The Alan Sondheim Mail Archive

August 29, 2011

War Against War, Krieg dem Kriege

---------- Forwarded message ----------
Date: Mon, 29 Aug 2011 21:16:28
From: Portside Moderator <moderator@PORTSIDE.ORG>
Subject: Blacks and Latinos Will Suffer When the Student Debt Bubble Bursts

Blacks and Latinos Will Suffer When the Student Debt
Bubble Bursts

By David A. Love LA Progressive August 29, 2011

When the housing bubble burst, the resulting
foreclosure crisis was a disaster for black and Latino
families, who lost 53 percent and 66 percent of their
median household wealth, respectively, between 2005 and
2009.  As a result, the racial wealth gap is widening,
with white households enjoying 18 times as much wealth
as their Latino counterparts, and 20 times more than
African-American households.

There is every indication that the bursting of the
student debt bubble, like the housing bubble before it,
is imminent.  And when it happens, it will send
shockwaves throughout the financial markets. People of
color will be especially vulnerable.

Although education is widely viewed as a way up and a
way out for poor, working-and middle-class students,
the prohibitive cost of college tuition has created a
virtual debtors' prison for many.  Loan defaults and
delinquencies are on the rise in America, and are only
expected to worsen.

A recent report from  Moody's Analytics says that
tuition has doubled since 2000 - that's a 10 percent
increase every year - causing student debt to
accelerate during the recession. In contrast, other
types of consumer debt such as mortgages, credit cards
and auto loans have decreased sharply. Outstanding
student loans have increased 25 percent since 2008.
Student debt now exceeds total credit card debt, and is
likely to reach $1 trillion this year, with the average
debt for a bachelor's degree at $24,000.

To add to the problem, unemployment is high and there
are no jobs for recent graduates. And in the lucrative
for-profit college industry where students of color
predominate at 54 percent, graduation rates are lower
than traditional institutions of higher learning. So,
students leave without the benefit of a degree, but
with the debt burden just the same.

For blacks and Latinos - who suffer from lower pay and
double the unemployment, and must assume larger debt
loads to pay for school - the deck is stacked against
them.  According to a Georgetown University study,
blacks and Latinos earn less than whites, even with
advanced degrees. Moreover, members of these groups who
have earned a master's degree earn less than whites
with a bachelor's. It is no wonder that their default
rates are higher. In a 2007 survey, black students had
a default rate five times higher than whites and nine
times higher than Asians, with the Latino rate double
that of whites and quadruple that of Asians.

This talk of student default goes far beyond dollars
and statistics. These are human beings who are thrown
into hopeless life situations because the tuition is
too damn high. Recently I had the pleasure of reviewing
the new film Default: The Student Loan Documentary. I
appreciate the film's clarity in spelling out the
nature of this American crisis and its impact on
ordinary people. Borrowers break down and cry in front
of the camera as they reveal the amount of money they
owe in student loans. Some were brought to financial
ruin as the result of prohibitively high monthly loan
payments, compounded by illness or some other setback.
Others are unable to get married and start a family
because their loan payments prohibit it. One has to
take a step back and ask if this is really what America
has become.

"The private loan industry, they don't care about
people," said Carmen Berkley, who appeared in the film.
Carmen, who is African-American, has $80,000 in student
loan debt, in addition to $5,000 in credit card debt
and thousands in medical debt due to an illness. "I
told them, `Look I don't make that much money. I make
$34,000 a year. There's no way I can spend 600 or 900
dollars a month just for loans.' And they said, `Well
there's nothing we can do about it.'"

debt worry Blacks and Latinos Will Suffer When the
Student Debt Bubble BurstsDefault touches on far more
than the inability of college graduates to afford to
repay their loans, and the financial ruin they face as
they must choose between paying their rent, eating or
paying off their mortgage-sized school debt. Although
that heart-wrenching part of the story by itself is
enough to warrant a documentary, the problem is even
deeper, as the movie points out.

Ultimately, the student debt crisis is a product of the
union of greed and corruption - the banking industry
and the politicians they have purchased for the purpose
of carrying their water. Colleges and universities do
their part by hiking up tuition far in excess of
inflation. Meanwhile, private lenders exploit financial
realities where students can no longer work to pay
their way through college, and federal loans no longer
pay for most or all of a college education. Moreover,
these lenders benefit from loan defaults, as the fees
and penalties that rack up can double or triple the
amount of the original loan.

david e1286586822361 Blacks and Latinos Will Suffer
When the Student Debt Bubble BurstsMuch of this new
financial crisis really speaks to the power of the
lenders, who receive their money's worth from their
investment in Congress. There is a reason why student
loans are the only type of debt that cannot be
discharged in a bankruptcy. The banks paid for the laws
that exempt such loans from fundamental consumer
protections. Even gambling debts can be discharged in a
bankruptcy, as is mentioned in Default.

And in the irony of all ironies, the banking
institutions that were "too big to fail" enjoy their
federal bailout funds. This, as they continue to
extract additional profit from human suffering, whether
by exploiting homeowners with predatory mortgages, or
bilking students with predatory school loans.  These
bailout recipients are making everyday people suffer,
yet where is the bailout for the students?
_______________ Executive Editor, David A. Love,
JD, is a lawyer and journalist based in Philadelphia,
and a contributor to the Progressive Media Project,
McClatchy-Tribune News Service, In These Times and
Philadelphia Independent Media Center. He contributed
to the book, States of Confinement: Policing,
Detention, and Prisons (St. Martin's Press, 2000). Love
is a former Amnesty International UK spokesperson,
organized the first national police brutality
conference as a staff member with the Center for
Constitutional Rights, and served as a law clerk to two
Black federal judges. His blog is


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