• Martin O’Malley Has $340 THOUSAND In Student Loan Debt

    Democratic presidential candidate Martin O’Malley let slip Wednesday that his family has managed to pile up a mind-boggling $339,000 in student loan debt putting his two daughters through college. Though O’Malley’s anecdote is intended to bolster support for his plan to enact debt-free college, experts on student loans say that his huge debt burden really just reflects bafflingly bad financial judgment on the part of the ex-Maryland governor.

    O’Malley on Wednesday rolled out a five-year plan that he says would allow all Americans to graduate debt-free as long as they attend a public institution. The plan relies on a combination of tuition freezes, increased federal grants, and repayment plans that demand a percentage of wages rather than a set amount of money. (RELATED: O’Malley Cites Satirical Article In Major Campaign Document)

    To lend emotional support to his plan, O’Malley told The Washington Post about his own experience, saying that he and his wife have taken out $339,200 in loans putting their two oldest daughters through college. Grace, 24, graduated from Georgetown University and is now a teacher, while Tara, 23, recently finished as the public College of Charleston and is working as an administrative assistant for the United Nations Foundation. Grace’s story was used to win support in an O’Malley email sent out Tuesday.

    “I had to make a tough choice: Do I go to the college we can afford or do I take out loans to go to the college of my dreams?” Grace wrote in the email. “At the age of 18, I made the decision to follow my dreams. My family and I now face years of debt — and we know we’re not the only ones.” The average annual cost of attendance at Georgetown is currently over $67,000, making it one of the country’s most expensive schools.

    Still, experts questioned by Inside Higher Ed said the amount of debt taken on by the O’Malleys was an absolute absurdity that suggested incredibly irresponsible financial management.

    “[It] makes no sense. It just means they are very poor financial planners,” said Sandy Baum, a senior fellow at the Urban Institute. “No one should borrow money that way.”

    The total is also bizarre because the O’Malleys have earned enough money that they should have been able to save up for their daughters’ schooling. For the past eight years, O’Malley earned a $150,000 salary as governor of Maryland, and before that he made at least $125,000 a year during the eight years he spent as mayor of Baltimore. His wife Katie earns $141,333 a year as a district court judge, and has held that job since 2001. Though the couple has had consistently high incomes for the past 15 years, they apparently put aside nothing for their daughters’ education.

    Terry Hartle, a senior vice president at the American Council on Education, told Inside Higher Ed that the O’Malley’s debt burden probably only made sense if they borrowed the entire cost of attending both Georgetown and the College of Charleston.

    “It appears that the O’Malley family elected to borrow enough money to finance the total cost of the education of their children,” Hartle said. “Most upper-income families save before their kids go.”

    Another expert, Mark Kantrowitz of Edvisors, said the O’Malleys borrowed more than “99.9 percent of parents.” The average indebted undergraduate leaves school with about $28,000 in loans, but even when multiplied by two the O’Malleys are sextupling the national average.

    The burden of such a high debt can be seen in the level of interest the loans carry. With such a huge amount of debt, the vast majority of the O’Malley’s loans will be federal parent PLUS loans, which have interest rates of between 6.4 and 8.5 percent, depending on the year they were taken out. That means the O’Malleys are paying between $22,048 and $28,832 in interest per year until they pay down the principle. On a standard 10-year student loan repayment plan at 8 percent interest, the O’Malleys would have a monthly payment of $4115 and a final loan cost of $493851, meaning interest alone could cost them another $150,000.

    The O’Malley campaign hasn’t offered more specifics on why they borrowed so much, why they apparently saved nothing beforehand, or how they are attempting to pay off the loan, instead releasing a general statement:

    “My wife and I took out big loans to support our daughters. For us, this is what the American Dream is all about — working hard and making sacrifices so our kids can pursue bigger opportunities and do better than we did.”

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