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While California students mustered to lead a nationwide movement for college debt relief, policymakers and innovators grappled with the issue in ways of their own.

Students in the UC system — particularly the Berkeley campus — have taken a central role in pushing the co-called Million Student March. Protest organizers have announced a sweeping agenda including “a $15 minimum wage for student employees on college campuses, free tuition at public universities, and the abolition of student debt,” according to Time. “The Million Student March was an idea that started with a remark made by U.S. Senator Bernie Sanders, stating elected officials wouldn’t care about supporting higher education until a million students were out marching,” as UCSA President Kevin Sabo told the Daily Californian.

An uncertain path

The latest elements of student debt policy emanating from Washington have been a mixed bag. The new revisions to the federal Pay As You Earn program “will let all borrowers with federal direct student loans who are not in default cap their monthly payments at 10 percent of discretionary income, no matter when they borrowed or their debt-to-income ratio,” as the San Francisco Chronicle reported.

Meanwhile, a twist in federal robocall law has raised the specter of heightened fraud risks for targeted students. “Under the new provision, robocalls could only be directed at people with student loans backed by the federal government,” noted KOMO Channel 4 News. “For many, that’s just one more opportunity for scammers and deceptive marketers to expand their operations. State and federal regulators already have their hands full with illegal companies that make unsolicited calls claiming they can help consumers consolidate student loan debt or get loan modifications  for a large and illegal up-front free.”

Tuition politics

Californians have actually fared better than others as the debt crisis continues its upward spiral. “Students graduating from California colleges had just $21,382 in loans, fourth-lowest among the states,” the Institute for College Access and Success noted in its tenth annual report on student debt, according to the Chronicle.

“The state’s Cal Grant program pays up to the full cost of systemwide tuition and fees at University of California and California State University campuses, and up to a certain dollar amount ($9,084 in 2014-15) at qualifying private colleges. These grants, available to California residents from low- and moderate-income families, have helped defray soaring tuition.”

ICAS research director Debbie Cochrane told the Chronicle that “tuition at UC and CSU campuses rose 128 percent, but the average debt for public-college graduates rose only 43 percent” over the past 10 years.

But some Golden State politicos have sought to frame state education as a crisis in need of broad new government support. Along with UC Regent Eloy Ortiz, Lt. Gov. Gavin Newsom announced his support for an initiative called California College Promise, “a bold effort to offer two tuition-free years of community college for responsible students,” as they argued in the San Jose Mercury News. “This promise is true to California’s tradition of advancing our educational system at critical junctures to present future generations with better opportunities to succeed,” they wrote.

Disrupting debt

At the same time, student debt has attracted the attention of California’s startup scene. One new highly selective startup school, Make School, offers a two-year curriculum in tech — “billed as ‘debt-free education,'” as the Mercury News reported. “Ashu Desai, the 23-year-old cofounder of Make School, said widespread concerns about student debt and abuses in the for-profit college sector influenced his decision not to charge tuition up front. Instead, the school charges a percentage of graduates’ wages — or, alternatively, an investment in their startup — instead of a flat fee.”

Everest was operated by the now-shuttered Corinthian Colleges chain. Some feel fleeced students should have their loans forgiven.

The state talks a big game about policing the for-profit college industry, with legislative proposals to ease student debt and a massive lawsuit against the now-defunct Corinthian Colleges.

But an $8 million bureaucracy the state launched five years ago has done little to improve the accreditation process that allowed the schools to operate in the first place, an attorney representing former students of the schools said.

The Bureau for Private Postsecondary Education opened in 2010 after it was discovered that California was home to hundreds of for-profits in which students took out student loans in exchange for dubious results.

The bureau, though, has been “worthless,” said Harry Shulman, a San Francisco lawyer who has represented students in cases against the for-profit colleges.

“It’s not just them, though, it’s this whole constellation of groups that have been set up to try and monitor the schools,” Shulman said.

He also argues that the accreditation process itself doesn’t work. “Once a school gets that, then it can get [student loans], and that’s a big deal because once it gets those, it is sucking at the government teat.”

