Student loan debt–it’s one of the most pervasive concerns for young adults today. Approximately 44 million Americans have student loan debt–those Americans in total owe about $1.3 trillion. The average graduate of the Class of 2016 will hold $37,172 in student debt by the time they graduate. But how much do students actually know about the debt they’re taking on? A new survey conducted by LendEdu, a New Jersey-based company that calls itself the “Kayak of student lending” shows that they may not know that much.

One of the biggest revelations from LendEdu, which surveyed current college students, is that about half of college students surveyed think their loans will qualify for federal forgiveness after graduation–and most of them are probably wrong. In truth, there are very few ways to get your loans completely forgiven. One way is to go into public service work for a minimum of 10 years, but a relatively small percentage of the population follows that path. A few other (rare) ways that students manage to qualify for student loan forgiveness is by accepting certain teaching programs that place teachers in underserved areas, or if the university you attended shuts down while you’re a student or within 120 days after you graduate. For the record, death also qualifies someone for student loan forgiveness…but it’s probably safe to say that most students aren’t including that as a viable option when it comes to not paying back student loans.

Other questions on the survey indicated that the respondents don’t have a great handle on a few different aspects of student loans. According to the survey: “80 percent of college students could not identify the current interest rates on undergraduate federal subsidized and unsubsidized student loans.” Similarly, “79 percent of college students could not identify the current repayment term of a federal student loan” and “when asked, 64 percent of college students incorrectly believe that it is possible to refinance student loan debt with the federal government.”

This of course, isn’t to say that these are facts that all borrowers of student loans should have off the top of their heads. Student loans–from applying to paying back the debt–are complicated. But at the same time, it’s important to teach and encourage realistic expectations as student loan debt continues to grow.

Anneliese Mahoney

Anneliese Mahoney is Managing Editor at Law Street and a Connecticut transplant to Washington D.C. She has a Bachelor’s degree in International Affairs from the George Washington University, and a passion for law, politics, and social issues. Contact Anneliese at amahoney@LawStreetMedia.com.

The post How Much Do You Know About Your Student Loan Debt? appeared first on Law Street.

As primary season heats up, the candidates still remaining in the presidential race have begun fine-tuning their higher education plans. Candidates from both sides of the aisle have spoken about how they would change, revamp, and, in some cases, fix higher education. But aside from Marco Rubio, only those from the Democratic party had rolled out specific plans to address rising tuition costs and astronomical student debt prior to the first primary contest in Iowa.

While we evaluate who’s still left in the race, let’s begin to look at the remaining candidates’ positions on higher education. Keep reading to learn more.

Bernie Sanders

As previously noted, Bernie Sanders’ education plan aims to make postsecondary education free at both community colleges and public four-year universities.

Historically Black College and Universities

In an appeal to lure African American voters and young people, Sanders asserted that tuition-free education would not force private historically black college and universities (HBCUs) to close down.

Representing the 6^th District of South Carolina and an influential power broker in presidential primary races, Congressman James Clyburn expressed his concerns over the prospect of free public education and the impact on black colleges.

“You’ve got to think about the consequences of things. If you start handing out two years of free college at public institutions are you ready for all the black, private HBCUs to close down? That’s what’s going to happen,” Clyburn said.

In a recent interview with MSNBC’s Tamron Hall confirming his endorsement of Hillary Clinton, Clyburn also said of the Sanders tuition-free education plan and the America’s College Promise plan proposed by the current administration, “there are no free lunches so there will be no free education.”

Student Loans and Interest Rates

Part of the Sanders education plan also includes lowering the interest rates on student loans. Sanders hopes to reduce loan interest rates to what they were 10 years ago. In 2006, undergraduate student loans hovered around 2.37 percent, which would cut the current rate of 4.39 percent nearly in half.

Sanders believes students should be able to refinance their loans in a similar fashion as auto loans. According to Sanders, if a loan for a car can be obtained at a 2.5 percent interest rate, why are students forced to pay between 5-7 percent for multiple decades? From the beginning, Sanders has vowed to prevent the federal government from making money on student loans but it remains to be seen just how he’d stop the profiting.

Hillary Clinton

There are commonalites between Democratic candidates Sanders and Clinton surrounding student debt and tuition-free community college. While Sanders believes there is a way to make both two-year and four-year public colleges tuition-free, Clinton’s New College Compact plan stipulates that students should never need to borrow to pay for tuition, books, and fees to attend a public in-state university. The Clinton education plan also calls for the ability for Pell Grants to be used for living expenses.

Historically Black College and Universities

As part of her plan to attract minority voters and young people, part of Clinton’s education plan includes a $25 billion investment in HBCUs, hispanic serving institutions (HSI), and other minority serving institutions (MSI) serving a high percentage of Pell Grant recipients in an effort to lower cost and increase student outcomes. This fund would also help low to moderately endowed nonprofit private institutions within the HBCU system. Contrary to Sanders, Clinton plans to invest in private postsecondary education, acknowledging that private colleges also help under-served students graduate.

Marco Rubio

Marco Rubio’s higher education plan, which emphasizes access and affordability, includes cheaper options for online education. Rubio also calls for students to treat themselves as commodities when applying to college, and asks students to embrace what he refers to as “human capital contracts” by selling themselves to private investors.

He asserts that students should know how much they could expect to earn before taking out a loan to pay for their education. Rubio maintains that the current higher education system in this country is outdated, broken, and “needs a disruption,” citing that college is too expensive, time consuming, and inflexible. Rubio uses partisan language to explain that the Democrats’ approach to fixing higher education is the same one attempted in Washington for decades by pouring money into an outdated system and raising taxes.

Income-Based Loan Repayment

There are some facets of Rubio’s education plan that are consistent with Clinton and Sanders. They are in agreement on investing in student success and wanting to simplify the Free Application for Federal Student Aid (FAFSA). However, Rubio wants to implement an automatic income-based student loan repayment plan in order to ease student loan debt. The current administration has already enacted repayment plans that are income-based as an option, but Rubio believes this should be the sole universal method for federal student loans.

Ties to Corinthian Colleges

In an effort to move higher education into the 21^st century, Rubio wants to ease access to state colleges and online education opportunities, and reshape accrediting entities to accommodate non-traditional education. This may raise concern with voters based on his ties to the for-profit Corinthian Colleges, which have contributed to his Reclaim America Pac.

Last spring, Corinthian Colleges filed for Chapter 11 bankruptcy and shut their doors for good, which adversely impacted over 16,000 students. In December of 2015, the Obama administration began the process to forgive nearly $28 million in federal student loans for over 1,300 students that said the now-defunct Corinthian Colleges violated their rights on grounds that they used deceptive tactics to convince students to take out loans. Now up to 350,000 students could be forgiven for taking out loans to pay tuition.

John Kasich

GOP Candidate Governor John Kasich of Ohio plans to keep college affordable by focusing on the 100 percent performance-based funding formula that emphasizes completion and graduation rates. The formula that has kept Ohio a leader in the nation with regard to freezing tuition rates for the next couple of years, Kasich plans to expand what has worked in Ohio to a federal level. The remaining focuses of Kasich’s education plan are centered heavily on K-12 education.

Donald Trump and Ted Cruz

Neither Donald Trump nor Texas Senator Ted Cruz have released their plans for higher education. However, in recent weeks Trump has been accused of scamming students with his for-profit Trump University, which began operating in 2005. Rubio attacked Trump, calling the university a “fake school,” and claiming the university has been defrauding students out of thousand of dollars after reports were revealed that students are currently suing Trump for restitution.

Conclusion

As the field narrows, voters are going to need to decide who their next president will be based on issues extending far beyond higher education. That said, the candidates left standing need to be clear about all of their plans. That includes laying out specifics on how to implement each education plan, including how they will be paid for, and who in the new president’s cabinet will oversee these implementations.

Some of these higher education plans are more radical than others, but hopefully as the election season gathers steam, voters will finally be privy to what higher education will look like for incoming students, new graduates paying back student loans, and mid-career professionals who may seeking relief from drowning in student loan debt.

