Why I'm not excited about the new IBR Program

The Income Based Repayment program does not impress me. Recently, Sandra Baum from the College Board was asked to inform people of how financial aid has changed. I take issue with the fact that Baum says again that "borrowing for college is sensible." We'll get to that in a moment. First, let's discuss why IBR is unimpressive.

Realistic Scenario - John and Jane, a married couple with student loan debt. (See them above, sipping wine and adoring one another).



If a married couple both have debt, the spouse's income counts in determining the person's monthly payment, but the spouse's debt doesn't count.


So, John and Jane both have 100k in student loan debt. 


John makes 45k a year. Jane makes 35k a year. Yikes! (They really are being reckless in their spending - I mean, they're drinking red wine and their clothes look awfully smart. Those irresponsible borrowers!)


In any event . . .


In determining John's payment, his household income is calculated at 70k a year, but his student loan debt is only calculated at 100k, and the same goes for Jane. Therefore for each of them, their household is calculated at 70k in income, but their total debt burden is only seen as 100k. When it fact it's 200k. (Remember: John owes 100k and Jane owes 100k).    



Hmmm . . . should John and Jane, even though they're madly in love, divorce?


Here's an IBR calculator - have fun with that!

I filled it out. Here's what I was informed:

"Unfortunately, current IBR rules use your and your spouse’s combined income to determine what monthly payment you can afford, but do not consider the burden of your combined student debt. This results in higher payments for both borrowers, a type of double-counting that is unfair and inappropriate for your situation.
The US Department of Education has agreed to revisit this rule and factor in both spouses' debts when calculating one applicant's IBR payments, but that change would not go into effect until as late as July 2010. In the meantime, the current rules will apply. Please sign up for our mailing list so we can keep you updated on these and other changes. More information is available here."

Hmmm . . . I'm glad I got married, but this news is not good.

Let's talk (again) about Baum's claim that "borrowing from college is sensible." To be cont . . .

The Relevance of Resurrecting and Recycling News: For My New Readers

Many of my readers have praised me for being prolific. They have also made remarks like, "I'm going to have to sit down and spend an hour exploring your blog when I have time!"

Since I'm picking up many new readers, I wanted to return to a few blogs I think are worth "assigning" to those of you who are new and wish to read my more investigative work. Here's a list below of what I think are important to understanding the heroes and the . . . ahem . . . villains in the student lending crisis. (Mind you, the reader will determine where the characters fall under each category, particularly the latter one. Most of the people I'm writing about aren't villains, but have decided to believe and work for a corrupted and broken system.

The decision to compromise one's ethics is paradoxically complex and simple. For instance, after I told a one researcher that they were on "the wrong side of the fence," they claimed that they were not even aware of how their organization functions. And, they added, "I'm just doing my job," or something like that. THAT claim is not an excuse. I like to direct anyone who makes such a cavalier remark about their "job," to this book by Hannah Arendt. (In this case, their role and their "I'm-just-doing-my-job" excuse, in fact, effects the lives of thousands and thousands of young people in America). I hesitated to make these remarks, but having studied this time period carefully (in contrast to the likes of Sarah Palin and her ilk), and I think the banality of evil is something we must, as a society, be cognizant of how. Indeed, it is our duty to be aware of how banal evil informs our thoughts, our actions, and the jobs we choose. I'm certainly not implying that the end point of your blase beliefs about "just doing a job" is leading people to gas chambers. Certainly not. I am, however, suggesting that the banality of evil appears in a variety of forms, and in the case of the student lending crisis, it seems clear to me that it exists in problematic and immoral ways. That's why we - all of us in this debate - must think about the sides we have chosen and why. 

Und jetzt die Abfallverwertung . . .

