Tuition fees in the US : the grapes of wrath

As the Occupy Wall Street protests have spread to many cities in the United States, they have also taken roots at US universities, where students set up their own tent cities. Their concern: the rising costs of tuition and their heavy student’s debts. This issues brought out by worried students are directly connected to the larger issues being raised by the Occupy protests against economic inequality.

Young people everywhere are underemployed and struggling to repay debt. New York university professor Andrew Ross ran an open forum entitled « Is student debt a form of indenture ? » and explained that student debt in the United States has topped one trillion, which is more than any other kind of consumer debt in the country. There is a real student lending industry in the United States that profits from student loans, especially defaults because they involve lucrative collector’s fees, interests and penalties. This, added to a planned tuition increase, triggered the wrath of many students around the country. They decided to create their own occupy movement.

College tuition fees

The American higher education system is among the world’s most prestigious. But at what price? College cost a lot, even if  you can find a variety of institutions : private universities, public universities, community college and liberal arts college. None is free. In the American System, students pay for their studies, and they pay the hard price. The College Board released its annual report on the cost of college at the beginning of November. The average in-state tuition at public four-year institutions cost about $8,244 annually. And the figures jump to $14,487 per year at for-profit institutions. The top Ivy League colleges, the world’s most renowned institutions cost $50,000 per year. Even if students receive grant aids and tax-based aid, according to the Project on student debt research, students graduated in 2010 with an average of $25,250 in debt, 5 percent higher than a year before.

Student loans, a heavy burden

Various types of loans exist for students to pay their tuitions: federal loans and private loans. Generally, federal loans are not sufficient to cover the full cost of higher education. Unlike federal loans, private lenders can adjust interest rates as high as they want and they do not offer consumer protection. Indeed, in 2005, bankruptcy protection was removed from private student loans. Default is now the only option left for struggling student loan debtors. And of course, the lenders make far more money on defaulted loans. The guarantor industry, derives on average 60 percent of their gross revenues from penalties and fees attached to defaulted student loans. That’s why they lend money to students regardless of whether they are likely to actually pay it back. Students are slaved to their loans and have to pay for years after they graduated.

Stef Gray, who is pioneering Occupy Student Debt, a movement calling for reforms in the student lending industry, explains that “It’s going to be default after default, after default. And once you default, that’s a black mark on your credit report for life, because student loans cannot be discharged in bankruptcy”. Nearing one trillion dollars, the student loan debt is today the subject of thousands of student’s protest.

Occupy movements led by students blossom everywhere

A campaign called Occupy student debt was recently launched. As an offspring of the Occupy movement, current and former students, as well as professors from various universities in New York City are part of the group. They experienced, and still experience the anxiety and desperation created by debt, all the more so as the global economy is sinking and they decided to react about it. They launched a website, where students and graduates can post pictures of themselves with a piece of paper, on which is written the amount they took out in loans and the amount they still owe. On November 21, the group started an online pledge. They’re seeking one million signatures of people who will refuse to pay their loans until reforms are made to the lending industry. What are the reforms they are calling for? Federally funded tuition-free tertiary public education, but also interest-free private loans, a requirement that for-profit and private universities open their financial books and the writing-off of all the current student debt.

Campuses haven’t been immune to the Occupy Wall Street movement that spread all around the country. Occupy Colleges, an offshoot of the movement has thus sprung up at over 100 schools nationwide. Theirs concerns are the rising costs of tuition as well as the insurmountable student debt. They want equality in higher education and they claim it.The movement is attracting young people who are having trouble paying back their student loans, while struggling to make ends meet.

Their protest might not be useless since at the end of October, President Obama announced new programs to ease the student loan burden for low-income graduates. Some efforts will be made to keep interest rates fixed, so that students do not have surprises down the road to repayment. The borrowers will have the option to enroll in debt forgiveness programs in exchange for spending part of their careers in the public service. He added a limit to the monthly payments, that won’t exceed 10% of the borrower’s income and debt will now be forgiven after 20 years of payments.

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