Tuesday, July 2, 2013

You Are Not a Loan

“Debt is the slavery of the free.”

~ Publilius Syrus

Did you know that more than three-quarters of American households are in debt?

How about the facts that student debt has exploded in recent years (tuition debt exceeds $1 trillion), the ratio of household debt to income is 154 percent, one in every seven Americans is being pursued by a debt collector, and 40 percent of indebted households used credit cards to pay for basic living expenses?

At least we can take comfort in knowing that Congress is moving quickly to address this burr in our collective ass, isn’t it?

As if.

The sad reality is that although politicians have known for months that interest rates for student loans were set to rise yesterday, they left Washington last week without doing anything to halt the increase.

I guess keeping campaign promises – during last year’s presidential race, both parties pledged to extend the 3.4 percent interest rates – and emphasizing the importance of higher education aren’t as important as renaming post offices and marching in Fourth of July parades. (The 112th Congress has distinguished itself as the most unproductive since the 80th Congress in the 1940s.)

House Republicans postured and pandered while filibustering an attempt to halt the increase and voting instead to raise the rates to as much as 8.5 percent. President Obama criticized the GOP proposal as “not smart” and “not fair,” insisting it would add to the burden that low- and middle-class families shoulder paying for college. And pols argued about tying the student loan rate to the ups and downs of the financial markets.

Some say the supersecret ultimate goal of GOP politicians is to turn student loans back over to the banks. One pundit explained, “By turning [student loans] into variable rate loans, House Republicans are laying the groundwork for the big banks to make huge profits off of students should they get their hands on student loans again.”

I wouldn't put it past 'em.

According to the Associated Press, “Subsidized Stafford loans, which account for roughly a quarter of all direct federal borrowing, went from 3.4 percent interest to 6.8 percent interest on Monday. Congress' Joint Economic Committee estimated the cost passed to students would be about $2,600.”

How many college students do you know who are going to be excited about adding $2,600 to their tab?

Patrick Arthur – an activist/writer friend who spent months covering the Occupy Wall Street movement in New York, Louisiana, Georgia and Washington, D.C. – told me about “Strike Debt,” an offshoot of OWS that bills itself as a “nationwide movement of debt resisters fighting for economic justice and democratic freedom” (click here for Strike Debt’s website) and “Rolling Jubilee,” a nonprofit organization which solicits donations that it uses to purchase debt – banks sell debt for pennies on the dollar – and then cancels the debt rather than trying to collect it. (According to the Rolling Jubilee website, $10 liberates a person from $200 in debt, $20 obliterates $400 in debt and a Benjamin takes the weight of $2,000 in debt off someone’s shoulders.)

Want to know what impressed me about this movement? Patrick told me that over 1,000 folks in Kentucky were anonymously relieved of student and medical debts a few months ago. “Yes, there needs to be more personal responsibility in America,” he said, “but the other side is that we live in a predatory environment where good people are reduced to a life of scraping just to breathe. Together, we can free ourselves of enforced, systemic burdens and make something better for our kids to enjoy.”

I know some cynical people who regularly ridicule the OWS movement and deny that it had any real impact. But 1,000 Kentuckians would beg to differ.

P.S. I’m reminded of the very entertaining video of Alan Grayson stomping P.J. “Yes, I’m a Drunkard and an Ass” O’Rourke into the ground for ridiculing the OWS movement on “Real Time with Bill Maher” back in October of 2011:

Historical loan sign photo courtesy George Marks/Retrofile/Getty Images.

Sources: Patrick M. Arthur, Strikedebt.org, Associated Press, PoliticsUSA.com, CNN.com, Rollingjubilee.org, Foxnews.com, Huffington Post.

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