federal and state-funded. The federal government would pick up 75 percent of the cost and states would be called upon to fill in the rest of the speculated $60 billion cost.

Student debt is a big talking point. Obama, who is on his way out of the White House, has addressed it several times. Not only is the President proposing free tuition at community colleges, he plans to implement the American Opportunity Tax Credit as a permanent part of the tax code, while simultaneously increasing the amount that can be refunded as part of the credit.

“I think his proposal is great, but where is that money coming from? It’s impossible to answer this without getting political. I don’t want to have to pay for everyone else’s college after I have fully paid mine off without any help,” said Derek Bortz, a recent graduate working in an electronics shop, “never mind paying for everyone else to have healthcare that I’ll probably never see either. All I would like to do is start to put away some money for the future, but these plans are making that a hard goal,” said Derek Bortz, a recent graduate.

The Hidden Struggles of the Working Poor

By: Charles Ivey Jr.

21st and Somerset in North Philly

When we were younger we all had a dream and were told if we worked hard enough we could accomplish anything. Often, we were not told about the barriers we would face, barriers such as discrimination. The level playing field that America still claims to offer no longer exist and when you are already considered to be at the bottom of the economic and social totem called the working poor, life can be rough.

Poverty can simply be defined as a general scarcity or the state of a person who lacks a certain amount of material possessions commonly referred to as money. Poverty can be permanent or temporary and most of the time can be closely related to inequality.

21st and Somerset in North Philly

African-American communities with high poverty rates can be seen all around the nation but mostly in bigger metro areas like Philadelphia and Pittsburgh. The topic of poverty reduction is a major issue across the country but nothing seems to get done to resolve the issue.

An offshoot of the issue is the discrimination of the working poor class. stereotypes, racism,assumptions and beliefs all play a factor.

“I think people don’t want to be poor,” Alfred Lubrano, a poverty reporter at the Philadelphia Inquirer suggested.” I think that people do want to rise above and the problem is that it is one of the hardest things to do in America.”

The working poor is a social class that to put blankly, consist of people who are working but barely making ends meet. These people do in fact have jobs but those jobs, which usually involve the service industry, do not help portray the “America dream.”

These jobs include anyone making minimum wage. A person can work very hard at these jobs, put in full weeks plus overtime. However if you make say, $19,700 a year for a family of three that is considered to be at the working poor level.

The issue of the working poor vs, discrimination has been a low profile problem for a while. Evidence from a sociological study of the American-American people of Philadelphia done by W.E.B Du Bois was published in The Philadelphia Negro back in 1899. During the Progressive Era, Du Bois saw society’s unequal opportunity as the main cause of poverty among the working poor. He also saw a connection between moral factors and poverty which draws a line between two groups.

One group consists of people who cannot escape the working poor class because they simply cannot overcome obstacles such as money issues or racial discrimination and the second group being people who live under the poverty line due to moral deficiencies such as not having the will to do anything.

The confusion of mixing the two groups often do occur.

“And yet well-meaning people continually do this,” wrote Du Bois in 1899.” They regale the thugs and whoremongers and gamblers of Seventh and Lombard Streets with congratulations on what the Negroes have done is a quarter century, and pity for their disabilities; and they scold the caterers of Addison Street for the pickpockets and paupers of the race. A judge of the city courts, who for years has daily met a throng of lazy and debased Negro criminals, come from the bench to talk to the Negroes about their criminals: he warns them first of all to leave the slums and either forget or does not know that the audience he is speaking to, left the slums when he was a boy and that the people before him are as distantly differentiated from the criminals he has met, as honest laborers anywhere differ from thieves.”

Being a part of the working poor or poverty in general can be the result of any combination of circu,stances such as being another generation born into poverty, causing a lack of skills and resources.

“Maybe one of the hardest things to do in America is to get out of poverty because you come from a poor place, a place that is dangerous. A place that has poor schools, poor role models, bad infrastructures, bad homes. there is bad health and a lack of jobs. so what you have to do is fight against each and everyone of those things,” Lubrano said.

There are people who are no longer a part of the middle class due to bad luck, being a victim of the competitive job market or a corporate takeover for example who ultimately ended up as the working poor.

