The Parent PLUS Student Loan Program Preys on Low-Income Families and Should Be Shut Down

When Congress finally passes the Big Beautiful Bill (BBB), it will include some changes to the Parent PLUS student loan program.  The Senate version and the House version both put a cap on the amount of money parents can borrow for their children's college education through Parent PLUS.

Currently, students' parents can borrow all the money they need to pay for their children's college education through Parent PLUS loans. The House-approved version of the BBB limits the amount parents can borrow to $50,000 total. The Senate caps the amount at $65,000 per dependent.

Three years ago, I argued in a blog essay that the Parent PLUS program is a predatory scheme that saddles low-income families with unmanageable debt. I'm reposting that essay below.

* * * 

 Years ago, I was strolling along a lakeside hiking trail in a Dallas-area park. As I was walking across a wooden bridge, I looked down to see a ball of wriggling snakes below me.

It was a big cluster--about the size of a beachball. It was a scary sight, and I didn't stick around long enough to determine whether the snakes were poisonous. I just hurried on my way.

The Department of Education's Parent PLUS program is like a big ball of snakes. The program has become so predatory, so large, and so politically charged that we don't want to even try to untangle it.  We just want to hurry along without thinking about it.

Parent PLUS is a federal program that lends money to parents to help them pay for their children's education. Although Congress supposedly intended the program to help affluent families, six out of ten parent borrowers are from low-income households.  And, as Matt Krupnick reported for Newsweek, at 140 schools, 80 percent of parent borrowers are in low-income homes.

Parent PLUS default rates are high. According to a Newsweek analysis, nearly ten percent of parents at 1000 colleges defaulted or were seriously late with payments within just two years of their child left college. At some schools, Parent PLUS default rates ran as high as 30 and even 40 percent.

And borrowing costs are high: "6.28 percent for the 2021-2022 academic year plus an upfront fee of 4.22 percent" (as reported by Newsweek).

In 2019-2020, parents took out Parent PLUS loans on behalf of three-quarters of a million students, and the loan amounts averaged about $16,000. 

But the average Parent PLUS loan at some colleges is much larger. At Spelman College, an HBCU in Atlanta, the median Parent PLUS loan was $85,000 for parents whose children graduated or left school between 2017 and 2019.

Other schools with high Parent PLUS loan amounts include New York University (almost $67,000) and Loyola Marymount in Los Angeles ($60,000). The median loan amount is also high at several art and music schools: Berklee College of Music in Boston, Pratt Institute in Brooklyn, and Savannah College of Art and Design in Georgia.

Newsweek, the Wall Street Journal, and other news media have shown that some colleges are taking advantage of their students' parents by encouraging them to take out loans in addition to the federal loans and Pell grants that students receive on their own.

This is predatory behavior. And parents who take out Parent PLUS loans will find it is almost impossible to discharge these loans in bankruptcy.

Congress needs to shut down the Parent PLUS program. Or at the very least, Congress should amend the Bankruptcy Code to allow financially distressed parents to discharge these loans in bankruptcy.

But Congress will probably take no action. It sees the Parent PLUS program as a big ball of snakes, and no politician has the guts to close down this pernicious scam against low-income parents.

Social Security is Not Going Away, But It Will Become Worthless

Inflation is the ally of political extremism, the antithesis of order.

Adam Ferguson

When Money Dies

According to a recent government report, Social Security's trust funds will be entirely depleted by 2034, just nine years from now. What does that mean?

Anil Suri, a Merril Lynch analyst, said that Social Security's predicted insolvency doesn't mean the government will stop issuing Social Security checks. However, recipients could see their benefits decreased by 20 percent.

This is bad news for retired or soon-to-be-retired Americans. Approximately 40 percent of older Americans rely on their Social Security checks for almost all of their income.  A 20 percent cut in benefits would be disastrous for these people--plunging them into poverty. Indeed, most retired Americans rely on their Social Security checks to help meet basic expenses, even if they have other sources of income.

I am 76 and receive monthly Social Security checks, but I'm not worried about a possible benefit reduction. Why?

First, there are several things Congress can do to shore up the Social Security trust fund, such as raising the age for full benefits or increasing payroll contributions for people who are in the workforce. I'm confident that Congress will take action to stabilize the Social Security trust fund.