Nationally, the federal student debt taken on by Corinthian students since 2010 is estimated at $3.2 billion.

Oversight of Accreditation Process

The trouble began with for-profit operators attracting students by touting impressive job placement statistics, which actually included fast-food jobs and other low-wage employment unrelated to student’s majors.

The state was recognized as one of the worst with regard to the soft-handed regulation of an industry that is allowed access to hundreds of millions in federal money through student loans.

“In California, the combination of relatively weak oversight – including virtually no oversight for a few recent years – and an unusually generous state grant program have made the state an attractive place for for-profit colleges to do business,” Debbie Cochrane, program director of the Institute for College Access & Success, told a legislative committee in 2013.

The same year, a legislative analysis found that the bureau was duplicating the work of regional and national accreditors who review schools subject to the for-profit regulation.

And that was three years after the bureau to protect students and keep the bad guys out of the field was created.

According to the bureau’s website, an “annual report is due by September 1 of each year, and is required to include specific information related to the educational programs offered by the institution in the reporting period.”

The bureau hasn’t published an annual report since 2013 and warns that information is self-reported by the schools and “has not been independently verified.”

The staffing level has grown from 50 in 2011 to 86, and spending on salaries increased 84 percent in that time to $4 million. Still, consumers sometimes have trouble getting anyone at the bureau to answer the phone.

The annual report for 2014 comes out in early 2016.

“We have to go through all the data and that takes a lot of time,” a clerk answering the phone said.

Here is the link, still open, for the schools to enter data such as the number of degrees awarded and job placement rates.

Approved Colleges

To its credit, the bureau maintains an up-to-date list of complaints and actions the bureau has taken.

It has also compiled a database for consumers to check out what colleges are approved by the state’s vetting process.

That includes a roster of some of the most troubled college systems in the U.S., including Kaplan College, Bridgepoint Education, ITT and the Educational Management LLC, which have spent hundreds of thousands of dollars on lobbying in Sacramento. Among the bills Bridgepoint has targeted, for example, is a failed measure last session requiring the bureau to post more information regarding an institution’s performance. It also lobbied regarding a successful bill that moved toward more performance metrics for colleges.

And when the bill giving the bureau some heavy regulatory powers was being discussed after its passage at one of the first meetings of the bureau, minutes show that there was plenty of opposition – 16 comments against the measure.

Assistance Offered to Indebted Students

Education Management and Kaplan have lost certifications in other states, forcing them to shutter some schools. Other lesser-known institutions have closed and left students holding tens of thousands of dollars in student loan debt. For that, there is a proposed solution in Sacramento.

“The closing of Corinthian this past April showed that there are holes in the oversight of for profit colleges,” state Assemblyman Jose Medina, D-Riverside, told a legislative committee in July. His answer?  A bill that would provide financial assistance to anyone impacted by the closure of Corinthian’s three schools in California and ensure that their debt from those schools does not count against them in applying for state education assistance.

The measure, Assembly Bill 573, is in keeping with an essay written by Rohit Chopra, ombudsman for the federal Consumer Financial Protection Bureau, which explained how students fleeced by for-profits might escape their student loan debt.  

“Some states may have programs that assist students with private student loans in the event of a school closure,” Chopra writes in the May article. “In addition, some private student lenders may offer options to assist certain borrowers in this situation.”

Many for-profit schools are represented nationally by trade group Association of Private Sector Colleges and Universities. Noah Black, vice president of public affairs for the group, did not return a call. In California, a lot of them are represented by the California Association of Private Postsecondary Schools. Its executive director, Robert Johnson, did not respond to an email seeking an interview.

By John Seiler

Greece is leading the way for California — off a cliff. The two polities are similar: beautiful mediterranean climate, creative people, massively powerful government-worker unions, busted budgets, impending bankruptcy. Greece is just a little ahead of California. The latest report: Greeks are abandoning the unworkable, corrupt two-party system:

MARATHON, Greece (Reuters) — Georgios Pasayannis was a Greek civil servant for 40 years, and the 73-year-old pensioner voted faithfully for New Democracy throughout, confident his future was safe in the hands of the conservative party.

