Student Loans & Bankruptcies (was Re: creative financing)

Yoshie Furuhashi furuhashi.1 at osu.edu
Fri Apr 20 18:13:15 PDT 2001



>oh bullshit. enough people ripped off the middle class welfare
>system that it costs money.

How much? Chump change compared to social security, medicare, prisons, armed forces, fixing the S&L debacle, etc., I should think.


>i know a guy who was a perpetual grad student, had been working on
>it for 15 years. he got out the max stud loan every year-but he
>didn'tneed it. he was getting research assistantships which amounted
>to dusting the books in the faculty lounge. so, he invested it back
>when the interest on loans was far lower than that which could be
>yielded from money market CDs.

"I know a guy who...". How representative is the muppet in your anecdote?


>i know of several people who declared financial independence from
>their parents just so they could get their state college tuitions
>paid for, even though their parents were paying for car, clothes,
>apt and food.

Ah, "several people".... Provided, for the sake of an argument, that this practice is common, though, why should parents individually pay for their children's college education? If your complaint is that only the better off benefit from state funding for tertiary education, why not make the rich pay higher taxes to cover its costs?


>add up the number of times these things happen, combine it with the
>reagan era and you get punitive measures that harm the poor. which
>is what i said in the first fucking place.

Neoliberalism is capital's counter-attack against the working class, and turning to student loans instead of grants & then making loans costly & punitive is just one small part of the big neoliberal agenda.


>no matter what benevolent and wonderous utopia we live in in the
>future, we are going to have to have some measures of deservingness.

"Scarcity will never be in short supply"? That's no reason to make education -- including higher education -- more expensive & less accessible.


>if educations are free in the future, why should we foot the bill
>for the students who go to college and fuck around and flunk out of
>most of their courses--or is it all going to magically change and no
>one will do such a thing? << i actually have hopes in that regard.
>but the only way that kind of consciousness will come about is when
>people start recogniziing how they are interdependent. that is, they
>will choose and prefer not to fuck around because they will see the
>value in learning for the sake of learning, they will recognize that
>the entire community is paying for education for all, not some
>abstract faceless "state". marx wanted us to understand how
>production was socialized so we could see our interdependence for
>precisely this reason!

Making education more expensive to individual students & having them pay larger amounts of money directly out of their own or parents' pockets is the path toward more privatization, not toward more socialization.

Now, let's look at Medicare & nursing homes:

***** Los Angeles Times August 2, 1999, Monday, Home Edition SECTION: Health; Part S; Page 1; View Desk HEADLINE: FOCUS ON SENIOR HEALTH; CAN YOU AFFORD CARE IN YOUR AILING YEARS?; FINANCES * BABY BOOMERS ARE LEARNING FROM THEIR EXPERIENCES WITH ELDERLY PARENTS THE BEST WAY TO PREPARE FINANCIALLY, NOT JUST FOR RETIREMENT BUT FOR LONG-TERM NURSING. BYLINE: ROBERT A. ROSENBLATT, TIMES STAFF WRITER

...The good news is that at age 65, all Americans automatically become part of a protected group, the only class of Americans guaranteed health insurance. They qualify for Medicare, the government program that provides free choice of any participating doctor or hospital. It offers more freedom to choose physicians than almost anyone who gets health insurance through their employer or who buys it on their own.

The bad news is that Medicare doesn't cover prescription drugs, the biggest monthly medical expense for many seniors. In recent years, drug costs also have been the fastest-growing component of medical inflation. And Medicare won't pay for custodial care in a nursing home--an expense that can climb as high as $ 50,000 a year.

Trading Some Freedom for More Security

But there are ways to prepare, and the lessons boomers learn with their parents should help in their own decision-making in years to come.

...The choices for the generations involve ethical issues as well as financial. Should you deplete your sweet gray-haired mother's life savings to pay for medical care in her declining years? Or should you take advantage of provisos of federal law that allow relatively well-off seniors, with a little financial maneuvering, to technically qualify for government programs intended for the indigent? Will she get the same quality of care? And is that fair to other taxpayers?

Should your mother buy a special long-term-care insurance policy now, just in case? And while you're at it, should you get yourself such a policy, knowing you may not collect any benefits for 40 years, if ever?

Long-term nursing care isn't a problem for everyone. The rich, of course, can afford it.

The poor are covered by Medicaid (Medi-Cal in California), a program that pays the medical bills of the indigent, including the costs of a nursing home. But to qualify, a person who has not been indigent previously must impoverish oneself to qualify, spending all but $ 2,000 of financial assets--stocks, bonds, bank accounts, cash.

But long-term care is a real question for the vast middle and upper-middle classes, those with enough assets to worry about.

Married couples have some protection. If one spouse goes into a nursing home, the other can keep their home and financial assets worth at least $ 81,960. Typically, the man goes into the nursing facility and the wife remains at home. She can keep all the income she received in her own name. If that amount is less than $ 2,049 a month, she can also keep her income from her spouse in the nursing home, to bring her to the $ 2,049 standard.

Finding Ways to Distribute Assets

A vigorous industry of lawyers and financial planners has sprung up to advise the elderly and their children on ways to distribute assets to keep the money in the family and still qualify the aged parent for Medi-Cal. Your mother can give away money, buy a new car even if she rarely drives, or renovate her home, all as part of an aggressive campaign to reduce her financial worth against the day when she may need a nursing home.

Naturally, families should discuss the right thing to do while the aging parents are still in good physical and mental health.

One family might sell Mom's house for $ 200,000, move her into one of the kids' homes and use the cash from the sale to hire companions or nurse's aides to care for the ailing woman. Perhaps their mom insisted that Medicaid is welfare, and she begged them never to put her in a nursing home. They could use all of the $ 200,000 caring for Mom for the rest of her life.

In another strategy, a family might encourage Mom to spend all her money fixing the house, buying new furniture or a new car, or paying off the mortgage. When she gets down to her last $ 2,000, the family starts supporting her. Then, if she needs nursing home care, the government will pay the bills. They can protect the house by signing a statement that she intends to return home, no matter how ill and frail she is. When she dies, the children sell the home for $ 200,000 and divide the money as their inheritance.

All of this is legal. But the state isn't happy about the middle class using a program for the indigent. Medi-Cal is "designed for individuals who are impoverished," said Ken August, a spokesman for the California Department of Health Services. "It's prudent for people to prepare for the possibility that they may someday need long-term care and have options other than impoverishment. Relying on impoverishment as a way to guarantee your medical care is a very risky strategy," he said.... *****

Should we close the loophole mentioned above, so the so-called "middle class" won't financially maneuver themselves to become entitled to nursing-home care paid for by Medicare, a provision intended only for indigents?

How should we pay for our parents' nursing-home care? And our own, if we live long enough?

Yoshie



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