At 2:24 AM -0400 4/20/01, Kelley Walker wrote:
>>Right. Doesn't matter if you can't pay it and go bankrupt. They still have
>>a legal right to the money. No negotiating or bargaining. In very rare
>>cases, and I know of one, a women with a huge student loan had a major
>>bipolar episodes, was put on disability and Social Security, and they
>>finally accepted pennies on the dollar. Up until then though, no
>>bargaining. At one point before this, they were taking about 40% of her
>>(small) paycheck.
>
>right, but don't forget about the idiots who failed to repay that
>could. there are reasons this has happened, the state's punitive
>approach, and they aren't merely be/c the US gubmint wants to be
>punitive for the hell of it, tho that is part of it. defaulting on
>your loan when you can repay it in some small amount is unacceptable
>because it's the rest of us who have to pay for those who default,
>yes? so, it's too bad the Jack Slack with a Phud in Area Studies
>isn't making a lot of money, but for a lot of folks in that
>situation it's because they are purposefully taking on jobs that pay
>low wages for some reason or another. so when Jack Slack puts it to
>the gov, he's putting it the people for whom there is now that much
>less money to pay for other programs that _aren't_ mainly for the
>middle class. if Jack Slack _is_ able bodied, he's contributing to
>the situation your friend finds herself in and the one i found
>myself in as a teenager.
>
>no, it's not the best of all worlds, but i really can't see the use
>of encouraging people to default on a .gov loan--if that had been
>what they could have done. as it stands, of course, no one can
>really do that. as maureen mentioned, there are moral reasons, at
>least, for not defaulting if you're in the position to pay at least
>something back.
>
>kelley
When neoliberals go about making legislations more costly & punitive to the working class, they first go after highly publicized cases of frauds & deadbeats (however unrepresentative such cases may be among all the beneficiaries of such legislations), especially focusing upon bad behaviors of the privileged workers & petit-bourgeois, such as doctors:
***** The New York Times December 7, 1981, Monday, Late City Final Edition SECTION: Section A; Page 19, Column 1; National Desk HEADLINE: MANY DOCTORS FAILING TO PAY STUDENT LOANS BYLINE: UPI DATELINE: WASHINGTON, Dec. 6
Many doctors are failing to pay back the Government loans that helped them through school, according to Federal investigators.
A report by the staff of the Senate Governmental Affairs Comittee cited a graduate of the University of Maryland medical school. He had not missed a payment on his $24,600 car loan, but his student loan was listed as ''uncollectable'' for four years, putting him in arrears for $2,529.
Aides to Senator Charles H. Percy, Republican of Illinois, a committee member, said about 50,000 health professionals, including 5,716 doctors, were seriously delinquent in paying their student loans, depleting by more than $23 million the Government's money pool for providing longterm medical school loans.
Nurses Have Worst Record
The overall delinquency rate was about one-third of the 167,000 former medical and health care students benefitting from the program. Computer searches by the Department of Health and Human Services found that nurses had the worst repayment record with 37,760 of about 88,000 with loans being in arrears by $14.2 million; 5,716 of the 36,179 doctors with loans in default for $4.4 million; with dentists, optometrists, pharmacists and podiatrists havng similar default rates.
''Almost every aspect of the collection end of this program flies in the face of good business sense,'' said Senator Percy, who will lead full committee hearings Tuesday into the Health Professions Student Loan Program.
''If I were a student attempting to secure one of these loans in today's budget-cutting environment,'' Senator Percy added, ''I would be pretty upset to be rejected knowing that practicing physicians, many of whom are earning high incomes, have failed to repay the Federal loans which made their careers possible.''
A Percy aide estimated that as many as 5,000 prospective doctors, dentists, optometrists, pharmacists and nurses would be denied Government loans this year because of the abuses.