Resources

Real Clear Politics: 2016 Republican Presidential Nomination

Buzzfeed: Clyburn: Sanders’ Education Plan is a Disaster for Private Black Colleges

Center for Responsive Politics: Corinthian Colleges 2014

New York Times: Ben Carson Seeing No Path Forward, Signals End of Candidacy

New York Times: Super Tuesday Results

Washington Post: Students of Defunct For-Profit Colleges to Receive $28 Million in Loan Forgiveness

Think Progress: Rubio Attacked Trump for Running a ‘Fake School.’ But There’s Just One Problem

Jamal Evan Mazyck

Jamal Mazyck is currently pursuing an Ed.D. in educational leadership and is a graduate research assistant at San Diego State University. When he is not writing, researching or tweeting about the ins and outs of higher education, he can be found on the tennis court and running half-marathons. Contact Jamal at Staff@LawStreetMedia.com.

The post What are the Candidates’ Higher Education Plans Post-Obama? appeared first on Law Street.

During the recent Democratic debate in Charleston, South Carolina, front-runner Hillary Clinton, Vermont Senator Bernie Sanders, and former Maryland Governor Martin O’Malley each became increasingly combative with one another when discussing their positions on important issues for voters. With the Iowa caucuses quickly approaching, these debates are becoming more crucial as voters begin to sift through many of the issues discussed including gun control, healthcare, Wall Street, immigration, and foreign policy. Although minimally discussed during the debate, tuition-free education may become a campaign defining issue. Many candidates have tuition and debt relief initiatives on their platforms, but what exactly is tuition-free higher education and who supports it? Keep reading to learn more.

Tuition-Free Education

Tax-funded education is not exactly a new phenomenon, but most recently tuition-free education programs at the state level have been launched in Tennessee and Oregon for community colleges. Many other states have similar programs on the table at the two-year level, but Sanders is the only candidate in this presidential cycle to propose a federal program for tuition-free higher education at the public university level.

Specifically, the self-proclaimed “Democratic Socialist” Bernie Sanders mentioned during the debate in Charleston that his education plan includes free education at both two-year and four-year public institutions. Midway through the debate, one of the moderators Andrea Mitchell asked Sanders how, among many other issues on his platform, would he pay for this education initiative. Sanders responded by stating that he wants to rebuild our infrastructure and close the loophole that allows major corporations to stash millions in the Cayman Islands and not pay a nickel in taxes.  Sanders continued through his want list saying,

I want every kid in this country who has the ability, to be able to go to a public college or university tuition-free and by the way, substantially lower student debt interest rates in this country as well.

Among other seemingly expensive programs, his tuition-free education plan would be paid for by Wall Street taxes, according to Sanders. “We bailed out Wall Street, now it is Wall Street’s time to help the middle class,” Sanders explained.

How do the Conservative Candidates Feel?

With the exception of a few Democratic candidates, higher education issues have not been at the forefront of topics to tackle on the campaign trail. Many of the GOP candidates have instead chosen to focus their education positions in the K-12 sector.

As a whole, many Republicans have begun to move away from the Common Core values that former Florida Governor Jeb Bush famously supported, which seek to establish consistent educational standards across the states. But the GOP candidates differ a lot with their plans, with Dr. Ben Carson going on record in support of reducing tuition costs and student debt, while Ted Cruz publicly denounced Common Core in favor of local control of education. However, Donald Trump, the current party front-runner, has yet to roll out an actual education plan.

The International Take on Free College

The Sanders campaign aims to make college education tuition-free nationwide in hopes to prepare more Americans for the workforce and alleviate student debt. But according to the Sanders campaign, the idea is not as radical as some would have you believe.

Germany has already eliminated fees for their able college students by making their citizens pay much higher percentages in taxes than people in the United States. Unfortunately in an effort to keep costs down, many of these German universities place students in larger classrooms and forgo non-essential campus amenities. Denmark and Sweden also have tuition-free higher education for its citizens, and Chile, Finland, and Norway, will soon follow.

Who’s on Board with Sanders’ Plan?

Clinton

Although Clinton is currently leading by 25 points, her lead is slipping, according to the latest NBC/Wall Street Journal poll. As the first nomination contest in Iowa approaches, her stance on education may be the tipping point for securing likely voters. Like Sanders, Clinton believes that student debt is problematic and has also become a proponent for tuition-free education–at least for community college students. On Clinton’s campaign website she said, “we need to make a quality education affordable and available to everyone willing to work for it, without saddling them with decades of debt.”

Clinton agrees with Sanders with regard to reducing debt so students shouldn’t have to take out loans to pay for a quality education, as stipulated through her New College Compact education plan, but differs, however, in making tuition free at the university level.

In addition to Clinton’s education plan aiming to improve the amount of students able to attend college debt-free, the New College Compact program insists that students should be able to access higher education at the two-year level tuition-free, indicating that states need to reinvest in schools to improve student outcomes and graduation rates. Part of the Clinton campaign strategy is to build upon the presidency of Barack Obama and access to higher education is an indicator of such alignment. The New College Compact plan that includes a free community college provision mirrors the America’s College Promise program launched by the Obama Administration at this time last year.

O’Malley

The third Democratic presidential candidate, Martin O’Malley, found it difficult to get a word in on any of the issues he deemed important in Charleston, SC, which was the last debate before Iowa. Polling at an estimated 2 percent, securing the nomination for O’Malley is going to be an uphill battle. If viewers heard more from O’Malley, we may have been privy to his position on tuition-free education.

In contrast to Sanders and Clinton, O’Malley does not support a tuition-free higher education plan of any sort. Instead he proposes that college be debt-free for students, which coincides with the other democratic candidates’ platforms.

In agreement with the student-debt positions of Sanders and Clinton, O’Malley’s debt-free education proposal requests immediate relief to student borrowers, freezing public tuition rates, reduce tuition costs, increasing college preparedness, and holding for-profit colleges accountable. The O’Malley plan also aims to address other fees not associated with tuition that contribute to student debt by increasing Pell Grants, expanding work study programs, and providing childcare on campus, which have not largely been discussed by the other Democratic candidates.

What does this all mean?

Education has been a dividing issue for candidates for decades and the current presidential cycle will be no different. With many of the conservative candidates using sound bite opportunities to discuss their disdain for Common Core, while the liberals center their education conversations on the student debt crisis, the discussion will have an impact on the decisions for voters on both sides of the political aisle.

For those willing to discuss tuition-free education, the most eye-opening plan comes from candidate Sanders. His campaign hopes to make public colleges and universities tuition-free. Although Clinton supports tuition-free programs, her plan would only apply to two-year colleges, and would emphasize relieving students of crippling debt. O’Malley wants to help American families that are being crushed by $1.3 trillion in outstanding student loan debt, but his plan does not include a tuition-free education. He does, however, consider other fees associated with the total cost of college, that go beyond just tuition.

These education plans will be heavily scrutinized, along with initiatives yet to emerge from other candidates since the economic success of the country is contingent on the preparedness of its workforce. The federal government has also benefited from student loan interest rates and with the cost of college in the United States exponentially rising, more students are receiving financial aid assistance through loans more than ever before.

Conclusion

A college education has been categorized as an indicator of lifetime income earning potential. Whether paying for college outright, or through loans, the future of the country rests on the ability to contribute to the economic. The idea that tuition-free higher education will eliminate student debt is not going away and remains to be seen how Americans will respond this November.

Resources

Primary

RealClear Politics: 2016 Democratic Presidential Nomination

Additional

Bloomberg Business: Borrowers Fall Further Behind on $1.3 Trillion in student Loans

Los Angeles Times: Jeb Bush’s Embrace of Common Core is a Campaign Lightning Rod

Los Angeles Times: Why You Can Get a Free Education in Germany But Not in California

Marketplace: How German Higher Education Controls Costs

NBC News: Poll: Clinton holds 25-Point National Lead Over Sanders

Jamal Evan Mazyck

Jamal Mazyck is currently pursuing an Ed.D. in educational leadership and is a graduate research assistant at San Diego State University. When he is not writing, researching or tweeting about the ins and outs of higher education, he can be found on the tennis court and running half-marathons. Contact Jamal at Staff@LawStreetMedia.com.

The post Tuition-Free Education: Presidential Candidates Weigh In appeared first on Law Street.

There is a mixture of excitement and dread that permeates the air around the holidays. Excitement because, for most, we get a few badly-needed days off, we can expect at least a few gifts, and we get to talk to those friends and family who we haven’t seen in months. Of course, the dread comes in because we have to scrape together enough funds to return the favor of those gifts, and we have to talk to those friends and family who we haven’t seen in months.

