Occupy Philadelphia

Today was the first day of Occupy Philadelphia which was held on City Hall Plaza and attracted a large number of people.  They were throughout the plaza and nothing was organized or orchestrated.  There were no speakers other than sometimes someone would stand on a wall and shout something to the gathering.  This is very organic, grassroots and attracted various people from and with various causes.  A small street band played music which attracted the largest crowd but most people walked around, held their signs and chatted with one another.  I saw Sherrie Cohen, Sharif Street, Rick Smith of The Rick Smith Show and his engineer Brett Banditelli, Joe “The Nerd” Ferraro and others.  A large group gathered along Broad Street with signs and banners attracting many honks from passing vehicles in support.  Police stood silently and bored along the edge near City Hall as nothing of any consequence to them was happening.  All the while two helicopters hovered overhead taking pictures for their news organizations.

This is a hodgepodge video I took around the plaza.  The first part isn’t work safe for language:

This interview is with a young man unable to find a job:

These two young people held signs decrying the Bush tax cuts and the lack of jobs created by the failed policy:

These three men from Teamsters Local 929 had a lot to say:

More pictures and video are under the fold:

Joanne had a lot to say about bankers:

These students are saddled with onerous student loans:

Pictures:

High Unemployment Leads to More Student Loan Defaults

A blog post by Sean Brandon, originally published at Third and State.

The U.S. Department of Education recently released 2009 fiscal year data on the number of students defaulting on college loans. In a press release, the Department noted that the national default rate rose from 7% in 2008 to 8.8% in 2009, affecting loans for all types of colleges and universities. The default rate rose from 6% to 7.2% on loans for students at public institutions, 4% to 4.6% at private institutions, and 11.6% to 15% at for-profit institutions.

Among the states, Pennsylvania has the third highest number of higher learning institutions (behind California and New York) and a student default rate of only 6.6%, which is considerably better than the national rate. However, Pennsylvania is no exception when you compare the relationship between the unemployment rate and the borrower default rate.

Earlier this month, Rortybomb blogger Mike Konczal compared the default numbers of subprime mortgages with for-profit college loans. In his analysis, he drew attention to the relationship between unemployment and default rates.

The Keystone Research Center recreated one of Mike’s graphs below. It is quite clear that as unemployment rises, the number of students defaulting on their loan payments also goes up. Pennsylvania is the label highlighted in red. 

The tough economic conditions have been particularly hard on young college graduates. According to an Economic Policy Institute briefing paper, “between 2007 and the most recent 12 months (August 2010 – July 2011), the unemployment rate rose from 8.7% to 14.7% for young black college graduates, from 6.6% to 13.5% for young Hispanic college graduates, and from 5.1% to 9.2% for young white college graduates.”

Too many of today’s graduates are left holding a diploma but not a job. As a result, they are unable to pay back the money they already spent getting the degree that was supposed to help them get a good job.

In order to make loan payments more affordable, the Obama administration initiated the income-based repayment plan (IBR), which has capped the monthly payment at an amount based on family size and income. For many young graduates without income, however, the IBR plan does very little.

The best way to lower the student loan default rate is to bring down the unemployment rate. Lawmakers need to incentivize companies to hire young graduates. If the unemployment rate rises in the next few years like it did in the last three years, then hundreds of thousands of young graduates will default on their student loan payments each year.

Administration Reverses Student Loan Privatization

Included in health insurance reform was a bill affecting student loans.  The Department of Education has been working on this since last summer when I recall being on conference calls with Sec. Arne Duncan discussing the proposals.  Basically this Act reverses the privatization of the student loan business which has cost young people huge amounts of interest.  I recall college loans running in the low single digits but today some of these usurious rates pass 20 and 30% interest.

During the Pennsylvania presidential primary two years ago Hillary Clinton asked the students in her audiences (almost every event was on a college campus) what rates they were paying.  Hands remained up as she got to 30%.  Most seemed to be around 15-20%.  Those are obscene rates.  Private banks have been ripping off our young people with these usurious interest rates so the President has done something to protect these folks and their financial futures.  The government is back in the student loan business again and they are also expanding Pell grants by $36 billion over the next decade.  Closing the private bankers gravy train saves $68 billion and ends the taxpayer subsidies for private profit.  As Sec. Duncan said on yesterday’s conference call “should we subsidize banks or invest in higher education?”

Other significant facets of the law simplify forms students and parents use to apply, allow erasure of debt for any student who puts in ten years of public service following graduation and eases the burden of loan repayment by capping those at 10% of income.

Saddling our young people with mountains of debt is bad policy.  The cost of a college education has soared as state governments continually cut subsidies to balance broken budgets and private lenders soaked them with high interest rates.  We faced the prospect of a new generation unable to purchase homes or have disposable income because too large a percentage of their incomes were going to repay these loans.  The economic cost of that was prohibitive and simply went to fattening the profits of private banks.