The 10-year medical loans can total $20,000 or more and are provided at interest rates ranging from 3 to 7 percent. Senator Percy is sponsoring legislation to create new methods for collecting debts under Federal loan programs, including a provision for reporting delinquent borrowers to commercial credit bureaus. *****
Then, after a fake populist attack on deadbeat doctors and the like, they go after their real targets -- the working class & institutions that serve them:
***** The New York Times August 1, 1982, Sunday, Late City Final Edition SECTION: Section 1; Part 1; Page 22, Column 1; National Desk HEADLINE: BLACK COLLEGES FEAR EFFECTS OF PENALTIES FOR STUDENT LOAN DEFAULTS BYLINE: By REGINALD STUART, Special to the New York Times DATELINE: ATLANTA, July 31
Some historically black colleges may be unable to register thousands of students this fall and will lose several million dollars in student aid as a result of a Federal decision to penalize schools with high loan default rates.
The Department of Education originally listed 528 schools that it said had default rates of 25 percent or more on National Direct Student Loans and would have such loans cut off. Later it released the names of 92 schools that would not be totally cut off.
Some of those 92 are among 800 schools that will lose millions of dollars for having default rates of 10 percent or more, according to department officials. That possibility was not mentioned by Education Secretary T.H. Bell in his announcement Wednesday.
Chief executives of many of the black colleges criticized the Federal decision, which apparently hit their schools harder than any other group of institutions affected.
In Washington, James W. Moore, director of student financial assistance programs at the Department of Education, said the impact of the decision would vary depending on an institution's use of the direct student loan program. He acknowledged, however, that the action might appear to fly in the face of President Reagan's announced support late last year for strengthening the historically black schools, which now number 102.
Based on estimates from the United Negro College Fund and the National Association for Equal Opportunity in Higher Education, the combined impact of the cutoffs and penalties is to preclude about 90 percent of all historically black institutions from obtaining any new money from the National Direct Student Loan program.
''It's terribly unfair to deny loans to students who are not in default,'' said Dr. Frederick Humphries, president of Tennessee State University at Nashville, which stands to lose $507,000. It is one of the largest single amounts denied a four-year institution under Wednesday's announcement.
Although the direct loans make up only about 5 percent of the $10 million in student aid that Tennessee State awards annually, Dr. Humphries said the immediate impact would be to cut by 25 percent the 2,000 freshman students scheduled to arrive in three weeks.
Dr. Humphries said Tennessee State currently has a default rate of 38 percent, or $1.3 million, and he expressed doubt that much of it could be recovered in the near term. ''It flies against all of the economic experiences in this country and what people know about unemployment,'' he said.
Formula Determines Penalty
Clark College, a small institution here with a default rate of 21 percent, is among the 800 schools facing penalties. Clark this year will lose $70,000 in direct student loan funds.
A school's penalty is determined by a formula that takes into account the level of loan expenditures a school intends to make, what it projects it can collect in outstanding loans and what it would have collected had it maintained a default rate of 10 percent or less.
''What this policy does not take into account is the different kinds of populations historically black colleges are dealing with,'' said Dr. Elias Blake, the president of Clark.
''It's a very delicate issue because I don't want to be put in the position of apologizing for people who don't pay their bills,'' said Dr. Blake. ''But if institutions educate students who are greater credit risks, then there should be some kind of differential in the default policy. I've suggested to the officials that whatever penalty they develop should run to the schools, not the students. I've even suggested fines.''
Clark College is among several institutions that are appealing their penalty status on the ground that they have made substantial gains in reducing their default rates.
''But it's gotten tough,'' Dr. Blake said. ''and I'm not optimistic that we can get below 10 percent. It's down to a combination of people who can't pay and people who won't pay.''
Mr. Moore, the Department of Education official, questioned whether the penalties would have an adverse impact on the black colleges. ''It would have 15 years ago,'' said Mr. Moore. ''But the 102 historically black colleges will take down $140 million a year out of the Pell grant program and that's a tremendously large amount compared to what they'll lose in this program. Also, what they do have is the money they collected from prior borrowers'' from the loan program.