Different generations have different fears about what they’ll run into on the long, wintry visit home. For high school and college students, it’s the questions from older relatives like, “Do you have a girlfriend/boyfriend/horde of cats?” For professionals, it’s the questions from younger and older relatives like, “Do you have a girlfriend/boyfriend/horde of cats?”

And for many, we are not looking forward to having the inevitable discussions about politics with the set-in-their-ways relatives whose views differ so completely from ours.

While we’d like life to be like the Thanksgiving SNL skit where all disputes are solved by playing a little Adele, sadly the the melancholy tones of “Hello” will not stop your aunt or your grandfather or your young cousin who doesn’t know any better from questioning your political views, or even your way of life.

To help you out, here is a list of issues that might come up, and how you can keep from pulling your hair out. Deep breaths, you can get through this. Though, breaking out into song may be necessary.

Islamophobia

A hot-button topic on the campaign trail and in the news is, of course, the Syrian refugee crisis and its connection to ISIS. These might be subjects you would like to avoid with your grandmother who says vaguely racist things on a daily basis, but what if they come up?

First and foremost, remain calm. This goes for any touchy conversation. It is probably the easiest to get angry with our own family members, but nobody ever changed their opinions after being yelled at to stop their racist bullshit.

Facts are your friend, in this case, so point out the facts. There are millions of U.S. residents who identify as Muslim, but there isn’t an exact number because census data doesn’t record religious affiliations. Do you know why? Because U.S. citizens are supposed to be free from religious persecution. “Supposed to be” being the key phrase, here. Furthermore, ISIS wants the western world to be afraid of Muslims, and it wants people to misunderstand Islam so the Muslim population will subscribe to ISIS’ extremist views. Luckily, despite misconceptions perpetrated by conservatives and the media, the millions of Muslims who live, work and protect America are not extremists.

Sexism

It is a truth universally acknowledged that men and women deal with societal expectations based on gender. The stereotypical “having it all” for girls means finding a husband, landing a great job, and having a few children. For guys, it means making enough money to easily and happily support their spouse and 2.5 children. Maybe throw in a golden retriever for bonus points.

But the reality is that not everyone wants what society expects. While your parents and grandparents may have fit into that model, an exceeding number of young professionals do not. Maybe you’re a woman who does not want marriage or children, but has instead decided to focus on her career. Maybe you’re a man who has decided to be a stay-at-home dad while your common-law wife works a 9-to-5. Whatever your life choices, the best thing you can do when you receive passive aggressive comments about them is not to apologize.

You don’t need to make excuses or explain your way of life. When someone says, “your biological clock is ticking” or “you’d better settle down with a man before all the good ones are taken!” call out those comments for what they are: judgmental and outdated. Nobody needs to conform to sexist gender roles to feel fulfilled. Do what makes you happy and don’t say sorry. *Cues happy dancing*

Homophobia

Don’t forget to pack your rainbow flag before heading home so you can wave it in the faces of all your homophobic relatives! It is sure to be both entertaining and effective.

In all seriousness, most peoples’ homophobia stems from religious beliefs. So, if anyone complains about the historical decision to legalize same-sex marriage, you can ask them for a reason LGBT people should not be allowed to marry–outside of religious excuses. If they cannot give any legitimate reasons (and let’s face it, there really aren’t any), just remind them that we are a nation of many religions, and not everyone agrees with Christian ideals. Then wave aforementioned rainbow flag.

“Those damn millennials!”

If you are one of the thousands of 20-somethings who suffer from student loan debt, you’ve heard yourself referred to as an “ungrateful millennial” more than once this year. The generations that came before worked their way through college, after all, so why are we complaining about paying back that money? Why do we all want free handouts?

You can remind whichever relative brings it up that, in 1979, the minimum wage was $2.90 and students could easily pay for a year of school (public schools were around the $3,000 price tag) by working a job over the summer. Today’s minimum wage is $7.25, and that $4.35 bump per hour doesn’t really cover the difference in tuition costs, which now leave students with an average of $30,000 in debt. And that’s just undergrad.

Show them the math, and then tell them about how much you have to pay back on your loans every month. That amount, plus rent, insurance bills, and various other expenses like car loans and gas money, don’t leave a lot of expendable income for young graduates trying to break into their respective industry. And that lack of money probably has something to do with many young people putting off other big ticket items in their lives: settling down, buying a house, having kids, etc.

Remember, the greatest tools in your arsenal are facts and a calm demeanor. Keep an open mind, and if all else fails, stop talking and stuff your face with sugar cookies.

Morgan McMurray

Morgan McMurray is an editor and gender equality blogger based in Seattle, Washington. A 2013 graduate of Iowa State University, she has a Bachelor of Arts in English, Journalism, and International Studies. She spends her free time writing, reading, teaching dance classes, and binge-watching Netflix. Contact Morgan at staff@LawStreetMedia.com.

The post How to Deal With Family and Politics During the Holidays appeared first on Law Street.

It’s absolutely no secret that college is incredibly expensive. One of the biggest complaints about college costs is how exorbitant the prices of textbooks have become. But, if Senators Al Franken (D-Minnesota), Angus King (I-Maine) and Dick Durbin (D-Illinois) get their way, that will be changing soon. The three legislators just introduced a bill, the Affordable College Textbook Act, that will make some online textbooks free and ultimately help to cut textbook costs for college students.

An average student in 2013 spent roughly $1200 on books per year, or up to $1250 if just private universities are taken into account. The prices of textbooks have skyrocketed in recent years–increasing an average of 82 percent in the last 10 years. There was an 812 percent price jump between 1978-2013. Experts attribute the shocking jump in prices to a lack of competition in the market, but these high costs are certainly detrimental to students. Roughly 70 percent of students have foregone certain textbooks in an attempt to save money, even if they realize that doing so may affect their academic success. It makes a lot of sense–if you’re desperate to save money, it’s a lot easier to forgo textbooks than housing or food.

The bill was introduced last week and, if successful, will provide grants to institutions of higher education. Those institutions will then work on programs for “open” textbooks–essentially textbooks that are online and freely accessible to students. Franken explained why this program would make sense based on his experience in Minnesota, stating:

At The University of Minnesota they’ve started a program of open sourced textbooks and that is basically paying professors there to write textbooks and put them online and so that professors and teachers can use and students can use that material instead of a $150 textbook.

Durbin also explained his motivations, citing similar success in Illinois:

As I said, we did this at the University of Illinois. Now there are certain rules of the game. If you’re going to have an open text book, it really has to be open, available to everyone, for the public, and what were finding is there’s a lot of good response to it and I think its catching on.

This, overall, is a smart suggestion that alleviates a real problem for students. A corresponding bill has been introduced in the House by Representative Rubén Hinojosa (D-Texas) and Jared Polis (D-Colorado). But, it has a very long way to go before it becomes anywhere near a viable piece of legislation, and given the current Congressional climate, probably doesn’t have a good shot of being enacted. That being said, as more pressure is exerted on our government to address the rising costs of college expenses, these kind of common sense and intelligent proposals will become key. While the bill may not make it through this time, be on the lookout for similar proposals at the state and federal level moving forward.

Anneliese Mahoney

Anneliese Mahoney is Managing Editor at Law Street and a Connecticut transplant to Washington D.C. She has a Bachelor’s degree in International Affairs from the George Washington University, and a passion for law, politics, and social issues. Contact Anneliese at amahoney@LawStreetMedia.com.

The post Will the Senate Take Action to Combat Rising Textbook Costs? appeared first on Law Street.

Students affected by one of the largest educational scams in modern years are finally getting some relief. The U.S. Department of Education (DOE) says it will forgive students’ federal student loans on the grounds that Corinthian Colleges Inc. defrauded them after the company’s bankruptcy earlier this year.

A string of reports and lawsuits, including one by California Attorney General Kamala Harris, led to Corinthian’s end. The for-profit school used tactics that enticed students, many with limited education and money, with promises of workplace skills ranging from video game design to nursing. Students left these colleges with nearly worthless degrees and very little knowledge in their fields.

Before its closure, the two decade-old company was one of the biggest for-profit education companies in the United States, operating more than 100 campuses at one point under various names, including Everest, Wyotech, and Heald. Corinthian had campuses throughout North America and Canada. It ceased operations this April, shutting down campuses and selling off others after the Department of Education cut off its loan lifeline and fined Corinthian $30 million for misrepresenting job placement rates. The ending was tragic for many–thousands of students were given a one-day notice when campuses closed, leaving them to wonder if their hard work and credits could be transferred to other institutions to complete their education.

