Last month, the House of Representatives passed a tax bill that made college tuition waivers taxable income. Senate leaders removed this provision from the final draft of the tax law just after strong national public uproar against this provision. Had this provision remained in the final law, tens of thousands of graduate students would have been forced to drop out of college because they would not be able to pay this new tax. The tax on tuition waivers would have taxed the discount graduate students receive for working in labs and teaching classes. The problem is that you can’t pay income tax if you have no income, and a discount is not income. The House bill would have eliminated the deduction for interest on student loans as well, but this too was eliminated in the final law due to public outcry.
All over the country, state legislatures are passing laws designed to make college education less affordable. Did you know that in a lot of states, if you don’t pay your student loans on time, you can lose your job? For example, if you are a physical therapist and you get behind in your student loans payments, your license to work can be revoked in 20 states. If you default on a student loan, you can be fired as a schoolteacher in 11 states. And in South Dakota, Iowa, and Oklahoma; if you don’t make your student loan payments on time, the state can take away your driver’s license. In other words, if you went to college and are not making your student loan payments on time, the state can take away your ability to work in your profession. Then how do you repay your student loans?
SOUTH DAKOTA. South Dakota has perhaps the most punitive student loan default laws. If you default on a student loan in South Dakota, they can take away your driver’s license. However, if you default on your mortgage on a multi-million dollar mansion overlooking Mount Rushmore – well – that’s OK. The state’s DMV can’t take away your driver’s license for just that. Taking away a person’s driver’s license, and in a largely rural state like South Dakota, for failing to repay a student loan on time seems just plain mean-spirited to me. Also, in South Dakota, if you get behind in repaying your student loans, you can also lose your license to work as a registered nurse, a physical therapist, or a speech pathologist; and if you are employed as a public schoolteacher in South Dakota, you can be immediately fired. Plus, at last count, about 1,500 people living in South Dakota were denied hunting and fishing licenses for failing to repay student loans on time. So, if you are behind in your student loan payments in South Dakota and you work in a licensed occupation, not only are you barred from working in your profession, but in addition, you can’t legally hunt or fish for your dinner. You can legally eat vegetables that you grow in your backyard. Sounds ridiculous, doesn’t it?
BERKELEY. Here in Berkeley, the main driver of college student debt is the cost of housing. A 2 bedroom apartment in a new building near campus costs $4,000 to $5,000 a month, but I’ve seen some that cost over $6,000 a month. Everyone in Berkeley city government is aware of this, but no one seems to be concerned about it. Quite the opposite. The mayor and Berkeley city council are constantly passing new laws and regulations designed to raise, not lower, the cost of building new apartments near campus. For example, a permit to build a new apartment house in Berkeley near campus now costs between $100,000 and $200,000 per apartment – and the council is planning to raise the price of permits next year. Now – who do you suppose ultimately pays for these astronomically expensive building permits? It’s just who you think it is! It’s the tenants who live in these buildings.
College students all over the U.S. are graduating with more and more student debt, and the cost of repaying that debt keeps rising. Every American should be very concerned about this. If a college education becomes just a privilege of the rich, as it was in Colonial times, we are in serious trouble as a nation. An industrialized society that does not value higher education is doomed to poverty and becoming a third rate and third world nation.