Tuesday, February 14, 2006

Your Comments

I thought I'd post some excerpts from emails I've been getting in reaction to the launch of Generation Debt. I am thinking about holding a contest for the Voice column where people write in to tell their own stories of living in Generation Debt and the things they've been doing to get by.
These snippets are posted anonymously, but let me know if you'd like yours taken off the blog.

I owe the government a few thousand in taxes, Sallie Mae 20K, and I just get by paying the rent, and live a modest life as far as luxury goes. Your book has made me realize that since Reagan, and especially in recent years, the government has really changed the laws, interest rates, etc. to favor the rich, and (pardon me), fuck the poor.
.. I got so upset reading Gen Debt (a lot of my fellow grads have plenty of money, and have started families...it makes me feel so f*!!*ked up!). I've chosen to live in NYC to pursue the arts, and to escape the bland life of suburbia (where my family resides in NJ). I thought that the reason I was relatively poor was my fault; but really, I've worked hard, just in professions that don't pay.

As a young person with great trepidation for my future career / financial situation, your book made me realize that I'm not alone in my seemingly counterintuitive youthful pessimism. I thank you for it.

as a young person in nyc who has a good job but still can't afford to buy an apartment, i fit squarely in the demographic you write about... i can't really afford to buy, but i recently made peace with the fact that for young people these days, the only way to make it economically is through major sacrifice. i was trying to not get down about all that while walking around in the rain when i found...you talking about the same problems i was thinking about... just hearing someone speaking to those issues did indeed make my day.

As a student in my last year... your talk is very relevant to my life and I thank you for helping me be aware of the paths I am currently and will have to take in the future.

It has also been my argument that people in US live with the money that they optimistically think they are going to make in the next 20 years, and they spend all of it today. I can't believe that even myself have a fat credit card balance, and even though I make good money, the monster keeps growing. Young people don't deserve that headache, and I thank you so much for fighting for them.


Anonymous said...

On the radio the other day, Anya, you said that you wished "the student-loan industry didn't have so much power in Congress to keep collecting $17 billion a year in subsidies."

Even Bob Shireman doesn't believe that. If you're going to criticize a program that serves 6000 schools, including many of the very best ones in the country, and ten million students, please get your facts straight.

Anya said...

You're right, I misspoke. That's live radio. The $17 billion figure referred to the estimated savings in the STAR act from shifting to 40 percent direct loans.

I noticed that you don't provide an alternate figure here.

Student loan program costs are at $40 billion between 1994-2004.

Reestimated annual subsidy costs for the FFELP program for 2004 are at an all-time high of approximately $10 billion, according to the 9/2005 GAO report "Federal Student Loans: Challenges in Estimating Federal Subsidy Costs."

Anonymous said...

What is your source for the $17 billion savings from the STAR Act? Not CBO. CBO never issued a revenue estimate. It's SPIRG. Hardly an expert.

The guaranteed student loan program may be many things, but it is not more expensive than the direct loan program. You’re barking up the wrong tree.

You refer to "annual subsidy costs." Maybe a dozen or two people in the United States really understand what that means.

It does not refer to actual program costs (as in, actual revenue v. program expenses). The FFELP did NOT cost taxpayers $10 billion in 2004, as you suggest. According to the GAO, FFELP cost taxpayers $896 million. DL cost taxpayers $3.2 billion (and DL has 1/3 the loan volume; now that’s a scandal). Since 1993, it’s lost more than $14 billion. Those are actual dollars.

On the other hand, annual subsidy costs are a projection. It’s an estimate, a prediction of how much a given year's loans will earn or lose over their 10-30 year life. A lot can happen in even 10 years.

In fact, the govt.’s estimates have been WAY OFF. I'm glad you mentioned "re-estimated annual subsidy costs."

Every year since the DL program was created in 1993, the govt. has re-estimated its annual subsidy costs.
--In every year, but one, direct lending's subsidy costs were revised upwards, meaning DL's projected losses got worse or its projected profits (yes, the govt. counts on there being years when it profits from DLs) were reduced.
--Over ten years, the department has increased DL's subsidy costs by a total of $5-6 billion, if not more.

Someone has pointed you to the 2005 GAO report. I’m glad they did. Basically it said that “annual subsidy costs” are NOT the final word on program performance.

--“Assessing and comparing the total costs and benefits of the two loan programs would require consideration of, among other things, costs incurred by schools in operating the loan programs, quality of services provided to schools and borrowers, benefits to society and individuals from postsecondary education, as well as federal costs and revenues generated by each loan program—federal budgetary costs.”
--“Because federal administrative expenses … are excluded from subsidy cost estimates, for example, these estimates can underestimate the total lifetime costs of FFELP and FDLP loans. Other costs and revenues are also not considered in subsidy costs estimates, including interest rate risk inherent to lending programs, and federal tax revenues generated by private-sector activity in both FFELP and FDLP.
--“While subsidy cost estimates include many of the federal costs associated with FFELP and FDLP loans, they do not capture all federal costs and revenues associated with the loan programs.
 “Consideration of all federal costs and revenues of the loan programs would be an important component of a broader assessment of the costs and benefits of the two programs.”