This is a very sensible decision by the DOE that will help thousands of students who were struggling to pay back these loans. But although this may give many students a fresh start, consumer and education groups worry that this loan forgiveness process will be too tedious for most to complete. Students have to individually apply for the loan relief. This process requires legal savvy and documents–including transcripts–that could be difficult to obtain, especially considering that the schools are no longer operating. It is also important for those who apply to know that the relief is only applicable to federal student loans, not the private loans which countless students were reportedly lured into getting. Finance blogger, Alexis Goldstein, criticized the plan stating:

Instead of providing broad debt cancellation to former students of Corinthian Colleges, Inc. the Department decided to require students to jump through extensive loopholes in order to apply for relief.

Although this may give the impression that the Corinthian problem is solved, it is only the beginning. Because federal regulators let the operation run too long, the lost loans may total up to $3.5 billion in taxpayer money.

We’re going to do everything we can to help #CorinthianCollege students, while also protecting taxpayers. http://t.co/FhePt7hD6c

— Arne Duncan (@arneduncan) June 8, 2015

A Huffington Post analysis recently found that nearly half of the schools listed by the Department of Education as “Alternative Education Options” are for-profit institutions owned by corporations that are also under federal investigation for possibly misleading students. The Obama administration is already guaranteeing forgiveness to the 40,000 students who borrowed hundreds of millions in federal loans to enroll at Heald from 2010 on. Forgiving the loans is a great step for the thousands of hard-hit students, but it should also make the government much more watchful of the educational marketplace.

Taelor Bentley

Taelor is a member of the Hampton University Class of 2017 and was a Law Street Media Fellow for the Summer of 2015. Contact Taelor at staff@LawStreetMedia.com.

The post For-Profit College Scam Victims Get Loan Forgiveness: Will it Be Enough? appeared first on Law Street.

It’s no secret that college education in this country has gotten extremely pricey. For more and more students, the only possible way to gain a higher education is to apply for student loans. Unfortunately, many of the students who take out loans then have a difficult time paying them back. The Department of Education used to employ debt collection companies to track down that money. However, the Department of Education just announced that it will be no longer contracting five of those companies, after they provided inaccurate information to borrowers.

The companies whose contracts are being terminated are Pioneer Credit Recovery, Coast Professional, Enterprise Recovery Systems, National Recoveries, and West Asset Management. According to Bloomberg the reasoning for the decision included findings that:

The companies gave borrowers misleading information about ‘the benefits to the borrowers’ credit report’ and about ‘the waiver of certain collection fees,’ the agency said.

It appears that the Department of Education isn’t going to cut its work off with these five companies overnight. Rather, its planning on “winding down” the contracts and transferring them to other companies.

This is a good public relations move for the Department of Education. The department has long been under fire for working with the debt collection companies. Various watchdogs have accused the Department of Education of turning a blind eye to the companies’ practices. For example, the Government Accountability Office, the part of the U.S. government which investigates and evaluates other departments’ practices, claims that the Department of Education found the debt collectors violated the federal law yet didn’t do anything about it.

However, the five debt collection companies are claiming that they were “blindsided” by the Department of Education’s decision. Pioneer Credit Recovery claimed that it had been told last April that it was complying with various regulations. Pioneer also claimed that the Department of Education had conducted 17 different reviews over the course of 2014, and never brought up any concerns or violations to Pioneer.

This decision comes during the middle of a nationwide discussion on student loans, and the viability of for-profit universities. Earlier this week, a letter written by 15 students who attended the for-profit Corinthian Colleges network was shared around the internet. The so called “Corinthian 15” are asking the Department of Education for loan forgiveness. The letter includes the following:

We trusted that education would lead to a better life. And we trusted you to ensure that the education system in this country would do so. But Corinthian took advantage of our dreams and targeted us to make a profit. You let it happen, and now you cash in.

Each month you force us to make payments into an immoral system that profits from our aspirations.

We paid dearly for degrees that have led to unemployment or to jobs that don’t pay a living wage. We can’t and won’t pay any longer.

It’s a powerful message to the Department of Education, and while the department’s move away from predatory debt collectors is a good thing, it’s just a very small step in the right direction.

Anneliese Mahoney

Anneliese Mahoney is Managing Editor at Law Street and a Connecticut transplant to Washington D.C. She has a Bachelor’s degree in International Affairs from the George Washington University, and a passion for law, politics, and social issues. Contact Anneliese at amahoney@LawStreetMedia.com.

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From bizarre laws to college admissions strippers, Law Street has you covered on everything you might have missed last week. Our number one story of the week came from Marisa Mostek who added the Pacific Northwest states to her series of the Dumbest Laws in the United States. Hint: hope you don’t want to buy a new mattress on a Sunday, because that’s out of the question. Anneliese Mahoney wrote the #2 post on Columbia University’s policy allowing students who have experienced trauma to petition for delayed exams, which became a hot topic in the context of the recent Ferguson and New York grand jury decisions. And Ashley Shaw had the #3 post of the week with a report on now-defunct FastTrain College’s admissions practices that will have you scratching your head and wondering how this happened in real life. ICYMI: check out Law Street’s Best of the Week.

#1 The Dumbest Laws in the United States: Pacific Northwest Edition

I was wrong a couple weeks ago when I said that California laws are crazy. Many of the Golden State’s laws that I mentioned now seem completely sane in comparison to those I’ve discovered in Washington and Oregon. For example, if you are trying to woo the opposite sex by saying your dad just won the lottery and drives a brand-new Lamborghini when in fact he doesn’t have a dime to his name, you better think again. In Washington state it is illegal to pretend that your parents are rich. Read full article here.

#2 Columbia Law takes Progressive Stance on Mental Health

In light of the incredibly controversial and nation-sweeping announcements that grand juries in Missouri and New York failed to indict the cops who killed Michael Brown and Eric Garner, respectively, Columbia University Law School made an announcement. It regarded the reactions that some of the students may be having to those verdicts, and offered counseling, opportunities to talk to professors regarding the indictment. Read full article here.

#3 BS in Dancing: When Stripper Work Admissions, It Might be a Scam

With a name like FastTrain College, you probably expect a top-notch education system along the lines of Harvard or Yale; however, what you apparently get is a different type of top entirely. When FastTrain wants you (so basically if you are a man), it will send out its top admissions officer. And by top officer, I of course mean an exotic dancer dressed provocatively in an effort to lure you into the school. Read full article here.

Chelsey D. Goff

Chelsey D. Goff was formerly Chief People Officer at Law Street. She is a Granite State Native who holds a Master of Public Policy in Urban Policy from the George Washington University. She’s passionate about social justice issues, politics — especially those in First in the Nation New Hampshire — and all things Bravo. Contact Chelsey at staff@LawStreetMedia.com.

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With a name like FastTrain College, you probably expect a top-notch education system along the lines of Harvard or Yale; however, what you apparently get is a different type of top entirely. When FastTrain wants you (so basically if you are a man), it will send out its top admissions officer. And by top officer, I of course mean an exotic dancer dressed provocatively in an effort to lure you into the school. Because every life decision should be made by the size of the breasts and attractiveness of the faces you will see when you get there. (Though since I chose my college strictly on the size of its dorm rooms, I suppose I cannot really judge.)

Courtesy of Giphy.

Strippers aside, the school was not as morally motivated as you might expect from an organization that got you to attend by showing you sexy women. The school had a few questionable practices, too. For example, it would apparently give you a high school diploma if you didn’t have one so that you could attend college, which really is very nice even if it is not legal. Let’s all pretend that the real reason isn’t so that the new high school “graduate” can now apply for student loans that will go to the school to pay for their higher “education.” The school also asked students to lie on their government forms. All in all, it stole a whole lot of government money–meaning millions–which led to an FBI raid, criminal charges against the owner, and an ongoing civil suit.

Courtesy of Giphy.

This is a pretty titillating subject don’t you think? (Yes that pun was intended.) More than 100 students from this now-defunct school (only open a few years) are in default on their loans; however, the students going there during the raid will not have to pay. Because of a closed door provision, the government will do the following to a loan from this time: drop it like it’s hot.

I have a feeling this school will not win its lawsuit and will have to repay the money it took. Lucky for FastTrain, it has a real clear way to collect those fees: strip show on campus!