Now he says he will never cast his ballot again for “those crooks” or their coalition partners, the centre-left PASOK party, since they cut his 1,500 euro per month pension by a third while pushing through tax increases.

Their mismanagement of Greece has turned the twilight of his life into a grinding struggle. Pasayannis, who worked for the defence ministry, says he plans to get revenge at the May 6 national elections.

“We pay and pay, but we have nothing for it,” said the man who had hoped for a carefree retirement in the seaside village of Marathon, 40 kilometres (25 miles) east of Athens. “They cheated us and lied to us for years. They’re a bunch of crooks.”

Greeks are in a fractious mood ahead of the election, and much of their anger is directed at the two parties that have long dominated the political landscape.

‘Decline to state’

In a similar way, Californians have been abandoing “those crooks” in the Democratic and Republican parties to re-register as “decline to state voters”:

According to a recent report:

California continues to witness a steady rise in the number of voters who choose not to affiliate with any political party. According to the most recent numbers released by the Secretary of State, 21.2% of California voters are now registered as having no party preference, a new high.

Back to Reuters on Greece:

At the other end of the spectrum, legions of young voters are also turning their back on the two parties that have taken turns ruling Greece for the last four decades. About 15 percent of the electorate — 1.4 million — is 18 to 29.

The unemployment rate for Greeks under the age of 25 tops 50 percent. Hordes of young Greeks who have seen their career hopes destroyed by the economic implosion are also expected to turn their backs on ND and PASOK, pollsters say.

Opinion polls show gains for small parties that oppose the steep wage and pension cuts imposed on Greece by the European Union and International Monetary Fund (IMF) in return for aid….

“Young people are suffering the most because of these clowns,” she said. “For young people in Greece now there is no job, no hope, no nothing.”

California youth nightmare

In California, young people also are restless. As has happened across the country, young people are rallying behind the only independent presidential candidate this year, Ron Paul:

Ron Paul attracted a peculiar 8,500-plus voters to the third of three town hall meetings he held in California this week, this time at UC-Berkeley. In drawing such a huge crowd to Berkeley, the 12-term Congressman from Texas shattered his unrivaled town hall meeting attendance record. The meeting took place at UC-Berkeley’s Memorial Glade, where he addressed the crowd from atop the steps of Doe Library in Berkeley, CA. Dr. Paul spoke about his platform of constitutionally-limited government, the enduring bonds between economic and civil liberties, and his fiscal blueprint that cuts Washington spending, shrinks the national debt, and reverses the federal government’s harmful growth and intrusiveness. Full video of the event posted at UStream, by msl209.

As in Greece, young folks know that there’s no future for them because of the immense debt piled up by their governments, and the inflation-low interest rate trap sprung by central banks. In Greece, the banks are the European Central Bank, which controls the inflationist Euro, and the IMF, mentioned above. In America, it’s the inflationist Federal Reserve Board that Ron Paul wants to get rid of.

Amercan kids also have it worse than Greek kids in one crucial way: American students owe an incredible $1 trillion in student-loan debt, which they’re finding impossible to pay back without decent jobs in the Bush-Obama-Greenspan-Bernanke-Republican-Democrat Great Recession-weak recovery.

Debt forgiveness 

The U.S. and California (and other states’) political regimes have strung this albatross of debt around youngsters’ necks at the time young folks should be building families and careers. The two politcal parties want to continue the status quo of the bank ripoffs. President Obama and Mitt Romney both have endorsed keeping interest rates low on the student debts. But how can that help when most of those holding the debts don’t have jobs, or have low-paying jobs?

What they should do is call for canceling the debts. Just as Greece’s government should simply cancel the country’s debts, much as Iceland did recently and Argentina did a decade ago. If bankers are stupid enough to loan trillions to bad risks, it’s the bankers who should suffer from their usurious greed, not the borrower-victims.

After Iceland dumped its loans, the economy recovered. The same thing happened in Argentina a decade ago.

Dumping student debt would benefit California’s kids, and America’s kids. But as in Greece, the politicians are beholden to the banks, not the people.