As promised, here's the list of earlier blogs worthy of reading:

1) "The Resurrection of the Dept. of Ed. G-Man and America's Collective Trauma" (originally posted August 13, 2009)
2) "Part II of the Resurrection of the Dept. of Ed. G-Man and America's Collective Trauma" (originally posted August 14, 2009)
3) "BREAKING NEWS PART I: My Debate with Patricia Steele and Sandra Baum" (originally posted August 15, 2009) - Patricia Steele, a research analyst, and Sandra Baum, an economist, work for the College Board, and I had a lengthy debate over the course of two days with both of them.
4) "BREAKING NEWS PART II: The College Board USED to be LENDERS" (originally posted August 15, 2009)
5) "Quod est veritas? Why isn't the Department of Education putting out any reports on student loan debt?" (originally posted on August 20, 2009)
6) "And yet another posting about the College Board" (originally posted August 21, 2009)

BREAKING NEWS PART I: My debate with Patricia Steele and Sandra Baum

Education Matters sent word out to movement supporters and leaders about Kim Clark's August 12th 2009 article, "Is Student Debt Really a Problem?" This article details a recent report from the College Board. In the report, the findings conclude that student debt really isn't as troubling as people would think.

A particular comment sparked outrage (understandably), and a fury of posts, which continue to be added today (SATURDAY), ensued. First off, who wrote this report and what was the remark that caused all this justified anger?

a) The report was drafted by Patricia Steele and Sandra Baum.

b) Steele claimed that the College Board put out the report in order to "take down a notch the sensationalist stories about students drowning in debt [my emphasis]."

The College Board is described by Klark as an "organization made up of colleges." In truth, there's more behind their involvement with this sticky, nasty lending industry, but I'll save that treat for later.

To describe the obvious systemic problems that the media has finally begun to discuss as "sensationalist" was a poor choice of words for Ms. Steele.

Here's what I wrote to them in an email on August 13, 2009:

Dear Authors of Recent (Highly Problematic) Study Regarding Student Loan Debt:

I am a blogger and my blog is about education. I am getting a lot of traffic and also am a supporter and volunteer for Robert Applebaum's Forgive Student Loan Movement. You recently stated that you published your report about student loan debt to "take down a notch the sensationalist stories about students drowning in debt." (You said that, Patricia). I find that remark to be offensive at best and condescending at worst. Your findings are highly questionable and do not take many factors into account. The stories I read on a daily basis about the crushing debt that middle class families have acquired as a result of sky-rocketing college tuition costs are heartbreaking. I am glad I'm on the right side of this argument. It is clear that lenders and higher education institutions are very nervous. They're actually responding. That means this movement is growing and proving to be more than just an irritating itch! We are talking about working- and middle-class families who are trying to better themselves, and you say something like that? Have you even bothered to read their stories? As social scientists who do an excellent job of crunching numbers for the College Board, I can only presume you lack the ability to synthesize these accounts. Thankfully we have historians who can tell richer stories and don't just look at the "numbers." That's a bad way to understand the complexity of modern society. I will be blogging about this piece soon. I will not be the only you will hear from.

Respectfully, Ms. C. Cryn Johannsen

This email got the authors' attention. Patricia was the first to write to me. Most of these emails were essentially "public," because I had cc-ed Robert Applebaum, Alan Collinge (if you're not familiar with his name, Collinge is the founder of Student Loan Justice, and others). Patricia and I argued back and forth for an entire afternoon. I understand why we weren't making much headway. It was cordial but heated. I appreciated that response from Patricia. She reacted quite strongly at first, but then she cooled down. Later that evening I received an email from Sandra Baum. To say it was condescending is putting it lightly.

On several occasions I let them know that I would be writing about our exchange and including their remarks (the ones that were public). But after re-reading the correspondence, and what I've recently learned about the College Board, I've decided that an exercise in providing my readers with a detail by detail account of our conversation is superfluous.

After my final exchanges with Sandra and Patricia, I investigated the College Board and its past. Suffice to say, their relationship with lenders is MUCH bigger than I had originally understood. I realized that the debate was disingenuous . . .