Here is my advice to prospective college students: do not go to a school that is run by strippers unless you are going to school to become a stripper or a stripper-voyeur. I promise you will not regret this advice as ludicrous as it might seem now.

Ashley Shaw

Ashley Shaw is an Alabama native and current New Jersey resident. A graduate of both Kennesaw State University and Thomas Goode Jones School of Law, she spends her free time reading, writing, boxing, horseback riding, playing trivia, flying helicopters, playing sports, and a whole lot else. So maybe she has too much spare time. Contact Ashley at staff@LawStreetMedia.com.

The post BS in Dancing: When Strippers Work Admissions, It Might be a Scam appeared first on Law Street.

On Thursday, October 23, 2014, NBCUniversal agreed to pay $6.4 million to settle claims that it violated labor laws over its unpaid internship program.  NBCUniversal’s decision to settle is pivotal because it marks a huge step toward eliminating unpaid internship programs completely.

The lawsuit against NBCUniversal began when Monet Eliastam, the lead plaintiff of the lawsuit, interned at Saturday Night Live for 25 hours per week or more and did not receive compensation. She and other unpaid interns filed a class-action lawsuit and sued NBCUniversal. Elisastam claimed, according to the Hollywood Reporter, that NBCUniversal “misclassified its workers as unpaid interns and thus denied them benefits like a minimum wage salary, overtime pay, social security contributions, and unemployment insurance.”

The Hollywood Reporter further reports that a United States District Court will have to approve the settlement, but if it stands, $1.18 million of the total $6.4 million will go to plaintiffs’ attorneys, Elliastam will receive a $10,000 service payment, and five other plaintiffs will receive service payments of $5,000 and $2,000 rewards. The rest will go to NBCUniversal interns, and the average settlement payment to interns will be $505 for those who interned in New York since July 3, 2007, in California since February 4, 2010, and in other states since February 4, 2011.

Unpaid interns have filed cases against Fox, Sony, Warner Brothers, and Viacom, and companies like Conde Nast have also settled unpaid internship cases. Unpaid internship cases are thus becoming the norm, which it should be.

As a law student, I have had my fair share of unpaid internships. One summer, I worked 35-40 hours per week at an entertainment company and did not receive a dime. Instead, I received credit and had to take an externship class. On the surface, that may not seem terrible because I got to apply three more credits to my total needed to graduate. However, I had to pay a few thousand dollars to take the externship class because the minimum amount of credits that my loan would pay for was six, and my externship class was only three.

It doesn’t take much to realize how unfair that is. Not only did I give the company free labor, but I was out a few thousand dollars in order to get that free labor. Where is the logic in that? There is none.  The unpaid internship system is designed to take total advantage of students just so the student can put that company’s name on his or her resume. The school makes money, and the company gets free labor.

Even for students who take internships or externships during the school year and do not have the student loans issue that I did, no one wants to take a class in addition to interning.  Especially in law school, students are so busy that externship classes take a back seat to a student’s more substantive school work, internships, law journals, and/or moot court.

Moreover, the entertainment companies exist in, not surprisingly, the most expensive cities in the country. Students can’t live on unpaid internships — not when your average lunch in New York City, for example, is around $10 or more. It’s simply not feasible. Yes, you can argue that students can live on student loans, but that misses the point.  Students want to be compensated for their work and be valued as integral employees. It’s as simple as that.

Fortunately, companies are starting to pay interns because companies do not want to be victims, which has been echoed to me in several legal internship interviews.

Hopefully interns will finally begin to get paid for their work across the board, and students will not have to experience what I and millions of other students have.

—

Joseph Perry (@jperry325) is a 3L at St. John’s University whose goal is to become a publishing and media law attorney. He has interned at William Morris Endeavor, Rodale, Inc., Columbia University Press, and is currently interning at Hachette Book Group and volunteering at the Media Law Resource Center, which has given him insight into the legal aspects of the publishing and media industries.

Featured image courtesy of [Knot via Flickr]

Joseph Perry

Joseph Perry is a graduate of St. John’s University School of Law whose goal is to become a publishing and media law attorney. He has interned at William Morris Endeavor, Rodale, Inc., Columbia University Press, and is currently interning at Hachette Book Group and volunteering at the Media Law Resource Center, which has given him insight into the legal aspects of the publishing and media industries. Contact Joe at staff@LawStreetMedia.com.

The post NBCUniversal Settles With Unpaid Interns for $6.4 Million appeared first on Law Street.

Monday again, huh? It’s rough. I’m not even going to try to dispute that. Ease into the work week with a recap of last week’s top stories from Law Street. Blogger Hannah Kaye took the number one spot with an analytical look at the the myth of “stranger danger” through the lens of the disturbing case of Hannah Graham in Virginia; writer Hannah Winsten took it to the people behind #GamerGate and violence against women to earn the number two spot; and I wrote about Starbucks’ upcoming competition to win free coffee for 30 years. ICYMI, check out the top three stories from last week.

#1 The Case of Hannah Graham and the Myth of Stranger Danger

On September 13 2014, 18-year-old University of Virginia student Hannah Graham went missing, and recently authorities arrested and charged 32-year-old Jesse L. Matthew Jr. in relation to the incident. His current charge is described as abduction with intent to defile in the case of Graham. (Intent to defile meaning he intended to sexually assault the victim.) Matthew is currently being held without bond and is scheduled for a hearing in early December. Unfortunately, after two weeks of searching, Graham has still not been found, but authorities are doing all they can to locate her. Read full article here.

#2 GamerGate Takes Misogyny to a Whole New Level

How many of you are big video game players? Probably a decent number of you. I, personally, don’t really get the whole video game thing, mainly because I didn’t grow up with them. My parents had really strong opinions about what kinds of activities made children’s “brains melt out of their ears.” Melodramatic, Mom. But! I’m in the minority here. You guys totally like to relax with a cold beer and a few hours of Madden, am I right? Read full article here.

#3 Starbucks for Life Campaign: You’re Welcome Law Students

If there are two things common to basically every law student ever, it’s this: 1. You’re exhausted in every possible way imaginable and subsisting on caffeine; and, 2. There’s no point in even thinking about the 30 years it’s going to take you to pay off your student debt. Lucky for (a handful of) you, Starbucks announced its new “Starbucks for Life” campaign. Read full article here.

—

Chelsey Goff (@cddg) is Chief People Officer at Law Street. She is a Granite State native who holds a Master of Public Policy in Urban Policy from the George Washington University in DC. She’s passionate about social justice issues, politics — especially those in First in the Nation New Hampshire — and all things Bravo. Contact Chelsey at cgoff@LawStreetMedia.com.

Chelsey D. Goff

Chelsey D. Goff was formerly Chief People Officer at Law Street. She is a Granite State Native who holds a Master of Public Policy in Urban Policy from the George Washington University. She’s passionate about social justice issues, politics — especially those in First in the Nation New Hampshire — and all things Bravo. Contact Chelsey at staff@LawStreetMedia.com.

The post ICYMI: Best of the Week appeared first on Law Street.

It’s pretty well known at this point that the law school industry is struggling. With overall enrollment down, many schools are taking drastic measures to make sure that they keep their numbers up. Some schools are doing this by lowering prices, and others are creating innovative new programs to attract students. And then you have the American University Washington College of Law, which is offering students a scholarship…and then making them pay if they don’t follow through on the terms of the scholarship.

American Law offers a scholarship called the Public Interest/Public Service Scholarship. The students who receive it are colloquially referred to as PIPS Scholars. The PIPS scholarship covers the full price of tuition and requires certain involvement in public service-based events and activities in order to remain in the program. For example, PIPS Scholars participate in the school’s Pro Bono Honors Pledge Program, and organize a Public Service Day for younger students. There are also academic standards that must be maintained. Overall, the program seems pretty rigorous, but also valuable, given that full-cost law school scholarships are pretty hard to come by.

But there’s apparently a catch, and that’s this stipulation:

Scholars will be expected to maintain matriculation at the Washington College of Law until graduation. Absent compelling circumstances, a scholar who chooses to withdraw or transfer from the law school will be required to pay back the full amount of tuition within 30 days of the end of the last semester of enrollment plus any other WCL grants or scholarships. As a condition of receiving the scholarship, incoming PIPS Scholars will be asked to sign a form indicating their understanding and acceptance of the foregoing terms and conditions of the award.

So if a PIPS Scholar doesn’t stay at American for all three years of legal education, she owes American Law repayment of that free tuition? American Law puts its current full-time tuition at $49,542.

