The Education section of the New York Times online (one of the best places to go to find out what’s the people who make decisions are reading), ran an article last week talking about the federal work study program and how it can fit into the ever-more-confusing funding structure to pay tuition. I had to make at least a few comments on this article and relay some of my experience with the work study program and the real world that I dealt with in college about a decade ago. [Read more…]
The Latest and Greatest with My NJHESAA Loan
Ah yes… Time once again to take a quick look at my student loan for the New Jersey Higher Education Student Assistance Authority. This loan aggravates me for a variety of reasons (which I’ll state below). I am pleased to announce, though, that I’ve made somewhat significant progress in paying down this loan to a less unruly level than when my repayment began. Since I began repaying the loan, I’ve reduced the principal due by a few thousand dollars, which is pretty good considering the interest rate.
Anyway, some things about this loan just make me (and thousands of others, I’m sure) mad:
- Interest Rate: I’m paying some 7.33% interest on my NJCLASS loan. That’s just too high of an interest rate for a borrower like me, who has an 800 credit rating. For comparison’s sake, my Direct Loan from the federal government has a 4.25% interest rate – much more acceptable.
- No Online Payment: I’m not sure how, in the year 2009, NJHESAA does not have an online repayment option. That’s crazy. When I graduated from Rutgers with my Masters Degree I had three student loans. One of them was to CitiBank. I was able to pay back the entire CitiBank loan (which was probably $8,000+) in less than a year because of the online payment options. NJHESAA is really missing out on getting an extra $50 here or $250 there in online payments. Either that, or they’ve strategically opted to not have an online payment gateway.
- Balance Inquiries: In a related point, the NJHESAA has no active online resources for borrowers in repayment. In other words, I can’t log-on to their website and check my balance or see my previous payment history. All of this is available with the federal government’s Direct Loans program.
- You’re Stuck: However, one of the most aggravating parts of the NJCLASS repayment is that you’re stuck with NJHESAA. I can go out and find better repayment terms from another lender, but I would not be able to pursue the improved terms without NJHESAA approving me taking out their entire loan. Let me rephrase that so everyone understands… I can go to Bank of America and get approved for a 4.5% loan specifically to repay my NJHESAA loan. However, I cannot repay my NJHESAA loan in full by switching to Bank of America without NJHESAA’s approval to do so. Talk about dealing in a fair marketplace…
One of the things that really irks me about this loan, though, is more of a historical aggravation in that NJHESAA once reported me to the credit bureaus as having paid 30 or 60 days late…while the loan was still being deferred because I was still in school! Talk about complete insanity!? And when I called them up to complain, they said that while they agreed that the report to the credit bureaus was an error on their part, there was nothing they could do about it. This negatively affected both my credit score and my Mother’s credit score since she was a co-signer at the time. Bear in mind that both my Mom and I have never made a late payment on any account at any point in time ever. Thankfully, I’ve disputed NJHESAA’s erroneous report with all three credit bureaus and they’ve removed the late payment error.
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While the entire student loan industry needs a vast amount of reform, at this point I’d settle for a company like NJHESAA getting itself into the 21st Century with an online payment and loan balance/information portal!
Could Canceling Student Loan Debt Help?
While playing around on Facebook the other day, I came across Robert Applebaum’s “group” called Cancel Student Loan Debt to Stimulate the Economy. On the group home page, Applebaum goes into detail on how canceling student loan debt would stimulate the economy in a variety of ways. Here is only a sampling of what this lawyer-turned-advocate suggests:
Forgiving student loan debt would have an IMMEDIATE stimulating effect on the economy. Responsible people who did nothing other than pursue a higher education would have hundreds, if not thousands of extra dollars per month to spend, fueling the economy NOW. Those extra dollars being pumped into the economy would have a multiplying effect, unlike many of the provisions of the new stimulus package. As a result, tax revenues would go up, the credit markets will unfreeze and jobs will be created.
Let me be clear. This is NOT about a free ride. This is about a new approach to economic stimulus, nothing more. To those who would argue that this proposal would cause the banking system to collapse or make student loans unavailable to future borrowers, please allow me to respond.
You can go read Applebaum’s group page to see how he responds to the obvious criticism. What strikes me is that that aggregate student loan debt in America is roughly $600 billion. The government passed $700 billion in stimulus spending last October (which has been a failure) and another nearly $800 billion last month. Plus there is a spending bill currently before the Congress that would increase the number of dollars being spent on ridiculous earmark projects. By some estimates, in total we could be spending $2.3 trillion on stimulating the economy…with little of that actual money going directly to benefit the middle class.
Applebaum’s suggestion is an interesting one and given the personal nature of the suggestion, each person who supports or rejects it will have specific reasons why. Many of those who reject it will project their life experiences on the stories of those who support it (a common, aggravating problem in the student loan world). Likewise, many of those who support the proposal will have a level of debt that could likely be paid off after a few years of hard work and saving. But there were always be exceptions that drive the argument forward in some people’s minds. You can find some of those exceptions by reading the a petition currently on The Petition Site calling for Applebaum’s plan to be put into action.
