There was some very exciting news coming out of Germany this week, when the country announced that it is scrapping tuition and fees for its universities. Organizing is widely credited with building the public will and political momentum for free college. In fact, Dorothee Stapelfeldt, of the Hamburg Parliament, told reporters this week, “Tuition fees are socially unjust.”
Free or low-cost higher education is typical in most of Europe.
In Germany, tuition is a mere fraction of what American students pay. But with Germany, which has been taking heat for pushing austerity measures that have unnecessarily constrained the economy, leading on this important issue it, brings hope that we can keep building the momentum in the U.S.
And it’s beginning. In Connecticut, Gov. Dannel Malloy has unveiled a plan that will help folks who are already burdened with student debt. His plan calls for state tax breaks for interest on student loans, but more importantly, it would create an authority in the state that would allow students to refinance their debt at market interest rates. Additionally, he’s working to create the Connecticut Financial Aid Pledge, which would offer assistance to help qualifying Connecticut students graduate without debt.
This is a step in the right direction, but the U.S. is still miles away from the free college tuition. Students, teachers unions, and communities have been working for nearly ten years in Germany to win free schooling. Here in the states it’s just recently risen to be part of the national conversation.
Nascent coalitions like the Higher Ed Not Debt that the Alliance works alongside, will continue to push for fully funded education, and to ensure that our young people don’t enter the workforce carrying student debt. We need other states to step up to the table to match and beat this proposal.
Because, as the Minister for Science and Culture in Lower Saxony said this week, “We got rid of tuition because we don’t want higher education which depends on the wealth of the parents.”
It has taken six years and dozens of lawsuits and settlements after the largest housing collapse since the Great Depression – and finally we may have a way to set up and implement local principal reduction programs in cities across the country.
September has brought us what is expected to be the last of the big settlements by the Justice Department against the big banks. The good news is that the settlements have grown progressively larger each time, with more and more specificity regarding how the banks must comply.
On the flip side, however, there are the murky oversight mechanisms that present challenges for municipalities and community groups looking for a handle.
In the latest settlement Bank of America is required to provide $2.5 billion in principal reduction where foreclosure is not pursued. Additionally, they’re required to pay $50 million to capitalize local programs administered by local governments, Community Development Financial Institutions or other community organizations.
This is ready-made for the proposal the Reset Seattle coalition is working to implement. Reset Seattle is an alliance of hundreds of individuals and more than 30 faith, community, and labor groups in Seattle dedicated to stopping the foreclosure crisis.
The Bank of America settlement money could create a revolving loan fund that is designed purchase underwater homes in zip codes that are particularly hard hit – such as those in southeast Seattle where 15 -20 percent of homes are underwater and homeowners haven’t felt the recovery the way parts of the city have.
Seattle must seize this opportunity to demand Chase, Bank of America and Citibank meet their settlement obligations by funding principal reduction proposals, like the one proposed in Seattle. This seems like a perfect fit for everyone – the banks meet their obligations, the city doesn’t have to issue bonds to capitalize the program and underwater homeowners in the city get their principal reduced saving hundreds of dollars every month.
In her latest brief on principal reduction, Alliance Policy Associate Allyson Fredericksen writes that “many other cities are already taking action to give banks the incentive to renegotiate mortgages and work with homeowners to avoid foreclosure”
Some of those incentives, according to Fredericksen, include instituting fees to encourage mediation, to issuing fines for blight on foreclosed homes, to releasing reports on banks’ actions in the community. Such actions put the responsibility on banks to act without putting additional pressure on homeowners.
Seattle should learn from other cities, and lead the way in helping homeowners, without requiring those stretched and stressed homeowners to negotiate with banks on their own.
Unfortunately as we’ve seen time and again since the housing market collapsed, common sense rarely wins out and unnecessary suffering is inflicted to score an ideological point. Hopefully the stars have finally aligned
As we’ve reported here and here, the state of higher education in this country has reached a crisis. The cost of tuition has risen substantially faster than any other good or service over the past 40 years. There are many that are calling the student debt crisis the next financial bubble.