As Paul Campos points out, this policy has undergone some changes over the years. Originally when the program was created in 2001, there did not appear to be any sort of repayment requirements. Between 2006 – 2014, PIPS Scholars who dropped out or transferred could convert their debt to American Law into a loan and pay it back that way. Now, it appears that students who don’t complete the requisite three years must pay back the full amount in 30 days.

It’s a pretty tough bargain that American Law is driving with this scholarship. To be fair, the students who enter this program do accept the terms and conditions, and apparently sign some sort of contract. I hope that those students are giving that document a good read-over, but given that they are entering law school on a full ride, it’s probably pretty safe to assume they are indeed being thorough. Obviously, a student who thinks he might want to transfer, or a student who isn’t 100 percent sure that law school is the right path should not accept this scholarship.

I do worry, though, about students who have to drop out of school for unforeseen reasons — health, family emergency, personal crises, and the like. Sometimes those things just happen, and the fact that American Law will penalize students for those reasons is pretty tough. Although the scholarship does say that the price will be charged “absent compelling circumstances,” there doesn’t appear to be a definition in the scholarship requirements of what compelling circumstances might be. Is it decided on an ad-hoc basis, or does American Law list some examples of what is a good enough reason to drop out? The potentially arbitrary nature of this sentence is deeply concerning.

I think it’s also important to note that American Law must know that if a student drops out, he’s probably not going to do a great job of paying the school back. Any attempts to reclaim the money, especially as much money as American Law charges a year, is probably going to drive that student into bankruptcy. Instead, this serves as more of an insurance policy than anything else — the threat of America Law’s possible actions are pretty much enough to keep students from transferring or otherwise leaving.

It’s an interesting move, American Law. In a environment where law schools are trying new strategies to stay ahead of the pack, let’s see how hostage-taking in the form of a “scholarship” works for you.

—-

Anneliese Mahoney (@AMahoney8672) is Lead Editor at Law Street and a Connecticut transplant to Washington D.C. She has a Bachelor’s degree in International Affairs from the George Washington University, and a passion for law, politics, and social issues. Contact Anneliese at amahoney@LawStreetMedia.com.

Featured image courtesy of [Truthout.org via Flickr]

Anneliese Mahoney

Anneliese Mahoney is Managing Editor at Law Street and a Connecticut transplant to Washington D.C. She has a Bachelor’s degree in International Affairs from the George Washington University, and a passion for law, politics, and social issues. Contact Anneliese at amahoney@LawStreetMedia.com.

The post American University College of Law and Its Hostage Scholarship appeared first on Law Street.

Millennials seem to be constantly in the news, and when it comes to money matters that trend holds true. With high unemployment and underemployment, unprecedented levels of student debt, and the burden of supporting an aging population, Millennials face a unique set of financial challenges. Recent studies indicate that Millennials think about money differently than older generations. Are Millennials actually less financially savvy, or are they just a product of the Great Recession? Here’s what you need to know about Millennials, their approach to personal finance, and what it means for their future.

Who are the Millennials?

There is no official start and end date to the Millennial generation, but the general definition includes anyone reaching young adulthood around the year 2000. Popular studies define a Millennial as anyone born between 1978 and 1994. There are more than 80 million Millennials, which makes them the largest generational cohort in history. They comprise nearly a third of the population, and their habits are simply too influential to ignore.

Various claims about Millennials only culminate in one agreeable truth: this generation is full of contradictions. Millennials are less politically engaged, but they are interested in helping their communities and making a difference. They are more diverse and tolerant of others, but aren’t naturally trusting. They love technology, multitasking, and personal branding. Critics describe Millennials as over-confident to the point of entitlement. Millennials and their financial situation are incredibly important since they are expected to make up roughly 75 percent of the workforce by 2025. As they search for jobs following the Great Recession, Millennials are best characterized as financially risk-averse.

What is the financial situation of Millennials like?

According to Pew Research Center, the median net worth of a household of a person younger than 35 in 1984 was $12,132 in today’s dollars. Today it’s only $6,815. With less money, Millennials need to be frugal. They are keeping more cash and investing less.

Cash

According to data from Bankrate.com’s latest Financial Security Index, 39 percent of 18 to 29 year-olds choose to hold money they will not touch for at least 10 years as cash in their accounts. This is not too surprising, given that young people are historically more prone to keep money rather than invest. Millennials without jobs or 401(k) plans need to keep more money on hand for short-term needs, like paying bills. This is not just a Millennial phenomenon either. The Great Recession led people of all ages to hold more money in cash rather than make risky investments. However, some scold Millennials for their lack of interest in investment, and even describe them as the most financially conservative generation since the Great Depression.

Banking

Millennials are less likely to rely on traditional banking for their money needs. Most Millennials instead turn to newer forms of payment, such as prepaid debit cards and mobile devices. Millennials shun checks and hate paying monthly fees for things like credit cards. After growing up with one-click companies like Amazon and Apple, Millennials believe in convenience. They look for free shipping, free services, and online accessibility. According to a 2014 TD Bank Financial Education Survey, ninety percent of Millennials use online or mobile devices for everyday banking.

Following the Great Recession, Millennials are hesitant to trust big banks. Many Millennials feel that those on Wall Street do not share their values. After seeing their parents’ accounts depleted in the recent recession, Millennials continue to distrust the stock market. Wells Fargo reported that 40 percent of Millennials disagree that financial advisors have their best interests in mind.

Saving

The good news is that Millennials, if they have the capability, do try to save. On average, Millennials begin saving at age 22, in comparison to age 35 for baby boomers. The issue is that Millennials save three times as much in cash or bonds as they do in equities. Because of this, they get little return on their money. While three in five Millennials describe themselves as savers, 45 percent have not started saving for retirement. Most Millennials are more concerned about saving to weather the next financial storm than saving for their far-off retirements. According to BankRate.com, Americans age 18 to 30 are the group most likely to set aside five months’ worth of expenses in a rainy day fund.

Homeownership

Millennials are more likely than other generations to wait to buy a home. They are also more likely to live with their parents while trying to gain stable financial footing. An October 2013 Pew Research Poll showed that for the second consecutive year a record number of Millennials lived in their parents’ houses. Over 30 percent of 18 to 31 year-olds lived with their parents in 2012 and 2013. Many recent graduates return home as a way to save money and pay off student loans.

However, this lack of homeownership is not necessarily due to shaky finances–there are a couple other explanations. First, Millennials live a more transient lifestyle and are more likely to rent in big cities before settling down. Secondly, Millennials are waiting until later in life to get married and have kids. This means they are also waiting longer to buy homes equipped for family life.

What has caused Millennials’ financial distress?

Student Loans

The increasing need to take student loans to get through college cripples young adults. The burden of paying off student loans leaves Millennials pushing other goals, including investing, to the future. According to the Federal Reserve Bank of New York, the average student loan debt in 2003 was $11,000. The average class of 2014 graduate with student loans owes $33,000. After paying off loan bills, Millennials have little extra money to invest.

The debt takes a toll on Millennials’ sense of financial security. Forty-two percent of Millennials say debt is their biggest financial concern. Forty percent say their debt is “overwhelming,” compared to only 23 percent of baby boomers. Fifty-six percent of Millennials say they are living “paycheck to paycheck.” Fifty-nine percent worry they will never pay off their college loans. Click here to read an in-depth analysis of the American student loan crisis, and watch this clip for more information on student loan debt below:

NerdWallet conducted a study of Millennials’ predicted ability to retire. They found the median debt for a student at graduation to be $23,300. The standard repayment plan of 10 years would cost that student $2,858 per year. This projected debt load would then end up costing that person $115,096 by retirement, since they would miss out on their most important decade of retirement savings with the highest compounded returns.

Unemployment

The difficulties of paying back student loans are exacerbated by the fact that many Millennials spend some period of time unemployed or underemployed in the slowly-recovering job market. Young adults face a rate of unemployment twice the national average. According to a Gallup poll in 2013, only 43 percent of Americans aged 18 to 29 had full-time employment. Some of these young adults could still be in school and therefore not looking for work. However, of those with a college degree, only 65 percent had a full-time job. While the country’s unemployment rate is falling, Millennials still make up 40 percent of those who are unemployed and searching for work. Bureau of Labor Statistics data from June 2014 show the unemployment rate for those ages 18 to 29 is over 15 percent.