Moreover, it's politically impossible for Congress to reduce Social Security benefits because so many Americans depend on them. Everyone recognizes that Social Security is the third rail in national politics. There are lots of budget items that will be slashed before Social Security benefits are cut.

Slashed benefits don't concern. What worries me is inflation.

The Federal government's national debt is $36 trillion, and interest on that debt is almost $1 trillion annually. Congress isn't even trying to balance the budget. Indeed, it will probably authorize an increased deficit as part of the Big Beautiful Bill.

Our government has financed our unbalanced budget with treasury bonds at reasonably low interest rates. The U.S. dollar is the world's reserve currency, and the United States has historically been regarded as a safe place to park money.

If the world loses confidence in the dollar, interest rates on treasury bonds will go up--perhaps dramatically. Inflation will rear its ugly head, and the dollar's buying power will shrink.

George Will wrote recently that the national debt makes a fiscal crisis inevitable. I agree.

That's what scares me: not a smaller Social Security check but a worthless check due to inflation. If inflation gets out of control, millions of Americans will suffer, especially older Americans whose Social Security checks are their sole source of income.

"Hangin' on to What I Got": Buck Owens' Advice for Hard Times

 Well, if a dollar bill is not worth a dime

And if the whole world goes to pot, 

Well, I'm a tellin' you that I'm a happy man

And I'm a hangin' on to what I got.

Hangin' on to What I Got

Buck Owens

Elon Musk dislikes President Donald Trump's "big, beautiful bill," arguing that it will contribute to the growing federal deficit and the nation's $36 trillion national debt. 

Musk is probably right, but whatcha gonna do? The Democrats oppose the BBB, but they won't consent to any budget cuts that would harm their shrinking and perpetually unhappy political base.

Meanwhile, hard-pressed Americans need a tax break, and I favor helping 'em out.

Let's face it: It's too late for the politicians to balance the federal budget or reduce our $36 trillion national debt. Nor will the Trump administration be able to halt inflation or curb interest rates. As Merle Haggard put it, our country is "rolling down hill like a snowball headed for hell," and the average American has no power to change the trajectory of our impending economic meltdown.

Hard times are coming to Flyover Country. Most of us will become poorer in the coming years, especially older Americans living on fixed incomes.

Perhaps all the little folk can do is take Buck Owens' advice and try to hang on to what we've got--our families, our jobs, and our homes.

This is a good time for Americans to get introduced to the music of hard times, a subgenre of country music dubbed the Bakersfield Sound. The leading lights of the Bakersfield Sound--Buck Owens, Merle Haggard, Woody Guthrie, Wynne Stewart, Tommy Collins, and Wanda Jackson--all saw hard times during the Great Depression, and they expressed their arduous life journeys in their heartfelt songs. 

You can hear that music today by listening to Dwight Yoakam's Bakersfield Beat on Sirius radio. I predict that the audience for the Bakersfield Sound will expand as our national economy collapses.  The Bakersfield Sound is the music of hard times, and hard times are just around the corner.

The Grapes of Wrath: Hangin' On to What I Got

Is the Democratic Party Suicidal? Warning Signs are Everywhere

According to the National Institute of Mental Health, people with suicidal ideations usually display warning signs.

For example, they may be overcome by sadness or rage, filled with hopelessness, or consumed by anger. Often, they withdraw from friends, make plans to die, or take extreme risks.

NIMH's checklist is for suicidal individuals, but these warning signs might also apply to moribund organizations. The Democratic Party, stunned and depressed by the election of Donald Trump, is showing distinct signs that it is contemplating self-destruction.

First, the Democrats are alienating their core constituency, just as suicidal individuals withdraw from their friends. The Democrats used to be the party of the Big Tent, made up of blue-collar workers, Catholics, labor unions, and ethnic Americans--particularly Irish Americans, Italian Americans, Jews, Blacks, and Hispanics. The Democrats also had a strong following among suburban women, who tend to be more liberal than their husbands.

But the Dems alienated all these groups. Its maniacal attachment to transgender sports turned off suburban women who don't like the idea of their soccer-playing daughters showering together with boys in the school gym. 

The Biden administration alienated traditional Catholics when the news got out that the FBI considered them to be potential domestic terrorists.

Hispanics didn't like being labeled as Latinx, as leftists and Democratic operatives often do.

