Commentary, News

New report: “Morally bankrupt” federal policy keeps student loan recipients in poverty

Yesterday the the National Consumer Law Center (NCLC) released an important new report that highlights a disturbing method by which the federal government is preying upon student loan recipients. This is from the NCLC release that accompanied Voices of Despair: Student Borrowers Kept in Poverty When Government Seizes Their Earned Income Tax Credit.

The report compiles stories from borrowers recounting the hardship caused by the federal government’s seizure of their Earned Income Tax Credits (EITC) because of a defaulted student loan.

In January 2018, NCLC asked student loan borrowers who had their EITC seized to share their stories and to tell us what they had planned to do with their tax credit. Many borrowers described the things their growing children would have to do without—clothing for the next season, a bed to sleep in, medical care, a roof over their heads, and in some cases, food in their bellies.

“The loss to these families is heartbreaking,” said Persis Yu, National Consumer Law Center attorney, director of NCLC’s Student Loan Borrower Assistance Project, and author of the report. “The Earned Income Tax Credit keeps parents working and children out of poverty. Robbing families of these funds is counterproductive and makes absolutely no sense.”

The nonpartisan Center on Budget and Policy Priorities (CBPP) has cited EITC expansion as the most important cause of employment growth among single mothers with children during the 1990s. In 2015 alone, the program was credited with lifting about 6.6 million people out of poverty, including about 3.3 million children.

Taking the EITC also compounds the harms borne by low-income borrowers, who often were denied the promised benefits of education. For example, many students were lured in to attend a school such as Everest (part of the for-profit Corinthian Colleges) which the U.S. Department of Education found misrepresented job placement rates to their prospective students, or a school that closed in mid-course which recently happened to many students attending the for-profit ITT Technical Institute.

“Stripping families of the Earned Income Tax Credit is a morally bankrupt policy which compounds the harms borne by low-income borrowers,” said Yu. “Congress needs to put a hard stop to this federal government practice.”

Click here to check out the report.

Check Also

Another editorial pleads with Burr, Tillis to end ideological attack on federal courts

As Clayton Henkel noted yesterday, the Winston-Salem Journal ...

Top Stories from NCPW

  • News
  • Commentary

Shortly after 10 o’clock yesterday morning, a federal jury in the hog nuisance case Gillis vs. Murph [...]

North Carolina state law would seem to provide just two options for Wayne County school leaders, clo [...]

Perhaps the sixth time is the charm? Rep. David Lewis (R-Harnett) unveiled another attempt Tuesday b [...]

As the UNC Board of Governors prepares to take up the fate of the Silent Sam Confederate monument Fr [...]

Fayetteville is my hometown more than any – I was born here to military parents, this is where my gr [...]

It’s long been understood by those who pay attention to public policy debates that the age-old conse [...]

The post The newest nuisance in the 9th: Election Fraud Scandal appeared first on NC Policy Watch. [...]

Earlier this week, the UNC-Chapel Hill Board of Trustees (BoT) began plans to erect a statue dedicat [...]