So, why is the Millennial financial situation so concerning?

Those in the financial industry worry about Millennials’ lack of investments. Early investment is necessary to meet retirement goals. However, many Millennials are saving in cash to build a “rainy day fund” rather than to fund their retirement still decades away. Most Millennials are aware they cannot safely count on Social Security for their retirement. However, Millennials are not saving enough to get by in retirement without Social Security.

Holding cash in a savings account currently yields negative real interest. By holding cash rather than investing it, Millennials are essentially losing money. The burdens on Millennials in terms of debt and student loans may be preventing them from investing, but financial planners worry this generation is missing out on their prime years of investment. The issue is all the more troubling because Millennials have time to take on the risks of investment since they are still decades from retirement.

Consider the following investing example involving two twin sisters posed by USA Today: one twin sister starts investing $5,000 a year in a Roth IRA at age 22, then stops at age 30 and doesn’t save any more money. The other sister also starts investing $5,000 a year, but begins at age 31 and continues every year until she is 67. With a 10 percent annual return, they both will have just under $1 million. But the sister who started early and stopped at 30 will have slightly more. With consistent returns, the first nine years end up being worth more than the next 36. Getting an early start is more important now than ever, because set pensions are nearly non-existent. Most people have to make 401(k) contributions on their own, where an employer may match a certain amount. Watch for more about retirement savings below:

There are greater concerns than Millennials’ lack of investment and retirement savings. For example, the fact that Millennials are waiting until later in life to buy homes has drawn some ire. Critics contend that Millennials are holding back the recovery in real estate because they are content to live at home rather than become homeowners. Spending on homes and greater investment would have a positive ripple effect on the economy.

Are Millennials just being ignorant?

Maybe. According to Kiplinger, nearly half of Millennials have used costly forms of non-bank borrowing, such as payday loans and pawn shops. These young people may not be aware that less expensive options are available. This lack of knowledge permeates their attitudes toward personal finance. Less than a quarter of young adults in a Kiplinger survey could answer four or five questions correctly on a basic financial literacy quiz. Specifically, Millennials struggle with the concept of mortgages, likely because many have not bought a house. Millennials also struggle with the concept of inflation, probably because they have only lived in an era when inflation has been under control. In a financial literacy assessment created by the U.S Treasury Department and Department of Education, Millennials scored only 69 percent on average. In another quiz, created by the Jumpstart Coalition for Personal Finance Literacy, the average score was just 48 percent. Watch college students answer some financial questions below:

Through both schools and their employers, Millennials are offered more financial education than other generations ever received. However, their participation rate is among the lowest of all generations. Most Millennials are simply content being frugal and trying to save what they can.

Regardless, most Millennials know they need to save for the future. The problem is their current financial situation leaves them little money to invest. They may think holding cash is the safe bet now, but any hope for a safe retirement will require greater levels of investment. The Millennial financial situation isn’t great–but hopefully they will be willing to learn.

Resources

Primary

Financial Industry Regulatory Authority: The Financial Capability of Young Adults–A Generational View

Brookings: How Millennials Could Upend Wall Street and Corporate America

Additional

TIME: Millennials are Hoarding Cash

Fortune: The Collapse of Millennial Homeownership Could be a Mirage

Vox: Why is it so Difficult to Teach People to Manage Money?

Investopedia: Money Habits of the Millennials

U.S. News & World Report: Why Aren’t Millennials Investing? Fear Isn’t the Only Factor

Kiplinger: Millennials Face Financial Hurdles

USA Today: Slow Start, Shaky Future for Millennials

U.S. Chamber of Commerce Foundation: The Millennial Generation Research Review

Nerd Wallet: 73 Will be the Retirement Norm for Millennials

Philadelphia Business Journal: Millennials are Very Conservative Investors–and Why That’s a Problem

New York Post: Frugal Millennials Save for Rainy Days: Study

Federal Reserve Bank of New York: Are Recent College Graduates Finding Good Jobs?

Gallup: In U.S., Fewer Young Adults Holding Full-Time Jobs

Wall Street Journal: Congratulations to Class of 2014, Most Indebted Ever

Editor’s Note: This post has been updated to credit select information to USA Today. 

Alexandra Stembaugh

Alexandra Stembaugh graduated from the University of Notre Dame studying Economics and English. She plans to go on to law school in the future. Her interests include economic policy, criminal justice, and political dramas. Contact Alexandra at staff@LawStreetMedia.com.

The post Millennials and Personal Finance: A Lost Generation? appeared first on Law Street.

The Class of 2018 is having an exciting summer. They get to figure out which dorms they will live in, which intro classes they will take, and, most importantly, which loans they will take out to pay for the next four years. Meanwhile, the Class of 2014 is experiencing some discomfort as they figure out how exactly to pay for those loans they took out four summers ago. Student loans burden a reported 40 million Americans. Read on to learn all about how these people and their finances are impacted by politics.

What is a student loan?

A student loan is pretty self-explanatory. It is a type of loan specifically meant to pay for university tuition and all other costs associated with going to college. This can include books, computers, and housing. Student loans differ greatly from other types of loans. For example, federal student loans do not have to be paid back until graduation. People obtain student loans by filling out the Free Application for Federal Student Aid (FAFSA), a form that gives students access to all sorts of financial aid, including Pell Grants and Federal Work Study.

Who provides these student loans?

While some students obtain these loans from private banks, many of them obtain loans from the federal government. Federal loans are all backed and funded by the U.S. Department of Education (DOE), which means that the interest rate is often lower than those provided by a private bank.

What are some problems with the student loan system?

The big problem is that so many students need them. Twelve million students each year, 60 percent of all college students, pay some portion of their tuition with student loans. This is partly because college is more expensive than it used to be. Over the last 24 years, the average cost of in-state public college education rose by $5,470. And that’s just in-state public school. Tuition at some private institutions is staggering.

This contrast illustrates it best: the overall consumer price index has risen 115 percent since 1985. How high has the college education inflation rate risen? Nearly 500 percent. It’s no wonder that more Americans than ever have student loan debt. Here’s President Barack Obama decrying skyrocketing tuition:

Interest rates used to be a problem. In previous years, the interest rate on student loans would be set permanently by Congress. However, these rates were set up so that, unless Congress reauthorized them, they would double. There was a fight to keep these rates low in 2012 and 2013. That’s why this weird clip from Late Night With Jimmy Fallon with Obama exists:

Congress quickly realized that going through this battle every year was not good for anyone. That’s why they passed the Bipartisan Student Loan Certainty Act of 2013. This law tied student loans to the 10-year Treasury note and locked in individual rates for life. This means that, while your own rate will never rise, the rates of future students will raise independent of action from Congress.

The bigger problem is that student loans have saddled 37 million graduates with serious debt. It takes years, sometimes decades, to pay off these loans. Worse, these debts have been steadily rising over the past few decades.

Why does it take so long to pay back student loans?

Simply put, graduates just aren’t very good at paying these loans back. Somewhere between a quarter and a third of borrowers are late on their payments. According to the Federal Reserve Bank of New York, 35 percent of American student loan borrowers were delinquent on payments in the third quarter of 2012. This local news broadcast called the situation an “economic crisis.”

Graduating students are also struggling to pay back these loans because they are entering an awful job market. For example, 6.7 percent of students who graduated in 2008 were still unemployed in 2012. How are these young people expected to start paying down this debt when they have little or no income?

Many graduates also do not know how to correctly pay these loans back. This advice column from The New York Times shows just how complicated paying back student loans can be.

If so many graduates cannot quickly pay off their debts, they may be left out of certain opportunities, like buying a house. Student loan debt is a drag on the economy.

PBS NewsHour has more on that issue here:

What assistance is available to those with student loan debt?

Not much. Some politicians are attempting to reform the system to help graduates (we’ll get to that later), but there are only a few ways the government can currently help.

Loan consolidation is one such option. This is when the government lets you combine all of your loans into one. Graduates who are having trouble paying off multiple loans consider this option so that they can only have one manageable monthly payment. There are also some instances in which debt holders can defer their payments on principle and interest. Find out if your student loan payments can be deferred here.

Private companies exist that offer to help lower monthly payments, but these companies have recently come under fire from federal and state regulators for using predatory practices and charging graduates hefty upfront fees for services that the DOE offers for free. Illinois has sued some of these companies and more states are likely to follow.

