Streams

Occupy Wall Street Unmoved by Obama's Student Loan Changes

Thursday, October 27, 2011

A sign advocating student loan reform rests on top of sleeping bags at the Occupy Wall Street protests at Zuccotti Park. (Anna Sale/WNYC)

At Occupy Wall Street, between signs about demanding more regulations for banks and less money in politics, another common refrain has focused on the massive student debt load facing young people entering the workforce.

President Obama picked up on that theme and announced a series of student loan reforms in Denver students on Wednesday.

“About 1.6 million Americans could see their payments go down by hundreds of dollars a month and that includes some of the students who are here today,” he announced to a crowd of cheering students in a rousing, campaign-style speech. 

But at Zuccotti Park, the reaction of Occupy protesters was much more muted — and cynical.

“There should have been a bailout for people and students when they bailed out the CEOs,” said Paul Moore, an Occupy protester who’s been at the park for over a month. “To hear that he might have done something to help the millions of kids struggling with student loan debt, it might be because he has to reclaim the student base that helped him win in 2008.”

What Obama’s Announcement Changes

Both the president and Occupy Wall Street protesters agree on the scope of the problem. Student loan debt is approaching $1 trillion and already exceeds the total credit card debt in the country. In his Denver speech, Obama laid out how years of student loan payments hurts the overall economy and makes it more difficult for young people to start families, buy homes, and invest in retirement. Occupy Wall Street protesters lament the same thing, but use terms like “wage slavery” and call for wide-reaching student loan forgiveness.   

President Obama announced several changes on Wednesday that he’s able to make without further action from Congress. One is a push to help former students refinance their federal student loans. Another change moves up an adjustment that will lower monthly payments based on a graduate's income. Starting in 2012, the payments will decrease from 15 percent to 10 percent of discretionary income. That change had been scheduled to go into effect in 2014. 

As it stands now, if enrollees in this income-based repayment program, loans are totally forgiven after making payments for 25 years. That will now be shortened to 20 years next year, instead of 2014, when it was scheduled to go into effect after Congress passed a student loan overhaul last year.

But one of the challenges with the federal income-based payment program is a low participation rate. Only about 450,000 borrowers currently participate, out of 36 million Americans with student loans.

Baruch College Financial Aid Director Steve O’Meara said part of the issue is that for graduating students, impending student loan bills don't immediately register, and they breeze through a required internet-based exit interview with the financial aid office.

“Typically, when a student is graduating, and they're elated, and this is really just another checkbox that they need to complete. It's not necessarily a priority for students,” O’Meara said. “For us, it is.”

Another initiative announced Wednesday by the president is aimed to address this. President Obama wants to make payment and loan information more clear to borrowers with a new outreach effort called Know Before You Owe.

Occupy Protests Call for Loan Forgiveness, Not Lower Payments

But many Occupy Wall Street protesters see the president’s move as trying to harness their energy without doing enough to change the system.

At Zuccotti Park on Wednesday, protester Gil Torres didn't see a way that this was going to help him. He lives in Manhattan, and has more than $100,000 in student loan debt in both federal and private loans from college and law school. He's already defaulted once when he was just out of school, adding tens of thousands of dollars in penalties to the principle he owes. Then, he was laid off from his attorney job three weeks ago and says he is worried.

“It's definitely on my mind,” he said. “It's concerning, and what's going to happen next. It makes me question whether it was even worth going to law school.”

Overall, there was a general sense among protesters that the president was responding to them by focusing on student loans, but some saw the move as Obama just co-opting their message.

“It's really frustrating to see how something that supposed to, in the language of helping us, is not actually doing anything,” said protester Jason Ahmadi. “The people have these real concerns and mobilized to look for real answers, and they make changes that have the language of solving the problem, but actually don't do anything.”

And this gets back at the larger political problem for the president. President Obama was explicit at his Denver rally that he needs the support of young people to pressure Congress to do more, in a call to reignite the kind of enthusiasm he sparked in 2008.

Back then, Ahmadi was just out of college and volunteered for Obama’s campaign in the battleground state of Nevada. This time around, he’s spending that political energy at Zuccotti Park. 

Tags:

More in:

Comments [2]

Bill Hardin from Johnson City, TN

This is making sense to me. Keep sending those comments.

Nov. 27 2011 11:08 AM
Nick

I used to work at a financial aid office at a community college in NJ. It wasnt uncommon for students to borrow using stafford loans. The tuition, at the time, wasn't very high, but students would borrow anyway. (Usually full time tuition plus fees was under $1,500.00, books being another 3-5 Hundred). So 2 Grand a semester to go to school at around 12-13 credits. So, if you borrowed 2000 a semester and complete your 2 years on time you would have $8 grand in student loan debt. This is just for an associate's degree, 60 credits. Now once a student chooses the University they want, lets say Rutgers, this amount will skyrocket after the student completes the rest of the 60 credits. So, a student, going to the cheapest community college followed by an affordable University would probably end up with about 25 to 30 grand in student loan debt. Half of it being federal loans, the other possibly being from private loans. The private loans are the worst, high interest rates and different confusing repayment options.
There needs to be more public money going into schools, and more regulation on how the schools can spend the money. Since the mid 2000s when I started working at the college I worked at til present, roughly 10 years, school state aid had been decreasing, which, you guessed it, made tuition go up every year.
Next, the government needs to set uniform laws for private lenders.
Also, prior to a student attending a school, they should be required to attend a meeting with a school administrator who will map their costs for their entire stay and explain what and how student aid/loans will help them. I think if a student wants to go to a school and knows exactly how much everything costs and what they will be repaying when it is over, he/she and his/her family will be able to make a better more informed decision.

Oct. 27 2011 09:09 PM

Leave a Comment

Email addresses are required but never displayed.

Get the WNYC Morning Brief in your inbox.
We'll send you our top 5 stories every day, plus breaking news and weather.

Sponsored

About It's A Free Country ®

Archive of It's A Free Country articles and posts. Visit the It's A Free Country Home Page for lots more.

Supported by

WNYC is supported by the Charles H. Revson Foundation: Because a great city needs an informed and engaged public.  Learn more at revsonfoundation.org.

Feeds

Supported by