American Jews, once considered to be the bedrock of the Democratic Party, were horrified by the Democratic Party's high tolerance for antisemitism.

Suicidal individuals sometimes display fits of rage, and the Democrats also indulge in irrational bouts of anger. I can't count the number of times that Democratic politicians have spewed forth profanity-laced tirades against their political opponents. Foul-mouthed Congresswoman Jasmine Crockett (no relation to Davey) has become the new face of the Democratic Party, and her colleagues have adopted her potty-mouth rhetorical style.

Finally, NIMH noted that suicidal individuals oftentimes engage in risky behavior, and again, this warning sign applies to Democratic politicians. Senator Alex Padilla and several other Democratic pols have been physically restrained for bizarre antics, and a couple of Democrats have been arrested for interfering with federal deportation operations.

What's ahead for the Democratic Party? I think it is fast becoming a self-destructive fringe group. Democratic leaders have given up all hope of becoming the majority political party in the United States. They now seek to seize political power through sowing chaos. In other words, they have become institutionally suicidal.

 

10 Best Songs About Texas Cities: The Authoritative List

I love lists of best things, although I usually disagree with the list compilers' recommendations. Over the last few days, I perused several lists, and all were flawed.

Inside Hook posted a list of "72 Books Every Man Should Read." I scanned it twice and realized I hadn't read any of them. Nor do I plan to. That list is no good to me.

Food and Wine published a list of the top ten barbecue restaurants, but only two were in Texas, so that list is bogus. 

And today, the New York Times presented a list of the 21st century's 10 best movies, and The Guard, starring Brendan Gleeson and Don Cheadle, wasn't on it. So you know that list is total bullshit.

Not long ago, I compiled a list of the ten best songs about Texas, and today, I'm releasing my list of the ten best songs about Texas towns.

1. Dallas from a DC 9 at Night, written by Jimmie Dale Gilmore, is the stand-alone best song about a Texas city. I lived in Dallas for six years and love the town (great hamburgers), but Jimmie Dale perfectly captures a distinct coldness in the Dallasites. Here's a sample:

Dallas is a rich man with a death wish in his eyes
A steel and concrete soul with a warm-hearted love disguise
A rich man who tends to believe in his own lies
Dallas is a rich man with a death wish in his eyes

2. San Antonio Rose, the signature song of Bob Wills and the Texas Playboys, captures the magic of Texas Swing music during the 1930s when the people of Texas danced to forget about the miseries of the Great Depression. Patsy Cline's version is probably the most famous, but the song has been recorded by a host of artists, including Pat Boone, Clint Eastwood, and Bing Crosby. The lyrics have a mystical quality:

Deep within my heart lies a melody
A song of old San Antone
Where in dreams I live with a memory
Beneath the stars all alone

3. 11 Months and 29 Days, a Johnny Paycheck tune, tells the tale of a guy who gets arrested in Austin and sentenced to a year in the Huntsville penitentiary. His advice to his friends is timeless:

Keep the Lone Star cold
And the dance floor hot while I'm gone
Keep the Lone Star cold
And the dance floor hot while I'm gone, hey now
Keep your hands off my woman
I ain't gonna be gone that long

4. Telephone Road, an ode to Houston's honky tonk district, may be my favorite Texas song. Back in the day, Telephone Road was where the refinery workers went to dance and drink beer. During my sad sojourn at the University of Houston, I often ate lunch at a Telephone Road hamburger joint or Mexican restaurant. Nothing like a plate of enchiladas and a Modelo to cheer you up after being waterboarded at a faculty meeting.

Steve Earle's lyrics capture the vitality of Houston's blue-collar culture:

Come on, come on
Come on, let's go
This ain't Louisiana
Your mama won't know
Come on, come on
Come on, let's go
Here everybody's rockin'
Out on Telephone Road

5. El Paso, one of Marty Robbins's famous ballads, is about a cowboy who gets in a gunfight over "Wicked Felina," whom he loves unaccountably. The cowboy shoots his rival, rides off into the Badlands of New Mexico, and then returns to El Paso to die from a bullet from a posse member's rifle. All ends well, however, because Felina finds him and he dies in her arms.

