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Debt

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By Chris Cumella

On a conference call with New York college students last month, Senate Majority Leader Chuck Schumer (D-NY) presented his plan to cancel up to $50,000 in debt for federal student loan borrowers.

The plan is derived from Sen. Elizabeth Warren (D-Mass), who proposed national debt forgiveness as a promise in her presidential campaign. Both Warren and Schumer’s joint plan involves using a presidential executive to nullify student debt up to $50,000.

“College should be a ladder up,” Schumer said during the call. “But student debt weighs people down, it is an anchor, and we have to do something about it.”

President Joe Biden (D) has the executive authority to substantially cancel student loan debt for students through the Higher Education Act, according to Schumer. This would also bypass the requirement to present the motion to Congress.

Biden has said that he supported alleviating students of loan debt up to $10,000, and now the call to action is being echoed loudly by his fellow Democratic Party members. 

On his first day in office, the president addressed the ongoing dilemma regarding student debt, where his plan was to extend the pause on federal student loan payments and keeping the interest rate at 0% through the end of September.

The United States national student loan debt has accumulated at an alarming rate. An Experian survey indicated the total amount reached a record high of $1.57 trillion in 2020, an increase of about $166 billion since 2019.

Nearly 2.4 million New Yorkers owe $89.5 billion in federal student loans as of March 2020, Schumer said. The average New Yorker owes $34,600 in student loans, greater than the national average of $32,700.

To relieve loan borrowers of their debts, Schumer mentioned that if the federal government forgave debts up to $50,000, it would greatly bounce the economy. He detailed how instead of repaying their loans, people can instead allocate their money for other immediate and urgent payments, as well as leisure spending.

Schumer told conference attendees that the American Rescue Plan Act of 2021 includes roughly $2.6 billion for New York’s colleges and universities, with half of the allocations distributed as financial aid to students in addressing hardships brought about by COVID-19.

Some of the local institutions benefiting from the American Rescue Plan for “estimated minimum amount for student grants” were listed by Schumer during the conference call: City College $23.6 million, CUNY Queens College $25.8 million, Syracuse University $15.4 million, SUNY Buffalo $31.7 million and Stony Brook University $26.8 million.

Schumer also made an urgent request for the call participants, primarily college students, to stay informed by reading local and student-run newspapers. He likewise reinforced the importance of those attending the conference to take a call to action to write, call and email Biden and get their friends and family to do so to spread awareness.

“Student loan payments are on pause, but they are not going away if we don’t do something once the pandemic is over,” Schumer said. “These debts are just going to keep piling up.”

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Suffolk County Executive Steve Bellone speaks during a press conference June 20 calling out Republicans for voting down three bond resolutions. Photo by Kyle Barr

Democrats and Republicans in the Suffolk County Legislature are at each other’s throats over funding for a series of bonds, including for public safety initiatives, that failed to pass at the June 19 legislature meeting.

“The Republican caucus put politics ahead of public safety,” county Executive Steve Bellone (D) said at a press conference June 20. “We saw a group of seven Republican legislators put their own politics over the interests of their constituents, of public safety, of teachers and students.”

At the June 19 meeting, three out of four bond resolutions failed to garner support from at least 12 legislators, which would represent the two-thirds support necessary to pass a bond resolution. The seven members of the Republican minority caucus voted against the resolutions. The three failed bonds included 14 items that would have provided funding for county parks, correctional facilities, public safety initiatives, road reconstruction and more.

Republican legislators said they voted against the bonds because they did not want to feel forced to vote on items they might disagree with in the future, lumped with items they were comfortable supporting now.

“We shouldn’t be paying these things off for 30 years because it’s just not fair to young people.”

— Rob Trotta

“The blame for the failure of this bond rests squarely on the shoulders of Steve Bellone,” said Minority Leader Legislator Tom Cilmi (R-Bay Shore). “Last month the county executive abandoned 40 years of history and precedence in Suffolk County… in an effort to bully the legislature into every one of his proposals.”

Bonds traditionally had not been grouped together by the Suffolk Legislature.

Legislator Rob Trotta (R-Fort Salonga) said he opposed the resolutions in part because bonding for each of the 14 projects would increase the country’s deficit.

“What we’re doing is increasing debt,” Trotta said. “We shouldn’t be paying these things off for 30 years because it’s just not fair to young people.”

