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.


Former Nissan chairman Ghosn appears in Tokyo court

Updated 23 May 2019
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Former Nissan chairman Ghosn appears in Tokyo court

  • It is the first of a series of hearings to iron out logistics for Carlos Ghosn’s actual trial
  • Nissan’s former chairman has hired a strong legal team as he fights to clear his name

TOKYO: Nissan’s former chairman, Carlos Ghosn, appeared in a Japanese courtroom Thursday for a hearing ahead of his trial on accusations of financial misconduct.
It was the first of a series of hearings to iron out logistics for Ghosn’s actual trial. The trial date has not been set, and experts say it could be months away.
Ghosn, who led the Japanese automaker for two decades, was arrested in November and charged with underreporting his income and breach of trust. He was released on bail in March, rearrested in April on fresh accusations and then released again on bail on April 25.
Ghosn insists he is innocent and says he was targeted in a “conspiracy” by others at Nissan Motor Co.
Nissan, which is allied with Renault of France, has seen profits nose-dive amid the fallout from Ghosn’s arrest.
Ghosn has hired a strong legal team as he fights to clear his name. One of his top lawyers, Junichiro Hironaka, was seen walking into the courtroom Thursday with Ghosn.
One of the conditions of Ghosn’s release on bail is that he is forbidden to contact his wife. Prosecutors say that’s to prevent evidence tampering.
Ghosn’s lawyers challenged that restriction, saying it is a violation of human rights, but the Supreme Court rejected their appeal Tuesday.
The lawyers can appeal again to have the restriction removed.
In a briefing Thursday, Deputy Chief Prosecutor Shin Kukimoto welcomed the Supreme Court’s decision.
“For married people to be together is important, but I feel there was enough reason for the Supreme Court to support us in this restriction,” he said.
Kukimoto declined comment on the hearing, which was closed to reporters and the public.
Kukimoto also said the maximum penalty upon conviction of all 15 counts of the charges Ghosn is facing is 15 years in prison and a fine of ¥150 million ($1.4 million).