A sample from Marty Robbins's baroque and bathetic lyrics:

From out of nowhere, Felina has found me kissing my cheek as she kneels by my side 
Cradled by two loving arms that I'll die for. One little kiss and Felina, goodbye

6. Corpus Christi Bay, a profound song written by Robert Earle Keane, is a story about a young oil rig worker who can't stop drinking. He carouses with his brother for a time, but his brother wises up after his wife and children leave him. Several people have covered this song, but perhaps Johnny Rodriguez sings it best. Here is a snippet from the song's depressing story:

[My brother] came to Corpus just this weekend.
It was good to see him here.
He said he finally gave up drinking.  

Then he ordered me a beer

If I could live my life all over
It wouldn't matter anyway.
'Cause I never could stay sober
On the Corpus Christi Bay

7. Amarillo by Morning, a song about what a man gives up to be a rodeo bull rider, is most widely known as a George Strait song. I love this song, which is a cautionary tale about misplaced priorities:

Amarillo by mornin'
Up from San Antone
Everything that I got
It's just what I've got on
When that Sun is high
In that Texas sky
I'll be buckin' at the county fair
Amarillo by mornin'
Amarillo, I'll be there

8. Home in San Antone is on my list because San Antonio, the oldest Texas city, deserves two top-10 songs. Although others have sung it, Home in San Antone is a Bob Wills song articulating the genial patriotism most Texans feel for their communities. These lyrics assure us that we'll be okay, even if we're broke, so long as we own a little piece of San Antonio real estate:

Haven't got a worry, haven't got a care
Haven't got a thing to call my own
Tho' I'm out of money, I'm a millionaire.
I still have my home in San Antone.

When I greet my neighbor with a howdy all,
I'm wealthy as a king upon a throne.
You can have your mansion or a cottage small
I'll just take my home in San Antone

9. Cross the Brazos at Waco, like Marty Robbins's El Paso, is a song about a gunman who tries to give up a violent life to be with his sweetheart, but repents too late. He promises his darling that he'll ride from Waco to San Antonio and arrive at dawn, which is impossible since the towns are a hundred miles apart:

Cross the Brazos at Waco
Ride hard,and I'll make it by dawn
Cross the Brazos at Waco.
I'm safe when I reach San Antone

10. Fort Worth Blues, by Steve Earle, is the last song on my Top 10 list. 

Amsterdam was always good for grieving,
 And London never fails to leave me blue.
Paris never was my kinda town,
So I walked around
With the Ft. Worth Blues

Did Steve Earle really mean it when he said Paris was never his kind of town? Maybe he was referring to Paris, Texas.

If so, I agree with him. I suffered a stroke in April 2023 at the Whataburger in Paris, Texas. Very disagreeable event, but if you have to have a stroke, the Paris, Texas Whataburger store is the right place to have it.

 

Congress Might Do Away With Grad PLUS: Killing the Colleges' Cash-Cow Graduate Programs

 The U.S. House of Representatives passed President Trump's Big Beautiful Bill,  but it was tweaked a bit in the Senate. A final bill will be crafted through the reconciliation process, but it seems inevitable that Congress will scuttle Grad PLUS, an unsubsidized federal loan program with no borrowing limit.

The Senate version of the Big, Beautiful Bill caps federal loans for professional degrees (primarily law and medicine) at $200,000 and other graduate degrees at $100,000. This is a student-loan reform that is long overdue.

Once the colleges realized that there was no borrowing limit on grad-school loans, they jacked up graduate-school tuition rates and rolled out new graduate programs to lure in more suckers. MBA programs popped up like crabgrass on the campus quad, and mediocre MBA programs were often as expensive as the prestigious programs offered by Harvard and other elite schools.

Of course, the universities deny the charge that they raised tuition prices to take advantage of limitless student borrowing, but that's academic bullshit. The universities have never accepted the responsibility of keeping their costs down.

Sandy Baum, a nationally recognized student loan scholar, acknowledged that there is evidence that Grad Plus contributed to an increase in high-cost graduate degrees. Baum also admitted that the federal government's "infinite borrowing" policy is "not optimal," and has resulted in graduate students racking up hundreds of dollars in student debt to get a master's degree in fields like creative writing (as reported in Inside Higher Ed).

College leaders are alarmed at the prospect that Congress will kill the cash cows that are placidly grazing in the business schools and liberal arts departments. They claim that putting a cap on grad-school borrowing will prevent low-income students from getting medical and law degrees and other valuable post-graduate credentials.