Legislator Sarah Anker (D-Mount Sinai) sponsored a bill that would allocate funds for a Rails to Trails project from Wading River to Port Jefferson. That bill was included in a larger bond proposal at the June 6 legislative meeting, and that too was voted down by the Republican caucus.

“I hope they can get this resolved soon because it’s basically hindering government,” Anker said. “The county has to bond for these sorts of projects – that’s why we have this sort of process.”

Anker said the $8 million Rails to Trails project was to be funded by that bond and then the county would be reimbursed by the federal government, but without the bond the county is now looking for different revenue sources so it would not have to push back plans to start building the trail by spring 2019.

The most contentious item amongst the recent three defeated bonds was $2 million in funding for licensing Rave Panic Button mobile app, a downloadable application that acts as an instant call to fire and emergency services as well as police in an emergency, specifically a school shooting, for school and government employees.

The Rave app is currently active in 95 percent of county facilities with 20 percent of county employee phones now equipped with the app, according to Joel Vetter, the county Emergency Medical Services coordinator. The program is already in place in 19 school districts with 10 enabled devices per building. The funding, Vetter said, would have put the app in the hands of all current school administrative and teaching staff in all county school districts.

“This means that if the cellular system is down, you could contact emergency services through WiFi,” Vetter said.

Bellone defended the lump bonding, saying it’s a practice used in town and local governments across the state. He said the public safety initiatives would have saved district schools more than $1 million since each would not have to pay for it themselves.

“This has become the worst of our politics.”

— Duwayne Gregory

“If we back down from this outrageous conduct now, they will continue to hold hostage every important investment on the environment, on public safety, on roads, on parks — and we’re not going to allow that to happen,” the county executive said.

Cilmi contended that bundling the bonds together does not save money because the county’s bond council, New York law firm Harris Beach PLLC, does not charge for bond preparation.

The contract between Suffolk and Harris Beach, signed by the county in 2014, reads that there shall be no fee paid by the county related to the preparation of county resolutions, which includes bonds.

Cilmi and Trotta both said they could come close to guaranteeing funding for the Rave app would be approved as a stand-alone measure.

Democrats accused the Republican caucus of being hypocritical as the bond vote was all for items those legislators have already supported in the recent past.

“This has become the worst of our politics.” Presiding Officer DuWayne Gregory (D-Amityville) said. “Nobody gets 100 percent of what they want, and when they say, ‘we’re going to vote against a package to other bills regarding funding for our correctional facilities,’ saying ‘I don’t like one or two parts of the bill and I’m going to vote against,’ is just ridiculous.”

Bellone said he expects to put the bonds back up for vote in the next legislative meeting July 17, but he did not give specifics about whether or not the county would try and repackage the bills to be more favorable to the wishes of the Republican caucus.

Deputy County Executive Jon Kaiman (D) said if the bond vote fails again the app will not be available to districts until after school reconvenes in September.

“We have to regroup and think what kind of strategies we have going forward,” Kaiman said. “When you fail a vote the process takes a lot of time to come back.”

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It actually makes me cringe when I hear discussions questioning whether a college education is worth the expense. Yes, college loans carried by students after they graduate are astronomical and unprecedented. The average student loan debt for the Class of 2016, for example, is $37,172, up 6 percent from the preceding year. Americans owe, in total, more than $1.48 trillion in student loans spread out over 44 million borrowers, more than the $620 billion owed on credit cards, according to figures obtained from the Student Loan Hero website. Average monthly student loan repayment after graduation, for borrowers 20 to 30 years of age, is $351.

Those are, of course, mammoth numbers that are hard to conceive. But how about this for comparison: Mortgage debt is $8.8 trillion. You can move out of a house, but you only have one head. And what you fill that head with can determine the quality of the rest of your life. Your house may contain your financial equity, but your knowledge base and critical thinking make up your life’s equity.

I know the stories about the college dropouts who become billionaires. Good for them, they don’t have to worry about money. But that is part of the point I am trying to make. Education is not only about money, about the job you will hold or the amount of toys you will own by the time you die. Education is partially about income, as statistics prove. College grads earn more in the course of their lives than high school grads. And while today’s auto mechanic, who goes to a vocational school and who is really a kind of computer engineer can earn as much, perhaps, as a doctor or lawyer, money is not the only value in life. Satisfaction, a key ingredient of happiness, is another.

So what do you get from a college education? Is it worth the price?