During the recession, people held jobs that basically kept them on the thin line of the middle/ lower class and when they lost their jobs they were not able to find new ones. So they became a part of the working poor. The fact that people are forced to forfeit their jobs to outsourcing in places like India and China does not help.

A neglected factor that contributes to the working poor is the occurrence of forced college dropouts who could not afford to fund their college education. But sometimes while in the pursuit of a college degree, you may run into mental barriers too.

“Sometimes just the fact that you are educating yourself is almost like an revolutionary act because alot of people around you will ask, ‘why you doing that?’ and ‘why don’t you just be like the rest of us?’ It’s tough because there are people around you that’s not even encouraging you to do it. It is the single toughest things to do in America and I think people don’t understand that,” Lubrano mentioned.

“It’s crazy because in the city, it is a lot of resources but people keeping getting sucked back in because xyz,” Dolores Gonzalez Adriaanse said, a post secondary and career specialist at the Philadelphia Education Fund.

A few steps from 22nd and York was an empty home next to a lot filled with snow covered trash

Throughout North Philadelphia you will see bordered homes, litter filled vacant lots and loitering groups of mixed ages sitting around as illegal dirt bikes and ATVs with poorly done paint jobs swerve in between traffic as if they were invincible. A stimulus scene which influence many minds into thinking this is all that government assistant produce.

“I think there has been some exaggeration about it, [working poor and government assistance.]” Lubrano said. “For example, many people will say that there are people trying to take advantage who are on food stamps. In fact, the majority of people on food stamps or either disabled, children or elderly. Yes, there are so called ‘abled body’ Americans on food stamps but the vast majority is that other group and they’re not taking advantage of the system they are simply trying to survive.”

No matter where you look or who the issue is blamed on there is always in the back of someone’s mind the urge to group people of a particular background in one homogeneous unit. When you are on the outside looking in your vision often narrows.

People who look from an outside lenses make judgement about who these people are and do not really understand the over dominating pressure(s) that are dragging them down. Someone looking from the outside would not experience these difficulties.

More privileged people wake up in safer communities vs. Pittsburgh’s North side section. They experience good schools, good environments where good role models are present. They have one benefit piled on top of another and it is not uncommon for those same benefits to be invisible to them, hinting towards the illusion that they earned everything they have their selves. They assume the working poor have the same opportunities in life as they did, believing the working poor had the choice to be like them.

The simple answer is that they just do not have the same positive experiences in life and when coming right down to the point, the ideology of poverty can and will influence the discrimination of the working poor.

In a way the American dream still exist, it is just not a dream everyone have the luxury to experience. As Lubrano puts it:

“Sometimes it’s just what you’re faced with, no one in your family really rose above poverty and it has a force like gravity, it kind of holds you back. so there is a number of reasons but it all spells out the same thing which is the great difficulties to rise above.”

A Womens struggle for stability

BY: TRISHA RICE

Not everyone has the luxury of owning having a good job, owning a nice house, and making ends meet. And many Americans every day face the fact of not being able to pay the bills or put food on the table.  Some people need the help of Food Banks, Food stamps, and shelters.

A girl named Danielle Richter, 23, has struggled with money every day of her life. Danielle grew up in Ellwood City, Pennsylvania a small town near Butler.

Growing up her parents didn’t teach her how to save her money for bills and food. “Growing up my parents never had a lot of money and I was never taught that you needed to save for anything. But obviously when I got into college I realized that wasn’t true”, Danielle said.

Then Danielle went to college and reality hit. Most students struggle through college making ends meet because there isn’t time for a full time job. “I worked at Perkins a few hours a week but that didn’t help out much with the bills. Then I got a job at Lowes which made me a little more money but they wanted me to work too many hours and I could not keep up with my school work”.

Invisible Struggle

By Danielle Robits

Sarah Smith is a 24-year-old woman with Cerebral Palsy from Buffalo, New York, who recently made the decision to go back to school to get her master’s degree in social work.  

She picked social work because, “I wanted to help people help themselves.”  There were two main factors which influenced Smith’s decision to further her education.  She says that, “You either need experience or a masters degree to be able to obtain a job and you need one with the other.”

 Smith does not believe her disability is a hindrance when it comes to searching for jobs.  “ I’m as good if not better than those without a disability.”

Vester Howard, who also has Cerebral Palsy, made the decision not to further his education “for the following reasons: one, I can’t afford it.