Under the Starbucks plan, employees would receive a discounted tuition rate for the first two years from Arizona State University’s online program. The discount amounts to roughly $6,500 over two years on $30,000 retail price. The remainder of their tuition is expected to be paid by the employee, through personal savings or federal Pell Grants or scholarships.
While this promotion may be somewhat helpful for struggling low-wage Starbucks employees, it does little to fix structural deficiencies in the higher education system. They are deficiencies that Starbucks directly causes and benefits from. As a key member of the Fix the Debt organization Starbucks funded groups that were lobbying for lower corporate tax rates. These tax cuts are a direct cause of the disinvestment we’ve seen over the past 40 years in higher education. Continue reading “Starbucks’ Free College Gimmick Clouds the Real Problem”
This week the Department of Justice levied a $97 million fine against the student debt servicing giant Sallie Mae. The findings of the DOJ’s long investigation revealed a host of bad practices and illegal behaviors at the company, including overcharging on nearly all military service members’ loans, and mishandling borrowers’ payments to maximize late fees and penalties.
The fine is appropriate and offers some sense of justice, but it also feels eerily familiar to the lawsuits levied against the mortgage companies before, during, and after the Great Recession. Time and time again, the Department of Justice, state attorneys general, and regulators all found ample evidence of egregious wrongdoing and rampant fraud, resulting in several multi-million dollar settlements with all the mortgage giants.
Unfortunately, it ended there. There still hasn’t been a single executive of a major bank brought up on criminal charges and held accountable for the actions that caused the housing crisis. There were no structural changes in how the banks operate. These settlements simply became the cost of doing business – and we are still seeing the same reckless and illegal behavior years after they’ve supposedly taken their medicine.
The student loan debt crisis is the next bubble, no different than the mortgage collapse. Our future and our families are at risk. We have been here before – this time, it’s not too late to stop it. Slapping Sallie Mae on the wrist isn’t the answer.
Sallie Mae is a folksy name for the giant SLM Corporation. Contrary to what many assume, Sallie Mae is a for-profit company, it services and collects on student loans. Most student loans are originated by the U.S. Department of Education, which is also making a big profit off of student loans – a reported $41.3 billion last year. If the Department of Education was a corporation it would be the third most profitable in the world, right behind Exxon Mobil and Apple.
The Department of Education has options. Sallie Mae’s contract is coming up soon to be renewed for the next five years. Violating federal law is grounds for termination. Sign our petition telling Secretary of Education Arne Duncan that Sallie’s Mae contract shouldn’t be renewed.
This is a clear example of the federal government having an opportunity to restore the faith of the country. It’s an opportunity to hold giant corporations accountable. If you break the law, even if you’re a giant financial institution, there will be repercussions that are more than just the cost of doing business.
Until corporate executives are put in jail or until lucrative federal contracts are pulled, financial industry giants will continue to consider federal law a mere suggestion.
After three years of persistent and tireless work by Colorado Progressive Coalition members, the Colorado legislature this month finally passed meaningful protections for homeowners at risk of losing their homes.
For years horror stories have abounded in the press of banks that lost paperwork, homeowners never speaking to the same person twice, promises of a loan modification while simultaneously foreclosing on the borrower. Abuses by the banks added to the immense stress homeowners – and added to the growing number of foreclosures that could have been prevented.
Foreclosures and high numbers of underwater homes aren’t making headlines around the country the way they were a couple of years ago, but that doesn’t mean the housing market is back on solid footing – or that people are no longer suffering.
Thousands of families in Seattle are still dealing with the traumatic repercussions of the housing crash – wrecked credit, lost wealth, and relocation. Housing advocates, like Reset Seattle, are working with cities and public agencies to come up with creative ways to help homeowners.
Reset Seattle is asking the City of Seattle to use their power of eminent domain to buy underwater homes at fair market value, and then sell them to the current owners, at the current market price. It’s an innovative idea that just might help someone like Seattle high school teacher Betsy Andrews, who is hanging on to her home by a thread.
After being laid off from her job as an English teacher because of budget cuts, she worried that she wouldn’t be able to make the payments. Terrified of losing her house she called banks, worked with supposed-loan modification services, and spent hours and hours on the phone getting the run around. One “specialist” even told her the way to save her home was to “go get a job.”