First let’s talk about price. In the United States, where education is viewed as the ladder to success, a traditional college education at a fine college has always been ranked at the top of the pyramid. Those schools are also the most expensive because they are mainly private. There are various scholarships to help, but for most without adequate resources those schools can be out of reach. Then there are public universities, many of which are exemplary and much cheaper, particularly if you live in state. And three cheers for the two-year community colleges that can carry you halfway to a college degree with truly minimum expense. There are also work-study schools that may take longer to graduate from, but who is holding a stopwatch on your life?

Anyway, what you get out of college is directly proportional to what you put in. Like the computer expression, it’s garbage in, garbage out. So what is the bottom line here? What can you expect to get out of a good, traditional college?

For starters, there is knowledge, knowledge about almost everything known to humans at the time you
attend. It’s there for the asking, assuming there is room for you to enroll in the classes of your choice. And if you go on to college reasonably soon after you graduate from high school, you can focus on acquiring the knowledge of your choice without the responsibilities of a spouse, a car, a house, children, a dog and making a living. In college, you have a roof over your head, your meals are prepared and the lawn is mowed for you. The knowledge you choose to acquire may or may not turn out to be directly applicable to the work that you eventually do, but it will certainly contribute to your understanding of your world — scientifically, culturally, historically, economically, politically, and that will give you profound satisfaction. If your job depends on what you know rather than how much you can lift, knowledge will extend your work life, at the senior end when those whose bodies can no longer respond to physical tasks may face uncertain “golden years.”

Learning, of course, doesn’t depend on or stop with a college education. But appreciation for the value of knowledge grows as we age. Boy, how I wish I could live again those college years. Now I would know why I was there.

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Smithtown Comptroller Donald Musnug outlines his capital budget suggestions before the Town Board on Monday. Photo by Phil Corso

Smithtown’s new comptroller is calling on the town board to borrow money to fund upcoming capital projects.

Donald Musgnug, who was sworn in as town comptroller in February after his predecessor, Lou Necroto, took a job with the county, provided his first capital budget recommendations report on Monday and pushed for borrowing money to pay for improvements. He listed several bullet points justifying his recommendation, as the town gears up to fund projects like an animal shelter renovation, LED streetlight retrofittings and marina bulkhead improvements.

“Interest rates are at historically low rates and the town is fiscally strong,” Musgnug said. “Now is the time to borrow, when rates are low, and thankfully we are in a position to do so.”

The comptroller said he expects replacing aging and otherwise deteriorating equipment would reduce the amount of money set aside in future budgets for repairs and maintenance. In reference to an upcoming streetlight project that would bring LED lighting to Smithtown’s streets, Musgnug said the town would offset the costs of future projects in the form of savings.

“Taking advantage of new technology, such as in the case of LED bulbs for streetlights and the municipal solid waste facility, will reduce utility costs [and] repair costs and improve safety,” Musgnug said in his report. “Because the town’s finances have been conservatively managed over the years, there is little room to cut operating budgets, making the goal of staying within the New York State tax cap increasingly difficult in light of rising compensation, health care and pension costs.”

In the upcoming year, Musgnug said most of the budgetary requests are equipment-related and should be done in the near future as assets deteriorate due to age and usage.

The streetlight project, he said, would total $5.6 million but could be offset by a possible $750,000 grant from the state.

“It should also be noted that … we expect to reduce utility costs and repairs by $350,000 as a result of the streetlight LED retrofit, which will offset the cost of borrowing, which is $270,000 per year,” Musgnug said. “So we actually more than offset the cost of installation.”

The comptroller also said the town should anticipate equipment purchases and construction in 2016, mostly because of the first phase of Smithtown Animal Shelter renovations as well as upgrades at the town marina, which collectively require about $3.1 million in financing.

The following year, he said, those projects would require about $6 million in funding overtime to complete.
After the comptroller’s report, Councilman Ed Wehrheim (R) said he was impressed by the thoroughness of Musgnug’s pitch and wants to make sure the town follows through on capital projects after setting aside funding for them.

“Overall, I think it’s excellent,” he said. “In past years, we borrowed money and put up capital projects, but they never got done. Let’s make sure someone oversees these.”

In his report, Musgnug said even if the town chose to borrow more money as recommended, it would still see its overall debt steadily drop because of its conservative fiscal management policies.

“You should be commended for putting the town into a position where it can borrow significant sums of money and still have declining debt service payments [for which] it must budget,” he said.

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