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Student Loan Bankruptcies and the Imperative for More Affordable College Tuition

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Outstanding student loan debt in the U.S. is approaching one trillion dollars. One important question people struggling with student loan debt have is whether student loans are dischargeable in bankruptcy. With certainty, the options for student loan debtors are limited. For this reason, new programs and legislation are in the works to provide relief for student debtors and affordability for new students just entering college.

In 2010, President Obama signed the Health Care and Education Reconciliation Act (HCERA) to provide debt relief for college students. The HCERA gives student borrowers new alternatives for repaying their loans. There is an income-based repayment option to cap monthly repayments at 10 percent of income for borrowers. This option applies after 2014.  Loans may be forgiven in their entirety after 20 years. The president’s new “Pay as You Earn Plan” will permit about 1.6 million students to select this feature right now.

Public service workers may benefit from residual debt forgiveness after a decade. The funding under HCERA will increase the amount of resources available for Pell Grants to $5,550 today. These historic changes will be preserved in the Budget Control Act of 2011. The HCERA includes a $2 billion allocation to help community colleges expand education and job training.

The community colleges and state colleges provide needed relief from the high cost of tuition at some private colleges. Increasingly, the high schools are offering college courses in the senior year. These offerings can reduce the college experience by as much as one year in accelerated programs. In addition, the Federal Work Study Program (FWS) is another option to help students pay for public or private college.

The Hill-Burton Act provides low-cost or no-cost medical and dental care for most middle class wage earners and their families. The health care is provided by a hospital or facility with a mortgage to be paid. The facility takes poor and middle class patients in exchange for an iterative reduction in or forgiveness of the mortgage debt the facility owes. This program can help college students with medical and dental costs if their family income is within the statutory sliding-scale income limits.

The Federal Work Study Program (FWS) provides funds for part-time employment to help students finance the costs of a college education. Students can receive FWS funds at participating colleges and universities. Hourly wages must meet  the federal minimum wage requirements. Students may be employed by the college or university.

Shortly, the baby boomer generation will be retiring in record numbers. Every blue and white collar job category will be impacted. New trade school and college graduates will be needed to fill the void in order for the United States to remain competitive in the global market. The existing cadre of professional accountants, lawyers, physicians, dentists, actuaries, engineers and others will be replaced in growing numbers due to the retirement of the baby boomers. As a result of this trend, more affordable college education is an absolute imperative if this historic worker transition is to take place uneventfully.

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About Dr Joseph S Maresca

I've taught approx. 34 sections of collegiate courses including computer applications, college algebra, collegiate statistics, law, accounting, finance and economics. The experience includes service as a Board Director on the CPA Journal and Editor of the CPA Candidates Inc. Newsletter. In college, I worked as a statistics lab assistant. Manhattan College awarded a BS in an allied area of operations research. The program included courses in calculus, ordinary differential equations, probability, statistical inference, linear algebra , the more advanced operations research, price analysis and econometrics. Membership in the Delta Mu Delta National Honor Society was granted together with the degree. My experience includes both private account and industry. In addition, I've worked extensively in the Examinations Division of the AICPA from time to time. Recently, I passed the Engineering in Training Exam which consisted of 9 hours of examination in chemistry, physics, calculus, differential equations, linear algebra, probability/ statistics, fluids, electronics, materials science/structure of matter, mechanics, statics, thermodynamics, computer science, dynamics and a host of minor subject areas like engineering economics. A very small percentage of engineers actually take and pass the EIT exam. The number has hovered at circa 5%. Several decades ago, I passed the CPA examination and obtained another license in Computer Information Systems Auditing. A CISA must have knowledge in the areas of data center review, systems applications, the operating system of the computer, disaster recovery, contingency planning, developmental systems, the standards which govern facility reviews and a host of other areas. An MBA in Accounting with an Advanced Professional Certificate in Computer Applications/ Information Systems , an Advanced Professional Certificate in Finance and an Advanced Professional Certificate in Organizational Design were earned at New York University-Graduate School of Business (Stern ). In December of 2005, an earned PhD in Accounting was granted by the Ross College. The program entrance requires a previous Masters Degree for admittance together with a host of other criteria. The REGISTRAR of Ross College contact is: Tel . US 202-318-4454 FAX [records for Dr. Joseph S. Maresca Box 646 Bronxville NY 10708-3602] The clinical experience included the teaching of approximately 34 sections of college accounting, economics, statistics, college algebra, law, thesis project coursework and the professional grading of approx. 50,000 CPA examination essays with the American Institute of Certified Public Accountants. Additionally, membership is held in the Sigma Beta Delta International Honor Society chartered in 1994. Significant writings include over 10 copyrights in the name of the author (Joseph S. Maresca) and a patent in the earthquake sciences.
  • Arch Conservative

    Is the traditional college right after high school even worth it anymore?

    It almost seems like it’s more beneficial to find an entry level job right out of high school. Get a few years under your belt and then have your employer shoulder some of the costs of your education. Sure you’ll miss out on all those keggers and bong hits but you gotta grow up sometime right?

  • Much depends upon what course of study a student pursues in college. If the student intends to enter
    one of the major professions like medicine, law, accounting, engineering, actuarial etc., then the
    investment in time and money may be worth the effort. The baby boomer generation is retiring along
    with millions of professionals. Who will replace them when a tremendous void is created.
    Our population has grown from 300MM to 313MM in a mere decade or so.

    At some point, the demand for goods and services will increase. The main point is that a trained college
    student with a brand new education will be at a premium. Much depends on the practicality of the
    education received. Students need to think more about how their education will fit within a blossoming
    global economy. Students who pursue the professions will have the best chance in any economy.