I signed the petition and added a little bit of my story, which I think suggests why enacting a student loan forgiveness policy would be beneficial for me. Here is my little blurb, reprinted for your reading:
I graduated with $118,000 in student loan debt. Without taking out these loans, I would have never been able to receive the high quality education that I did. All I did was pursue the American Dream…and now I pay about $1,000 each month because of those student loans. I have a great job and I still can’t buy a home – heck, I can’t even buy a new car! I’m still making my payments and I’m still paying down my debt (down to $104,000 now). But if I could use that extra money each month to buy a home or a new car, I would do it in a heartbeat. However, on the path that I’m on now – neither purchase will be possible for at least the next ten years. Great…
I’m not sure if either purchase won’t be available for the next ten years, but repaying at the rate that I’m currently going (which is above and beyond the minimum monthly payments) will certainly put me on that timetable. Something needs to be done and though I have a few different ideas about how I plan on addressing this debt (can’t keep a good man down!), it would be so much more effective if the government stopped collecting it’s 4.75% interest rate off of the $50,000+ that I owe it in principle.
I don’t want a handout and I know that if things don’t change, then I’ll be able to payoff my student loans in due time. But during a time when Wall Street executives are getting million dollar bonuses for failing and when banks, insurance companies, and the automakers are getting money hand over fist from the government, you would hope that – at some point – someone in Washington steps back and says, “Whoa! What are we really doing here?!” If somebody would do that and champion this cause over the current bailout causes, I think it would truly stimulate the economy.
Obama’s Hope on College Affordability
President Obama gave his first address to the Congress last night and he addressed a variety of topics. The one topic that piqued my interest was his discussions about education and higher education specifically. Higher education affordability for all Americans is one of my major issues as a voter so I thought I’d offer some comments here. The text from Obama’s speech:
I know that the price of tuition is higher than ever, which is why if you are willing to volunteer in your neighborhood or give back to your community or serve your country, we will make sure that you can afford a higher education. And to encourage a renewed spirit of national service for this and future generations, I ask this Congress to send me the bipartisan legislation that bears the name of Senator Orrin Hatch as well as an American who has never stopped asking what he can do for his country – Senator Edward Kennedy.
You know – that’s a very inspiring thought and a good idea. I wonder about how realistic it is in action, though. For example, what will the cost be to the government if High School Student A volunteers X amount of hours in his or her hometown and thus meets the requirements of this program? Will the government pay all of their tuition at a public school? Half? A quarter? What is the number that makes college affordable for a student?
Further, what happens if High School Student B – who is from a better off family than Student A – does the same amount (or more) of volunteering than Student A? Since Student B is from a well-to-do family, then does he or she get anything for their community service? The same end was achieved – citizens served their community. Right?
And what happens when High School Student C needs another 50 hours of community service by the deadline date to qualify for whatever this grant money will be? Are we to believe that if Student C’s family knows people who know people that they won’t write-up false letters showing all of the service hours that Student C volunteered?
I don’t want to sound like a negative guy on this proposal, but it seems like it’s a bit too nebulous right now. I’m all for college affordability so long as 1) it is a program with no discrimination (income included), and 2) it’s fiscally responsible. We didn’t get that information last night. Other than that, I thought the President’s speech sounded more like a campaign speech than anything else, but I had no major fundamental problems with it.
Lobbying for Smartphones in the Classroom
You have to admire the lengths that certain industries will go through in order to make a buck during a recession – even if those lengths are laughable at best. Monday’s New York Times had a great article that talked about how the cell phone industry is funding research that proves smartphones help student perform better in the classroom.
Imagine that! The cellphone industry is publishing a report that suggests the education industry – one of the largest in the United States – should invest in smartphones for its students. Brilliant.
This reminds me of a situation that came up at my job last year. We were engaging in a contract with a lobbyist to advocate for more dollars to be spent on education facilities. One of the ideas that our boss at the time had was to generate an in-house report showing the need for more facility dollars and how our organization was well positioned to use those dollars most efficiently.
I almost jumped out of my skin.
Can you imagine being a legislator and having ABC Company come up to you and say, “We need more money for Project X. Here is a report showing the need for more money for Project X. Please note that ABC Company is the best organization to utilize extra dollars allocated to Project X.”
Talk about self-serving! Any legislator that is worth their skin would laugh off that report and – if they are really interested in whatever “Project X” happens to be – would commission an independent report. Luckily, through some arguments and some luck, my company partnered with a highly regarded university to create an independent report on the idea of more money for school facilities. It was a much better option than having us do a report in house that essentially says, “Give us money.”
Anyway, you can read the full text of the New York Times article, but trust me – it’s slightly ridiculous.
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