The Federal Government established the National Direct Student Loan program in 1958 with $6.8 million to try to help needy college aspirants with the cost of their education. Mr. Moore said the program now spends $5.2 billion a year. *****
***** The Washington Post December 7, 1982, Tuesday, Final Edition SECTION: First Section; A1 HEADLINE: Government Set To Attach Wages In Loan Defaults BYLINE: By Karlyn Barker, Washington Post Staff Writer
The government announced plans yesterday to begin garnisheeing the wages and pensions of nearly 47,000 federal workers and retirees if they do not repay nearly $68 million in delinquent student loans.
Starting next year, defaulters could be docked 15 percent of their salary per pay period and face disciplinary action, including suspension and subsequent dismissal.
Department of Education Secretary Terrel H. Bell said that warning letters, instructing defaulters to start making repayment arrangements immediately, are being sent to 46,860 current and retired federal employes and military personnel who hold 50,393 unpaid loans.
Some government workers have borrowed money under more than one federal loan program, he noted.
Bell and Sen. Charles Percy (R-Ill.), who described the stepped-up loan collection efforts at a news conference, said a computer match of 10 million government employe records against a list of all loan defaulters had enabled the department to come up with the names of specific federal workers who owe the government money.
"The fact that there are 46,000 federal employes in default . . . is the most shocking discovery to unfold in the continuing story of poor debt collection," said Percy, who characterized some of the defaulters as "deadbeats." He called failure to repay the money "really a slap in the face to every taxpayer in this country."
The $68 million owed by federal workers is only part of the $1.1 billion that the Department of Education is trying to collect. Approximately 820,000 people have defaulted on repayment of Federally Insured Student Loans, Guaranteed Student Loans and National Direct and Defense Student Loans programs.
Delinquent debts to the government, including unpaid school and mortgage loans and federal taxes, exceed $40 billion.
Bell said that the Reagan administration wants to collect from "all who are in default," but that it is particularly concerned "that those who hold government jobs pay their bills."
He added, with a touch of embarrassment, that his own agency has 67 student loan defaulters in its ranks and expects to be contacting each of them shortly. Since the department plans to ask other agencies to "play hardball" in seeking repayment, the Department of Education, he said, must "practice what we preach."
Other department officials said that federal workers don't have any higher default rate than the rest of the population, but that they are the easiest targets for collection programs.
"It would be nice" if the government could be just as aggressive about collecting money owed by thousands of others, said Robert Honig, staff director of the Federal Government Service Task Force. "But there's just no question about it, it's money owed."
The Department of Education has turned over to private collection agencies $570 million worth of defaulted loans from 402,000 accounts, Bell said. So far this year, collectors have brought in $9 million and worked out repayment arrangements for another $40 million. He said that most of the recovered money would go back to the federal treasury, but that some would be used to help other student borrowers.
The government this year also has cut off new National Direct Student Loans to schools with high default rates.
Under provisions of the Debt Collection Act, sponsored by Percy and signed into law by Reagan in October, the department will contact all of the defaulters on its list. Those who have not responded to its letters "on or about Feb. 1, 1983" will have their names turned over to the agencies where they work. It then will be up to each agency head to initiate collection action.
"Persons not responding to these actions within 60 days will be subject to having 15 percent of their wages withheld until the defaulted balances are paid in full," Bell said.
Of the outstanding loans held by federal workers, Bell said that current civil service employes owe $24.7 million on 17,221 loan accounts, retired civil service workers owe $745,000 on 589 accounts, active military employes owe $18.9 million on 14,549 accounts, military reservists owe $17.3 million on 12,645 accounts and retired military employes owe $5.1 million on 4,690 accounts. *****
You see how attacks begin with cases that are likely to generate populist indignation -- "delinquent doctors!" -- and move on to easy targets. Then attacks expand to include the entire working class. The bankruptcy reform is another example.
As in the case of criminal justice, you can't protect the innocent unless you also protect the guilty -- you can't protect those who can't pay, unless you also protect those who can but won't pay.
Yoshie