In the past, those looking for forgiveness of their debt were out luck. Even today, graduates who want an immediate forgiveness of their debts will have trouble doing so. This table shows just how hard it is to get student loan debt forgiven. Even bankruptcy does not always result in a forgiveness of student debt. However, action taken by President Obama made forgiveness a little easier. Read on to the next section to find out how.

How is President Obama trying to fix student loans?

Obama has used his executive power to bypass Congress and expand the Pay As You Earn program. Pay As You Earn is a federal program that allows borrowers to cap their monthly payments at 10 percent of their income and forgives remaining debt after 20 years. This program was previously only available to new students. Obama expanded the program to a majority of loan holders, who can begin to take advantage of it in 2015.

Obama also supports the Bank on Students Emergency Loan Refinancing Act. This bill, introduced this May by Sen. Elizabeth Warren (D-MA), would allow those with outstanding debt to refinance their loans based on newer and lower interest rates.

What does Congress think about these reforms?

As noted in the last section, Democrats are on board with Warren’s plan. Every single Democratic Senator voted for the bill when it was brought to the Senate floor. This is most likely because it is a targeted demographic of the Democratic Party’s base — young adults — and that it is paid for by a tax that that has been a part of their platform for years.

Republicans in Congress are not a fan of Warren’s bill, mainly because it would be funded by the Buffett Rule. The Buffett Rule, proposed by Obama before the 2012 election, is a plan to tax millionaires so that they are not paying a lower share of their wealth in taxes compared to middle-class Americans. Even Senate Republicans, often seen as more moderate than House Republicans, rejected the bill, calling it a “political stunt.” Only three Republicans voted for the bill.

Sen. Marco Rubio (R-FL), a possible 2016 candidate, has introduced a bill that looks nearly identical to the Pay As You Earn program, but applies the same logic to every single student loan. It caps payments as a percentage of income and allows for debt forgiveness. However, while Pay As You Earn forgives all debt after 20 years, Rubio’s bill would only forgive that debt if it were less than $57,500. The debt would be forgiven in 30 years if it were any higher than that figure. Still, there is a lot of common ground between conservatives and Democrats. Common sense would dictate that this bill has a real chance of being passed.

Yet, as those who follow Congress know all too well, common sense rarely impacts Congressional results. The main obstacle for Rubio’s reform bill is that not all conservatives are the same. There are significant divisions in the Republican party on this issue. Many conservatives do not even believe that the federal government should be in the business of paying for young people to go to college. When asked about his vote against Warren’s bill, Senate Majority Leader Mitch McConnell (R-KY) stated that it is not Congress’ job to forgive “obligations that have been voluntarily incurred.” He also said “not everybody needs to go to Yale,” presumably arguing that students who cannot afford college should look for cheaper options instead of depending on the government. There are certainly cheaper options than Yale, such as for-profit college. McConnell believes that students should consider these less-expensive options before depending on the government.

How do Americans feel about student loan reform?

There has not been much polling done on the issue of student loan reform; however, one 2013 Public Policy Polling poll shows that all Americans are unsurprisingly unified on one issue: 83 percent of all Americans want Congress to either keep rates on student loans the way they are or lower them. This poll was taken back when rates could have potentially doubled, so it does not reflect feelings toward current reform packages, but it does show that the American people are in favor of Congress acting to keep interest rates low.

Americans are much more divided when it comes to opinions on the worthiness of their own loans. A poll by the National Foundation for Credit Counseling shows that, by a two-to-one margin, most Americans believe that their own student loan was worth the cost. However, most would not recommend taking out student loans to finance an education and some claimed they would not have taken a loan out if they were aware of how much it would cost them in the long run.

Congress would be wise to spend time on this issue, regardless of which reform plan they support. According to a Harvard University Institute of Politics poll, 57 percent of Millennials believe that student debt is a major problem. That concern is consistent across party lines. This statistic will likely keep the student loan issue on the Congressional agenda for quite some time.

Resources

Primary

U.S. Senate: S 1241 The Bipartisan Student Loan Certainty Act

Additional

U.S. Department of Education: FAFSA

College Board: Average Net Price Over Time for Full-Time Students at Public Four-Year Institutions

Forbes: College Costs Out of Control

Huffington Post: Elizabeth Warren Slams Mitch McConnell: He Wants ‘Students to Dream a Little Smaller’

U.S. News & World Report: Congress Approves Student Loan Deal

Huffington Post: How Millennials and Students Won a Massive Victory on Loan Rates

Huffington Post: Why the Student Loan Deal is Bad News for Students

Vox: 2008 Was a Terrible Year to Graduate College

The New York Times: A Beginner’s Guide to Repaying Student Loans

U.S. News & World Report: Obama Sidesteps Congress to Expand Student Loan Repayment Program

CBS: Senate Republicans Block Consideration of Student Loan Bill

Eric Essagof

Eric Essagof attended The George Washington University majoring in Political Science. He writes about how decisions made in DC impact the rest of the country. He is a Twitter addict, hip-hop fan, and intramural sports referee in his spare time. Contact Eric at staff@LawStreetMedia.com.

The post Student Loans Burden a Generation appeared first on Law Street.

We’re having a debate here at Law Street over whether or not now is a good time to go to law school–this is Matt DeWilde’s argument against taking the leap, click here to read Brittany Alzfan’s opinion on why law school right now may be a good choice.

When it comes to the question of entering law school right now, unless you like gambling with over $100,000 on the line or you got into Harvard Law, you might want to hold your horses. Going to law school now will still most likely result in massive amounts of debt and only a small chance to get a job at a top law firm when you get out. I do believe that law school will one day be a smart choice again, but that day is at least several years down the road.

There are many reasons why now is not a good time to go to law school. For one, law school prices have started to trend downwards, but are still high across the board. You will most likely end up in massive debt, especially if you haven’t finished paying off loans you took out for your undergraduate degree. The best law schools are still going to set you back close to $150,000 and it is very hard to find a respectable school that will cost you less than $100,000. All that being said, it would be totally worth it if you could make six figures right after graduating, but you most likely won’t luck out in the job market. In fact, you will probably be happy if you can find a job that pays marginally better than one you could get with just your undergraduate degree.

Median pay out of law school is around $60,000 a year, $10,000 lower than it was in 2008. Also check out this graph from the Association for Legal Career Professionals. While it is true that there is a sizable percentage of graduates making good money–about $160,000 a year, they’re still in the minority. In fact, there was a high concentration of graduates making between $45,000-$55,000 out of law school in 2012, which is only marginally better than the $44,000 graduates averaged their first year out of undergrad.

The counterargument to these facts is that the job market has stabilized, and with a smaller law school class more students will get good jobs. But there are problems with this logic. One is that the best paying jobs are still only available to those who graduate from elite law schools, which have not had to drop class sizes to the same extent as mid-level law schools. So while it may now be less likely that you will be unemployed when you graduate, do not expect the big bucks. Also, just because the job market has stabilized now does not mean it will start improving over the next three years while you’re in school. Going to school with the assumption that the job market will improve is an incredible gamble.

While going to law school today might not be as bad as enrolling in 2009, it is still not a great option. But there are signs that we could only be a couple years away from a law school rebound. One is that law schools are starting to lower their prices.  There could very well be wide-scale tuition decreases over the next few years, meaning it would make sense to wait until those have come to fruition. As prices go down, so does the gamble.

So if your dream is to be a lawyer and you really want to go to law school, do not give up hope, but be patient. Prices should go down and the legal job market is likely to improve a bit–albeit in mainly lower paying jobs. Perhaps try to find a job as a paralegal for a few years, then go to law school. Paralegals can earn up to $50,000 out of undergrad and it’s great experience to put on law school applications. Gain work experience, and in a few years take advantage of lower priced law schools. While it may be better to apply to law school now than it was a couple years ago, it’s still a risky decision. Waiting a few years could very well improve your prospects.

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Matt DeWilde (@matt_dewilde25) is a member of the American University class of 2016 majoring in politics and considering going to law school. He loves writing about politics, reading, watching Netflix, and long walks on the beach. Contact Matt at staff@LawStreetMedia.com.

Featured image courtesy of [thisisbossi via Flickr]  

Matt DeWilde

Matt DeWilde is a member of the American University class of 2016 majoring in politics and considering going to law school. He loves writing about politics, reading, watching Netflix, and long walks on the beach. Contact Matt at staff@LawStreetMedia.com.

The post Don’t Go to Law School…Yet appeared first on Law Street.