Collegiate Catch-22 or Economics 101

It is a known fact that we can improve our employability and our lot in life by developing greater skills and knowledge through higher education. According to recent studies, the average new 4-year graduate will earn approximately $27,000 more than someone with no degree. It is also a very sad reality that the sky-rocketing costs of higher education are placing college out of reach for many. The other sad reality is that higher education costs are burying many with student loans in spiraling, inescapable debt.

That’s right - student loan debt (federal loans in particular) is inescapable. Even in bankruptcy, the debt from student loans is not and cannot be eliminated. This is totally unlike any other debt. “Virtually any other kind of debt — including medical bills, mortgage, credit cards and car loans, even gambling losses— can be discharged in bankruptcy, allowing the "honest but unlucky" a chance to restore their footing through an arduous restructuring overseen by a court.”[1]

 

“Forgive us our debts, as we forgive our debtors.” (Matthew 6:12 NRSV) Debt “forgiveness” is nothing new. It’s biblical. In fact it goes far beyond Jesus’ words in Matthew. It is found in Hebrew tradition. “Every seventh year you shall grant a remission of debt.” (Deuteronomy 15:1 NRSV) Debt “forgiveness” in bankruptcy, while difficult, allows folks suffering the slings and arrows of financial misfortune to begin anew, from the ground up. Why is there such inequity in the laws that student loan debt is “unforgiveable”? That, not the debt, is unforgiveable.

To add insult to injury, those taking out student loans for the upcoming academic year can expect interest rates on subsidized Stafford loans to double, as of July 1^st. That is, unless those on Capitol Hill can set aside partisan politics to hold rates at 3.4% for another year. Another forthcoming change is elimination of deferment until graduation. Thus far, principal and interest on subsidized student loans has been deferred. With the upcoming academic year, only the principal will be deferred. Interest will accumulate for the entire lifetime of student loans – yes, while students are in school. There are many college graduates who cannot find gainful employment, due to the unemployment situation in the country.

We are called to speak out against injustice. The laws regarding student loan debt are unjust. I strongly suggest that we write our U.S. Representatives and Senators to change these laws. First, we need to encourage our Senators to pass the GOP bill that will keep interest rates at 3.4% for another year. Then, we need to encourage our lawmakers to change the laws such that ALL debt is null and void in bankruptcy, even student loan debt.

Benevolent God, you call us to reach out to and to stand with the poor, the oppressed and the weak. Make us courageous ambassadors for poor, voiceless students. Help us foster a safe economic environment for those seeking to better themselves and society through higher education. Amen.

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[1] Even after bankruptcy, trapped by student debt, by Justin Pope, AP Education Writer | Associated Press – Wed, Apr 25, 2012 4:15 PM EDT, http://finance.yahoo.com/news/even-bankruptcy-trapped-student-debt-195547458.html