More bullshit. There is no good reason for graduate school tuition to be as high as it is, especially for programs that don't enable their graduates to get a higher salary.

Here's one example that illustrates my point. In 2017, Inside Higher Ed published an article on the high cost of getting a master's degree in data journalism from Columbia University. According to Columbia's own estimate, a student would pay $147,000 for this degree, including $106,000 in tuition and fees. And that was seven years ago.

Is a Columbia master's degree in journalism worth the cost? Probably not. Charlie J. Johnson, an editor for the Chicago Tribune at the time, was quoted in the Inside Higher Ed article as tweeting that “[a] $100,000 master’s degree in journalism is a stupid thing.”

Suppose Congress does away with the Grad Plus loan and puts a reasonable cap on graduate student loans. In that case, it will kill the universities' cash cows--high-priced graduate degrees that are wildly overpriced and often worthless. 

However, I'm not holding my breath.  At this very moment, the higher education industry's lobbyists are creeping around Capitol Hill, smoozing our national legislators, claiming that limitless student loans for grad school must be perpetuated.  

These sleazeballs lobbyists will argue that the present gravy train must not be derailed because socioeconomically disadvantaged students desperately need a worthless graduate degree or professional degree, no matter what it costs.

I predict that the Grad PLUS program will be retired. Nevertheless, the federal student loan program will continue to underwrite wildly overpriced graduate programs that will leave graduates with mountains of student debt--debt that they cannot discharge in bankruptcy.

Will Congress Kill Cash-Cow Graduate Programs?

Savage v Educational Credit Management Corp.: How $37,000 in student loans ballooned into a $250,000 debt

Paul Savage took out $37,000 in student loans to get a degree in human resources management from Temple University, which he obtained in 1997. Later that year, he consolidated the loans at an 8 percent interest rate, but he never made a single payment on the debt. 

Twenty-five years later, Savage tried to discharge his student loan debt in a Georgia bankruptcy court. By this time, his outstanding loan balance had ballooned to approximately $250,000.

Educational Credit Management Corporation, perhaps the U.S. Department of Education's most ruthless debt collector, opposed Savage's attempt to discharge his massive student loan obligation. It argued that Savage was eligible for REPAYE, a 20-year income-based repayment plan. Based on his low income, Savage's required monthly loan payment would be zero.

Furthermore, ECMC argued that Savage failed to make a good-faith effort to repay his debt, which barred him from bankruptcy relief.

Bankruptcy Judge Sage Sigler rejected ECMC's arguments and discharged Mr. Savage's student debt. Judge Sigler's reasoning was as follows:

First, the judge ruled that Savage had managed his loans in good faith. Although he failed to make any payments for over 25 years, Savage had either been enrolled in an income-based repayment plan or a government-approved deferment program and had never been in default. In addition. Savage had made good faith efforts to maximize his income, despite his average annual earnings over the years being only $14,000.

At the time of his bankruptcy filing, Savage was 57 years old. If he were forced into a 20-year income-based repayment plan that required him to make no payments, interest would accrue over the next two decades, increasing his total student loan debt to $1 million.

In short, Judge Sigler ruled that repaying his student loans would impose an undue hardship on Mr. Savage, and thus, he was entitled to bankruptcy relief.

Implications

Paul Savage was fortunate to have Judge Sigler presiding over his bankruptcy case. Many bankruptcy judges have refused to discharge student loan debt, even in cases with facts more dire than those presented by Savage.

ECMC has repeatedly argued that student loan borrowers who qualify for income-based repayment plans are ineligible for bankruptcy relief if their monthly payments are de minimis. Fortunately, many bankruptcy judges have begun to reject that argument for the same reasons Judge Sigler did.

It's nuts for the federal government, acting through private debt collectors, to oppose student-loan bankruptcy relief for people like Paul Savage. Democratic politicians seeking ways to support their young constituents should advocate for legislation that affords bankruptcy relief to overburdened debtors who have handled their student loans in good faith.

 Congress hasn't acted because many congressional legislators view the higher education industry as their core constituency, not college students. The higher education industry is content with the status quo, which allows colleges to charge outrageous tuition prices, knowing that students and their parents will borrow the money to pay the bill.

Bankruptcy Judge Sage Siegler