Student loan debt still crippling burden for millions of Americans

Student debt increases the gap between rich and poor. (File/AFP)
Updated 20 November 2018
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Student loan debt still crippling burden for millions of Americans

  • 42.2 million Americans were repaying a federal student loan at the end of June 2018 for a total sum of nearly $1.5 trillion
  • Many students take out loans from the federal government or private lenders

WASHINGTON: Michael Bloomberg’s record $1.8 billion donation for financial aid to Johns Hopkins University highlights the problem of student debt in America, which can still be a burden even years after graduation.
According to the Department of Education, 42.2 million Americans were repaying a federal student loan at the end of June 2018 for a total sum of nearly $1.5 trillion, the largest volume of debt after home loans.
Bloomberg, the former mayor of New York, said he was making the gift to his alma mater to help qualified low- and middle-income students more easily afford access to university in a country where post-secondary education fees at elite schools routinely exceed $50,000 a year, a prohibitive barrier for most families.
“I was lucky: My father was a bookkeeper who never made more than $6,000 a year. But I was able to afford Johns Hopkins University through a National Defense student loan and by holding down a job on campus,” Bloomberg, who also founded the financial news service of the same name, wrote in a New York Times op-ed.
The donation, believed to be the biggest ever to a university, “will ensure that we are able to recruit more first-generation and low-income students and provide them with full access to every dimension of the Johns Hopkins experience,” its head Ronald Daniels said.
Currently, 44 percent of students at the institution in Baltimore, Maryland, complete their studies in debt, on average owing more than $24,000, university data shows.
For Sandy Baum, a university professor at the Urban Institute, Bloomberg’s gift is “great” but “that’s just a drop in the ocean.”
His move would have had a bigger impact if he gave money to improve the quality of education for more students, in less elite private or public institutions, she told AFP, adding that they sorely lack funding.
Baum is not opposed to student loans because for most students, the choice becomes one between not going to university or borrowing to go.
Most students’ loans, she says, amount to between $15,000 and $20,000 but getting $40,000 in debt is not unusual for a bachelor’s degree (four years of study).
The College Board estimates the average cost of a four-year course in a private university at $34,740, not counting additional accommodation and living expenses.
Many students take out loans from the federal government or private lenders.
Some, especially the less wealthy, fall into the spiral of over-indebtedness when they find themselves unable to repay their loans.
They no longer have access to credit, cannot rent a home or buy a car. A local cable channel this summer launched a game, “Paid Off,” in which the participants battle it out to see who has their student debt cleared.
The problem worries everyone — even the US central bank. “As student loans continue to grow and become larger and larger, then it absolutely could hold back growth,” Jerome Powell warned in March.
Joanna Darcus, a lawyer for the consumer protection organization NCLC, welcomed Bloomberg’s big donation.
It’s needed in our “completely broken system of financing university education by debt,” she said.
For students from low-income backgrounds “it is very important to lower the cost of education” as student debt increases the gap between rich and poor, she told AFP.
The NCLC advocates for an increase in the number and size of university scholarships.
“If its possible for people to go to school without incurring debt we are all better off; we don’t have to spend money on debt collection and student debt doesn’t impair the decision-making on a personal, professional or financial level,” she added.


Libya’s National Oil against paying ‘ransom’ to reopen El Sharara field

Updated 14 December 2018
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Libya’s National Oil against paying ‘ransom’ to reopen El Sharara field

  • Ransom payment would set dangerous precedent
  • NOC declared force majeure on exports on Monday

BENGHAZI: Libya’s state-owned National Oil Corp. (NOC) said it was against paying a ransom to an armed group that has halted crude production at the country’s largest oilfield.
“Any attempt to pay a ransom to the armed militia which shut down El Sharara (oilfield) would set a dangerous precedent that would threaten the recovery of the Libyan economy,” NOC Chairman Mustafa Sanalla said in a statement on the company’s website.
NOC on Monday declared force majeure on exports from the 315,000-barrels-per-day oilfield after it was seized at the weekend by a local militia group.
The nearby El-Feel oilfield, which uses the same power supply as El Sharara, was still producing normally, a spokesman for NOC said, without giving an output figure. The field usually pumps around 70,000 bpd.
Since 2013 Libya has faced a wave of blockages of oilfields and export terminals by armed groups and civilians trying to press the country’s weak state into concessions.
Officials have tended to end such action by paying off protesters who demand to be added to the public payroll.
At El Sharara, in southern Libya, a mix of state-paid guards, civilians and tribesmen have occupied the field, camping there since Saturday, protesters and oil workers said. The protesters work in shifts, with some going home at night.
NOC has evacuated some staff by plane, engineers at the oilfield said. A number of sub-stations away from the main field have been vacated and equipment removed.
The occupiers are divided, with members of the Petroleum Facilities Guard (PFG) indicating they would end the blockade in return for a quick cash payment, oil workers say. The PFG has demanded more men be added to the public payroll.
The tribesmen have asked for long-term development funds, which might take time.
Libya is run by two competing, weak governments. Armed groups, tribesmen and normal Libyans tend to vent their anger about high inflation and a lack of infrastructure on the NOC, which they see as a cash cow booking billions of dollars in oil and gas revenues annually.