From Graduating Class to Indentured Class – Will America Continue to Eat its Young?

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Will America Continue to Eat its Young?

She was angry then, and not exactly pleased now – but Cryn Johannsen, Executive Director of All Education Matters (AEM), feels that student debt is finally being addressed at the highest levels of government.

When I say “then,” I mean the time back in March of 2011 when, still basking in the chilly Spring of the Occupy movement, Cryn Johannsen was working hard to see that student debt got as much attention as mortgage debt.  (She discussed that current reality in my earlier WGRNradio interview with her bit.ly/YsfvN8).

So, here we are today.  Student debt now exceeds $1 Trillion and is considered to be the “next big bubble” to pop.  A recent Time Magazine article provided these sobering facts:

In the past five years, the average student loan debt each borrower carries has risen 30% to $23,829. More than half of student loan accounts (adding up to more than 40% of the total dollars owed) are in deferral status.

The good news: students can defer for a few years before they have to repay.  The bad news: FICO Labs found that delinquencies rose by 22% in five years. For the newest group of loans it studied, delinquency rates are 15.1% — higher than the 11% cited by the Federal Reserve in a November report.

How can any student have any hope of a way out in the face of these statistics?

In her recent AEM article, Cryn offered one ray of hope – restoring bankruptcy protection to private student loan borrowers (bit.ly/WJQZdW).  As she pointed out, HR 432, a bill introduced by two Democrat House members, offers that way out.  But, don’t get too excited – this is the fifth time that this type of legislation has been presented for passage.

She describes its complexity.  On one side, there is the U.S. government as the largest lender in the U.S., then there are the universities through which – and to which – these monies are being funneled, and the lending industry that was born out of the federal government, Sallie Mae.  Each depends on the other, and each finds the other to be the “real” problem.

In the meantime, the student debtor is swinging in the wind.

She also shares her personal stories of students, deeply in debt, who have either considered suicide or carried it out.  “Deeply troubling,” is her understatement.  “Americans are very ashamed that they are in debt…and I keep getting notes and pleas for help.”

Cryn applauds the “collective voice” of the Occupy movement as well as the numerous articles that journalists have written for ensuring that student debt could not be swept under a legislative rug.  That Occupiers would wear signs and carry placards letting people know how much they owed “was heroic.” People are finally not “hiding the debt that we have,” an important first step in becoming free of it.

If you would like to know more about Cryn and her work, you can find her on Facebook (on.fb.me/XACtB0), at her website (bit.ly/WJQZdW), on LinkedIn (www.linkedin.com/in/chasecrynjohannsen), on Twitter  as @Cryn_Johannsen and by way of email at ccrynjohannsen@gmail.com.

(For the listener: A technical heads-up.  Please excuse the “crackles” that show up in the sound at times.  This was a defect in the cellphone, but I trust the content will more than make up for any annoyance.)