“It is humiliating,” she recently told a Seattle City Council Committee that is hearing options for helping families facing foreclosure to save their homes.
Finally, after 18 months without work, Andrews is teaching again and sighing with relief that she would be able to keep her house. But within days, she came home to a “Notice of default. Intent to accelerate” notice from the bank on her front door.
“I consider myself well-educated and pretty savvy,” said Andrews. “This has been an absolute nightmare navigating the system. It has affected my health. The reality is, if I lose my home, I will never be in a position to buy a house again.”
Despite the heart-breaking stories, Seattle homeowners like Andrews are unlikely to get help anytime soon from the City of Seattle.
This week, the Interdepartmental Team (IDT) created by the City to review strategies for helping families, including using eminent domain, made its first report to the council committee.
The results were pretty disappointing.
What they presented during a two-hour meeting Wednesday (that you can watch here) was a half-hearted attempt to perform their assignment. They painted a rosy picture of the Seattle housing market that runs drastically counter to what organizers, advocates – and homeowners – are seeing in the community.
What was their alternative solution? More outreach to put people into the federal government’s HARP (Home Affordable Refinance Program) and HAMP (Home Affordable Modification Program). In the past two years, those two programs have helped a mere 125 homeowners in Seattle. They have caused many others unbearable misery.
“More outreach isn’t going to help people,” said Chris Genese with Washington Community Action Network and Reset Seattle. “Throwing more energy at the same programs that aren’t working – isn’t the answer. We need to do something else.
“I am disheartened the Interdepartmental Team didn’t mention, any real options,” said Genese. “Our interest from the beginning has been finding avenues for principle reduction, to keep families in their homes, and to restore wealth – particularly in communities of color.”
Reset Seattle is open to other creative options. Boston Community Capital bought homes at short sales and auction, then reissued the mortgage to the homeowner at 6.3 percent interest. The program has kept 500 families in their homes so far.Other cities have implemented other efforts to help homeowners, and protect communities.
While the Seattle’s interdepartmental team didn’t expressly say they were eliminating the eminent domain proposal, they emphasized “significant” legal and logistical barriers that they indicated would outweigh the potential benefit.
Seattle has a reputation as a progressive city. It’s a city built on daring and dreams. It’s a city willing to try something different.
So here’s my advice to Seattle’s interdisciplinary team: Let’s get creative, let’s be bold, and let’s try this again.
Jason Collette is a national organizer for the Alliance for a Just Society. He specializes in banking issues, especially around foreclosure, payday lending and student debt. Jason@allianceforajustsociety
A college degree was once an investment in the future, a path to a good job, a home, car, vacation and money set aside to retire some day. But that college education has for many, become a ball and chain limiting future growth. Unless we begin to address this debt issue we will continue to see a growing chasm in American society – those who have access and wealth – and those who have mortgaged their future with little way to dig themselves out of debt.
This is the first in a three-part series by the Alliance for a Just Society, looking at the high cost of student debt for our country and for our future.
Young college graduates are putting their futures on hold as they struggle under the burden of high student debt – and a weak economic recovery that has failed to provide good jobs for them. Young adults in their 20s and 30s are delaying buying houses, cars, furniture or starting families. The implications for every family, and our nation, are huge.
It’s no longer shocking to read news articles about the scandalous behavior of big banks. Readers roll their eyes when they see JPMorgan’s CEO being awarded a total pay of $20 million the same year the bank made repeated headlines for being fined millions of dollars and incurring losses of billions of dollars. Stories like these are so common it’s almost boring.
But a jury in Butte, Mont. – population 34,000 – recently decided they weren’t going to tolerate a second set of rules just for banks. They delivered a $52 million verdict against Comerica, another national bank that was also bailed out by the government, and then refused to help a borrower.
Conservative intransigence — on issues as wide-ranging as appointing a permanent nominee for the Federal Housing and Finance Authority (FHFA) to implementing key components of the Dodd Frank Financial Reform law — prompted Sen. Harry Reid and Senate Democrats to change the Senate rules around cloture.