This week in student loan news, we saw a unique way to celebrate, an arrest and a proposal for reform.
Rapper’s Delight: Paying Off Student Loans
New Orleans-based rapper Dee-1 signed a major label record deal and did what most millennials would do when they come into unexpected cash – he paid off his student loans. The socially-conscious rapper and former middle school teacher (real name: David Augustine) made a music video (Sallie Mae Back) about repaying his Sallie Mae loans that has been covered by The Huffington Post, The Washington Post and CNN. Sallie Mae watched the video and sent its congratulations to the rapper through his Facebook fan page. Dee-1 shows how to celebrate paying back your student loans with toga parties, a Maybach joyride and a t-shirt declaring “I Finished”.
Watch the joyous celebration and read the full story.
US Marshals Make Arrest on Three Decade-Old Student Loan
Paul Aker took out a $1,500 student loan in 1987 and the US Marshalls arrived at his home last week to arrest him for failing to appear in court. With 30 years of interest, his balance is now $3,800. Aker was ordered to pay the loan after being taken to court as well as $1,258 to cover the cost of his arrest. Panic quickly set in that US Marshals were going to start making arrests for other borrowers failing to pay their student loans. It’s important to know that Aker was arrested for failing to appear in court when summoned, not solely for his student loan debt. “Thousands of people across the country are summoned to appear in court over defaulted federal student debt, according to the Marshals Service. In Houston alone, marshals say about 1,500 people have been identified for not appearing in court to address their outstanding federal student loans, resulting in arrest warrants.”
The US Marshall Service states they made several attempts to serve Aker a summons, spanning multiple years, and received a refusal to appear from Aker.
A Proposal to Replace the Federal Loan System
New America Foundation, a DC-based think tank with a focus on education reform, published a paper calling for the end of the federal loan system as we know it. The premise of the paper is that the federal student loan system is beyond repair and needs to be replaced, as no amount of reform will solve the issues facing the student loan system.
“The system creates an incentive for colleges to increase prices to capture the federal subsidy. This is particularly true with loans,” said Iris Palmer, senior policy analyst at New America. “It also allows colleges to take federal aid on one end for low-income students and re-attribute their institutional aid to higher-income students they’re trying to recruit. And it has encouraged states to shift their funding to other places because the federal government fills in some of the state disinvestment.”
The proposal puts requirements in place for states to meet in order to receive federal grants. Some of the requirements proposed include increasing the state level assistance for low-income students and more strenuous performance requirements for colleges and universities.
“We need to make sure that we are serving the students who could most benefit from a higher education and serving them well,” said Amy Laitinen, director for higher education at New America. “That would mean looking at completion and earnings. We’ve seen lots of programs putting folks at near poverty level wages. With a bachelor’s degree, you shouldn’t face that.”
Read the full story.
Check back next week for more student loan news.